CyberAgent revises down FY9/2019 forecast, CEO scapegoats underperformance of Dragalia Lost

[ggx2ac]

You may be familiar with CyGames, they are a subsidiary of CyberAgent.

CyberAgent just had their first quarter results for FY9/2019.

From it, they're already off to a rough start. They have had to revise down their operating profit for the fiscal year:

In the slide above, they talk about a new mobile game that released, they felt it was off to a good start, but by the first quarter it fell below expectations and they've had to wipe off ¥3.39B from their operating profit forecast.

This is how things look for the operating profit for the full year forecast:

Here you can see they're still going to invest 20B yen in something, that will be clarified a little later.

Here, you can see how their game business is doing. Dragalia Lost contributed to the first quarter Sales when other titles declined.

On the other hand, in their game business, the operating profit was low for the first quarter compared to previous years:

This next chart is hard to see, Dragalia Lost launched at the end of September and at its where it's at in this sales ranking is below the purple line for January on the right:

Now to the part about the CEO, credit to Muu for translating this blog entry that comes from the CEO of CyberAgent:

https://ameblo.jp/shibuya/entry-12436315278.html

コストを増やし過ぎていることに気がついたのは、今から半年前、2018年夏頃のことでした。

先行投資中のAbemaTVだけでなく、広告事業もゲーム事業も、さらなる成長の好機とみて、新規事業を立ち上げ、どんどん人を採用し、広告費を増やしと先行投資を膨らませていました。

少なくとも去年の春頃までは、売上がそれ以上に伸びるのでコスト増加分を吸収できていたのですが、コスト増に成長スピードが追いつけなくなってきていたのです。
ブレーキを踏むべきか迷いましたが、期待のゲーム新規大型タイトルを控えていたので、その進捗を見ることにしました。

そして9月末にゲームをリリース、好調なスタートを切ったことから、その約1ヶ月後の決算発表時に300億円の営業利益で見通しをだすことにしました。それが今から３ヶ月前です。
過去にも同様のパターンでゲームの伸びによって全体が潤っていたことから、特定のゲームタイトルに依存し過ぎてしまっていたと反省しています。

11月下旬、ゲームユーザーの増加に対し期待していたほどに課金は伸びないことに気付き、全社的にコスト増にブレーキをかけることにしました。
会社は車と同じで、クリープ現象のようにブレーキを踏んでもしばらくは動いてすぐに止まれないので、結構強めにブレーキを踏んだつもりですが、１Q（10〜12月）はだいぶ出遅れてしまいました。

２Q以降は、コスト構造の見直しの成果が現れて、巡航速度に戻ると思います。
それは上場企業の社長がブログに書くくらいだから、近い将来答え合わせできるでしょう。

It was around summer of 2018 when we realized costs and expenses were balooning.

In addition to Abema TV we boosted funding for games and advertising divisions expecting growth.

Up to last spring sales exceeded rising costs, however cost increases began catching up. I wondered if we should slow down, however we were expecting a new major game release so we held off.

In late September we released the game, and judging by its excellent start we announced a revenue target of 3billion yen. That was 3 months ago. I regret depending too much on specific game title performances, as this has succeeded in the past.

Late November, we realized that revenue was falling short of increased userbase in the game. At this point we put a stop to increased spending in the company overall. A company is like a car, you can't immediately stop after holding down the brakes. We think we hit the brakes pretty hard, but there will be some noticeable effects on 1Q (Oct - December).

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Now, why would such a company put all their hopes on one mobile game? Because they spend a ridiculous amount of money on a TV service called AbemaTV.

This is AbemaTV, surprisingly they've now added an on-demand service. I found it funny because years ago they tried to convince investors that Linear Online TV is the way to go because no one else does it:

So how has AbemaTV worked out for CyberAgent? Not well.

You'll notice when AbemaTV started, where they're losing roughly ¥20B per FY on operating income because it's invested into AbemaTV.

Here's a more in-depth look into their media business:

You can see on the right how much money their media business loses vs how much they earn. The earnings mainly come from blogs, tapple (a dating app) and advertising revenue. Their losses come from investing in AbemaTV.

So as you can see, AbemaTV burning 20 billion yen per year is why the CEO of CyberAgent is scapegoating the underperformance of Dragalia Lost because he can't let the investors see how much money he's losing on a TV service that has barely given any returns.

 

[ILikeFeet]

looks like Dragalia


Lost

 

[Shortiloe]

Maybe releasing the Game in Europe and Canada for example could help. But who am I...

 

[KoolAid]

Funny that this came out the same day a new ad for Dragalia came out.

Maybe releasing the Game in Europe and Canada for example could help. But who I am...

