TLDR; This hot take, clickbait article being spread misinterprets the statements and forecast presented in Kadokawa’s yearly financial presentation. The author conveniently leaves out of their analysis that FY21 sales of existing From titles we’re abnormally boosted by COVID and that a March release for ER only puts a few weeks of Revenue on Kadokawa’s books. ER by Mar22 still likely.
Edit: Incredible point by u/PMc17_ that publishers take the majority of the dollars from initial release. Even if ER releases in FY22 (aka March 2022) Kadokawa won’t see much profit until later. It makes complete sense that they consider profit from ER’s release in this forecast. Nothing to see here hollows.
This dude has seriously misinterpreted Kadokawa’s financial presentation and we need to stop believing every take out there from random shitty clickbait websites. Naturally this bad interpretation is spreading like wildfire so everyone thinks ER is never coming out.
Source: I work in finance for a public company and do quarterly performance analysis. I’ve previously worked literally building quarterly financial reports like the one we are analyzing.
Let’s take a look at Daniel’s claims. Assume FromSoft is releasing Elden Ring end of March 2022.
Claim #1: A YoY drop in revenue from the Gaming segment means that Elden Ring isn’t coming out in FY22 (aka before April 2022).
First, let’s consider how abnormal FY21 was. COVID rocked the world and sent the entire globe indoors. Both Bandai and Kadokawa stated in their Q3 results that after-launch sales of DS and Sekiro in FY21 we’re extremely strong and boosted financials. Naturally this jump in sales will quiet in FY22 as the pandemic slows down.
Considering the financials, naturally YoY Revenue is down when FY21 saw additional unexpected Revenue in a year when no title was released. Same can be said for Operating Profit when Revenue was up in a year when Expenses we’re down (remember no release in FY21) and then will take a hit as Expenses for ER dev increase and Revenue is down (Increased Expenses with lower Revenue = less Operating Profit).
Finally, I know hype for ER is insane but do we really expect 1-2 weeks of sales of one game to overpower an entire pandemic year of 5 titles? All of Froms games sold INCREDIBLY well for all of FY21. Can we really expect ER to sell better in just 2 weeks (assuming end of March release) than every From title in a whole year?
These points are backed up by the forecast slide shared in Daniel’s article. “Decelerated demand for repeating former works.” AKA Kadokawa saw a spike in demand for existing titles in FY21, demand will slow in FY22. That alone explains the reduced forecast.
Claim #2: Kadokawa’s explanation of a lower forecast (“Main reason for setting lower limits in view of the impact of COVID-19” is “delayed development of new works’) means that Elden Ring isn’t releasing in FY22.
While the first claim is a clear misinterpretation of the YoY financials, this is the claim I actually take more issue with. I get that we all go hollow when we hear the word “delay” but this point in the financial slides is making a very narrow statement and we shouldn’t interpret it any more broadly than we have to.
All this bullet is saying is that Kadokawa is telling it’s investors that they expect less revenue from gaming in FY22 than they had in FY21, due to ER being delayed by COVID. No duh. Imagine if the game came out this past March? That’s an entire year of FY22 sales they don’t get to put on their books. Sales for an extremely hype cross-platform game coming off a 2019 GOTY win AND the Most Anticipated game. The sooner ER comes out, the sooner Kadokawa can report that sweet sweet cash.
More realistically, let’s say From originally targeted Mar2021, quickly realized this wasn’t going to happen, and pushed internally to Oct2021. They report this to Kadokawa who can now expect 6 months of glorious ER revenue in FY22. Then….Miyazaki’s ambition and COVID cause the game to push to Mar2022. Kadokawa just went from expecting 6 months of $ in the FY all the way down to only 2 weeks. That’s a huge shift in how much revenue they can expect from the game IN THIS FISCAL.
To wrap up this novel, it’s pretty clear to me that this article is the result of a surface-level understanding of finance and shouldn’t be spread, believed, or acknowledged further. The original take from these slides, ER likely FY22, holds.