Koei Tecmo Holdings reported a sharp decline in first-quarter results, with revenue falling 15.9% to ¥14.8 billion ($96.3 million) for the three months ended June 30. Operating profit plummeted 37.5% to ¥3.57 billion ($23.2 million), while net income dropped 55.5% to ¥6.07 billion ($39.5 million).
The Japanese game publisher attributed the downturn to limited contributions from new releases and increased personnel expenses from aggressive hiring and wage increases. During the quarter, the company launched only one packaged game while two smartphone titles began operation under licensing agreements.
The entertainment business, which represents Koei Tecmo’s core gaming operations, saw revenue decline 18.1% to ¥13.58 billion ($88.3 million). The segment’s operating profit fell 34.9% to ¥3.71 billion ($24.1 million), primarily due to weaker mobile game performance compared to the previous year.
Despite the poor quarterly showing, the company maintains ambitious full-year projections. Management expects to generate ¥92 billion ($598.7 million) in revenue for fiscal 2026, representing 10.6% growth. However, this forecast heavily weights second-half performance, with ¥26 billion ($169.2 million) in operating profit targeted for the latter six months versus just ¥5 billion ($32.5 million) for the first half.
The company expects growth mainly in North America, Europe, and China markets for console and PC games, planning to “strengthen the system for the success of large-scale titles in the global market”. Upcoming releases include “Ninja Gaiden 4” scheduled for October and “Nioh 3” planned for early next year.
The amusement business provided a bright spot, with revenue jumping 39.2% and operating profit surging 586.6% as existing arcade locations performed well and new slot machine development projects began operations.
Koei Tecmo was among the first major Japanese game publishers to report quarterly results, potentially signaling broader industry challenges as the gaming sector faces increased competition and rising development costs.