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This

 

[Dark Cloud]

Dragalia hasn't released everywhere though

 

[Zero-ELEC]

looks like Dragalia


Lost

Click to shrink...

Reported

 

[SinCityAssassin]

What do you mean it's not reaching our inordinately high forecast in only five countries.

 

[Eliseo]

I blame them, they have been far too generous with Dragalia.

 

[Kalor]

I blame them, they have been far too generous with Dragalia.

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They're even more generous with Granblue and it's performed well for a long time.

 

[Eliseo]

They're even more generous with Granblue and it's performed well for a long time.

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So what then? can't blame it for just being in a few countries, GBF it's only in Japan nor them been too generous.

 

[KoolAid]

Your op is missing a graphic, btw

 

[Omnicore]

The fact that they still haven't released the game in Canada/Europe is ridiculous and I'm starting to think they're not going to.

 

[Nightengale]

Europe are historically very small markets in terms of spending power for gacha games. Releasing it there won't make a difference.

 

[Omnicore]

I blame them, they have been far too generous with Dragalia.

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I would lean more to the game still being very new that there really aren't any enticing packages worth spending money on for the casual spender. Whales are gonna whale but that only goes so far.

 

[Vena]

So what then? can't blame it for just being in a few countries, GBF it's only in Japan nor them been too generous.

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The game is being scapegoated for its solid performance because the company (and this CEO) is being dragged down by Abema TV and had been forecasting DL as the next coming of Christ in the previous report.

 

[ASaiyan]

Maybe releasing the Game in Europe and Canada for example could help. But who am I...

Click to shrink...

What do you mean it's not reaching our inordinately high forecast in only five countries.

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For real? They gotta get on that, then. Lol.

 

[Muu]

It's unfortunate how DL's been treated. Performance was excellent in the beginning, and for new content I'd argue it's still spectacular. Even including recent releases of established franchises I believe it comes out relatively close to the top, which should be saying something.

 

[Deleted member 17627]

Still seems like it's doing decently, but not amazingly.

As much as I like Dragalia, it's no Granblue. Character designs are less interesting, writing is a lot more boring, the town building aspect can get to be really annoying, events are not as rewarding as the latters, the upgrade system feels really basic. Music in Dragalia is amazing though.

And the gacha system? Terrible. The chances of you getting a new adventurer are so, so slim. Even when the galas happen, they pretty much make it so that you're even more likely to get a wyrmprint than before. At least when Granblue does galas, they make it so there character draw rates are increased over summons.

Wyrmprints really are just the worst, they really feel like they're just added in the gacha to take away your wyrmite. They are the least beneficial to the player in battle in comparison to summons and weapons.

 

[Eliseo]

The game is being scapegoated for its solid performance because the company (and this CEO) is being dragged down by Abema TV and had been forecasting DL as the next coming of Christ in the previous report.

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So the problem its on them and not the game itself, gotcha.

 

[ggx2ac]

Sorry guys, I finished the post now.
It's very stupid to have the post thread button right in front of you on mobile at all times instead of having it hidden considering I have to scroll around to do functions.

 

[Vena]

So the problem its on them and not the game itself, gotcha.

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The game is doing pretty much as best as you could ever hope for a brand new IP, the Japanese performance is excellent.

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NA is whatever but its a generally soft market on Gacha. Even still its in the top 100 to top 50 given the events, but in Japan its in the top 20 to top 10.

 

[delete12345]

Sorry guys, I finished the post now.
It's very stupid to have the post thread button right in front of you on mobile at all times instead of having it hidden considering I have to scroll around to do functions.

Click to shrink...

Send a bug report to one of those Report a bug threads.

 

[Deleted member 9714]

Still seems like it's doing decently, but not amazingly.

As much as I like Dragalia, it's no Granblue. Character designs are less interesting, writing is a lot more boring, the town building aspect can get to be really annoying, events are not as rewarding as the latters, the upgrade system feels really basic. Music in Dragalia is amazing though.

And the gacha system? Terrible. The chances of you getting a new adventurer are so, so slim. Even when the galas happen, they pretty much make it so that you're even more likely to get a wyrmprint than before. At least when Granblue does galas, they make it so there character draw rates are increased over summons.

Wyrmprints really are just the worst, they really feel like they're just added in the gacha to take away your wyrmite. They are the least beneficial to the player in battle in comparison to summons and weapons.

Click to shrink...

Seriously. I poured all my resources into the Gala and didn't get a single 5-star adventurer. They need to fix their system because it feels like prints and dragons only exist to make it more difficult to get adventurers.

It's a fun game though so the most part. They need to make events less-samey.

