One of Japan's biggest outsourcing companies, Tose, reported financial losses due to the recent mass cancellation of video games.
While Tose is not a studio whose name stands out among fans in the industry, if you wait around and watch the credits roll for any number of high-profile titles from Japan, you will most likely see the company's name pop up.
Tose Suffers Financial Losses
(Photo : Tose Co / Screenshot taken from official website)
The outsourcing company has co-developed, supported, and ported countless titles from the NES and GameBoy era up to the PlayStation 5 and Nintendo Switch days.
Some of these are The Legend of Zelda: Breath of the Wild, Dragon Quest Monsters: The Dark Prince, Crisis Core: Final Fantasy 7 Reunion, and Resident Evil Revelations.
Despite having a history that spans decades, Tose is now suffering losses, and its financial statements for the period that covers September 2023, to May 2024, reveal a stark outcome.
This is because the studio's net sales fell nearly 28% compared to last year which resulted in an operating loss of roughly $3.7 million, according to GamesRadar.
The company reportedly laid the blame for the losses on various video game cancellations across the industry. On the other hand, mass layoffs have not been happening at Japanese publishers as much as everywhere else.
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This was partly because of worker protection laws but there are still many companies still feeling the post-pandemic woes.
One example is Square Enix, which is a frequent Tose collaborator, which recently announced that it decided to cancel several unannounced games and has accrued roughly $140 million in "content abandonment losses."
Another publisher that would often work with Tose, Bandai Namco, announced that at least five games that were in development were canceled due to a loss in profits last year. Tose also expects orders and development conditions to remain uncertain due to policy changes on the clients' side.
Video Game Cancellations
Now, the outsourcing company is working on strengthening project management and plans to steadily launch currently scheduled projects in order to recover its business performance.
Due to the growing severity of the video game industry's economic conditions, publishers are more likely to cancel development projects, said Automaton.
On the website of Tose, you will be able to see some of its more recent project involvements, which include Paper Mario: The Thousand-Year Door remake, Final Fantasy Pixel Remaster, Scarlet Nexus, and WarioWare: Move It, among others.
Because Tose heavily relies on work that was commissioned from other publishers, the current situation has made it suffer the knock-on effects of the latter's own financial woes. The company has now lowered its sales forecast for the year by 12.5%.
While the company did not specify which clients have canceled projects that it was working on, one of the studio's most frequent collaborators is Square Enix, according to the Video Game Chronicle.
The publisher's woes were also put on full display after it announced that it took $140 million in losses over said canceled games. Square Enix added that it would be undertaking a new strategy to be "more selective and focused" about its pipeline.
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