 

[signal]

abema > flavor of the month gacha games, so blame away, CEO!

 

[Deleted member 36622]

How about releasing the game in Europe?

 

[Eliseo]

They seriously need to do something about the freakin wyrmprints.

 

[Aters]

I don't know what they were expecting, the game has nothing that stands out. They wanted to be the next Granblue or something?

 

[SinCityAssassin]

Wow yikes at the Abema earnings.

 

[BY2K]

Maybe they should release it in Canada, but what do I know...

 

[ggx2ac]

Maybe they should release it in Canada, but what do I know...

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They got 3.39 billion yen less than they expected in operating profit, so that's about $40.8 million Canadian dollars.

That's probably equivalent to a multi-million selling $60 usd video game after gross profit.

 

[Roukira]

I'm still waiting for it to release in Europe so that I can try it out easily.

 

[Deleted member 17627]

Seriously. I poured all my resources into the Gala and didn't get a single 5-star adventurer. They need to fix their system because it feels like prints and dragons only exist to make it more difficult to get adventurers.

It's a fun game though so the most part. They need to make events less-samey.

Click to shrink...

You're absolutely right. As for the events, I think the character based ones are great, but the "build a thing" ones are awful because for all your work, all you get is a five star wyrmprint. The stories in these events have also been worse than the character ones.

I don't know what they were expecting, the game has nothing that stands out. They wanted to be the next Granblue or something?

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With how they've been promoting it and framing it? I'm guessing yeah.

 

[Mare]

Unless my monitor have its colors off, Dragalia is ranking higher than Shadowverse, PC and SQ.
CEO is just BSing it. From a company perspective it will hurt em less to throw a new gatcha game under the bus than admit ABEMA (higher hierarchy project) is eating out their capital

 

[Muu]

Unless my monitor have its colors off, Dragalia is ranking higher than Shadowverse, PC and SQ.
CEO is just BSing it. From a company perspective it will hurt em less to throw a new gatcha game under the bus than admit ABEMA (higher hierarchy project) is eating out their capital

Click to shrink...

CEO is probably toast if he admits to Abema failing. When Abema falls it'll probably take the entire current executive team with it. From 2015-2018 Abema TV alone has resulted in 5billion yen in losses, it's absurd.

 

[Einbroch]

Not surprising, Dragalia Lost has probably the worst desire to pull in any gacha game I've ever played, and boy oh boy do I play a lot of gacha games.

The characters all play the same. They don't even have Live2D portraits, damage art (which I know is controversial, but it shows effort), they all have the same skeleton, it's bad. I pulled a banner 5* in a single ten pull and felt nothing. You know when not even scoring a lucky roll makes you happy that there are some major problems.

Throw in the stupid pity system, wyrmprints being completely useless, and the broken pity system, and yeah, there's no reason to invest money. Such a missed opportunity.

 

[Cantaim]

Just wow at Abema

 

[dark494]

Dragalia has significant problems in its content, quality, design, and business model that has turned off a large portion of its playerbase. They haven't listened to feedback at all and too many bugs too frequently. It's not doing well because it was doomed from the start, no matter how "generous" they appear to be. That generosity is wasted on how much it's designed to screw over the players.

 

[Kouriozan]

I stopped being interested and waiting for it when they showed they clearly don't care about releasing it in Europe.
So much for a Nintendo partnership.

 

[Gun Dog]

I was expecting DL to be worse performing than all their other games from the title, but it's above Dragon Quest, Shadowverse, and Princess Connect.

Dragalia has significant problems in its content, quality, design, and business model that has turned off a large portion of its playerbase. They haven't listened to feedback at all and too many bugs too frequently. It's not doing well because it was doomed from the start, no matter how "generous" they appear to be. That generosity is wasted on how much it's designed to screw over the players.

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?

Besides the way Wyrmprints are in the game, they have definitely been listening to feedback in the game and made changes. Hell, a patch just came out that made Co-Op room creation/finding much better. I do hope changes are in line for Wyrmprints, possibly lessened cost of 10 folds, no pity break on WP's, and an increased % on Dragons/Adventurers over WP's.

 

[Parshias]

The game is doing pretty much as best as you could ever hope for a brand new IP, the Japanese performance is excellent.


NA is whatever but its a generally soft market on Gacha. Even still its in the top 100 to top 50 given the events, but in Japan its in the top 20 to top 10.

Click to shrink...

It goes to show what a bad banner will do to a game. The big drop off on the charts there is because of the latest banner which was pretty mediocre. You'd think Cygames might have learned their lesson after the Wish on the Winds banner was similarly lousy. Let's see if the Kung Fu Panda Dragon can turn things around.

There needs to be a bit of a shake up in content if Cygames wants more people to splash the cash. Right now you can complete a really good chunk of the game's content with a character of each element, (so five) which means once you've got your core group there isn't a hug pull to summon for every new character.

 

[Vash]

Maybe releasing the Game in Europe and Canada for example could help. But who am I...

Click to shrink...

Seriously, why is not available here yet? There's an entire market they haven't even touched yet.

 

[Gun Dog]

It goes to show what a bad banner will do to a game. The big drop off on the charts there is because of the latest banner which was pretty mediocre. You'd think Cygames might have learned their lesson after the Wish on the Winds banner was similarly lousy. Let's see if the Kung Fu Panda Dragon can turn things around.

There needs to be a bit of a shake up in content if Cygames wants more people to splash the cash. Right now you can complete a really good chunk of the game's content with a character of each element, (so five) which means once you've got your core group there isn't a hug pull to summon for every new character.

Click to shrink...

Yeah, pretty much picking and choosing one character per element and "ok" invested characters here and there for team filling, you don't really have as much of incentive to pull anything unless there's a limited banner. I'd pull more if some of good gacha systems are pulled from GBF, so mostly just holding onto my Wyrmite/Dia.

 

[Deleted member 49574]

Make some premium mobile game and i will throw my credit card at the screen

I played Dragalia for a month. the only thing kept me going was the Daoko music.,

Once the initial charming first impression wares off your left with a mindless grind to upgrade for next event *and the cycle keeps going in loop*

 

[ILikeFeet]

after seeing some numbers on how EU and the like spend on mobile games, the whole "releasing it everywhere" isn't gonna make the game do significantly better numbers

 

[Drax]

It goes to show what a bad banner will do to a game. The big drop off on the charts there is because of the latest banner which was pretty mediocre. You'd think Cygames might have learned their lesson after the Wish on the Winds banner was similarly lousy. Let's see if the Kung Fu Panda Dragon can turn things around.

There needs to be a bit of a shake up in content if Cygames wants more people to splash the cash. Right now you can complete a really good chunk of the game's content with a character of each element, (so five) which means once you've got your core group there isn't a hug pull to summon for every new character.

Click to shrink...

I'm not sure if this is true btw, there is a soft cap on dolphining for a month and people hit that cap while chasing after ieyasu and marishiten.

 

[Deleted member 34618]

Pretty much the only thing Dragalia Lost has going for it is the licensed music. There are worse games, obviously, but it's pretty far on the wrong side of the "tons of cash shop-promoting rng grind systems with next to no actual gameplay" spectrum.

 

[Parshias]

I'm not sure if this is true btw, there is a soft cap on dolphining for a month and people hit that cap while chasing after ieyasu and marishiten.

Click to shrink...

Could be that. I just remember seeing the ranking charts have a similar dip back during the Garuda/Louise banner and that was another one that wasn't terribly good power-wise. Even had the same kind of situation with the new 5* adventurer sharing an element and weapon type with an already released 5* character.

 

[Cronogear]

I enjoyed Dragalia at launch, but the extremely low rates for higher adventurers, wyrmprints being borderline worthless, and events all being basically the same two ideas are making it feel a bit dull now.

Music is nice tho.

 

[Vena]

It goes to show what a bad banner will do to a game. The big drop off on the charts there is because of the latest banner which was pretty mediocre. You'd think Cygames might have learned their lesson after the Wish on the Winds banner was similarly lousy. Let's see if the Kung Fu Panda Dragon can turn things around.

There needs to be a bit of a shake up in content if Cygames wants more people to splash the cash. Right now you can complete a really good chunk of the game's content with a character of each element, (so five) which means once you've got your core group there isn't a hug pull to summon for every new character.

Click to shrink...

This banner ran long, Annelie actually did well on its launch and days after but the event ran very long and nothing came after it unlike before with special banners. So I don't think her banner is an issue so much as the gap between her and the raid. It seems they delayed/planned a bit of a window to line up Raid -> Valentines -> Void.

 

[Muu]

Could be that. I just remember seeing the ranking charts have a similar dip back during the Garuda/Louise banner and that was another one that wasn't terribly good power-wise. Even had the same kind of situation with the new 5* adventurer sharing an element and weapon type with an already released 5* character.

Click to shrink...

Like Draxal was saying I believe this is more the result of value pack purchases. The majority of spenders I assume limit themselves to monthly banners, which means that sales should peak on the first banner of the month and then coast from there. Mid month banners are naturally going to be at a disadvantage, which goes to show why even the Fes event (gala) didn't net a huge boost.