Namco Bandai reorganizes, cuts workforce by 10%

Tekken 6 publisher plans to eliminate 630 jobs as nine-month earnings slip 10 percent to $3.13 billion; full-year loss forecast balloons to $343 million.

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Namco Bandai continues to struggle to break out of its downward earnings trajectory. For the nine-month period ending December 31, the publisher reported that sales had slipped to ¥282.8 billion ($3.13 billion), down 10.4 percent from the year-ago period. Having pulled in a ¥9 billion ($99.6 million) profit during the period last year, Namco Bandai posted an ¥11.7 billion ($129 million) net loss for the nine-month period.

Tekken 6 couldn't shoulder all of Namco Bandai's losses.
Tekken 6 couldn't shoulder all of Namco Bandai's losses.

As a result of its worsening financial position, Namco Bandai has announced its "Restart Plan" initiative, a ranging reorganization plan focused on "transforming into a speedy group" as well as bolstering its financial position. As part of the plan, Namco Bandai said it would be eliminating about 630 positions--or 10 percent of its workforce--over the next 12 months through solicitation for early retirement.

The publisher said the move should save ¥3.5 billion ($38.7 million) by the end of its next fiscal year. However, that savings won't be reflected in its current-year results, as Namco Bandai today also lowered its earnings forecast for the 12-month period ending March 31, 2010. Saying it has faced "an uphill battle" thus far this year, the publisher now expects to pull in ¥380 billion ($4.2 billion) during the 12-month period, down from previous projections of ¥400 billion ($4.4 billion).

Namco Bandai also said that it anticipates reporting "extraordinary losses" for its full fiscal year. Having previously predicted a net income of ¥8.5 billion ($94 million), the publisher now expects to post a sizable ¥31 billion ($343 million) net loss.

Namco Bandai attributed the dramatic reversal to a number of factors. Save for Tekken 6, which the publisher announced shipped 2.5 million units initially, Namco Bandai said home software sales "fell below projections given weak market conditions for most of major home game software." Though the publisher didn't provide global sales figures for the fighter, Namco Bandai did say Tekken 6 sold 400,000 units in Japan and Asia.

Other reasons for the shortfall included "sluggish results" from its Visual and Music Content and Amusement Facility businesses as well as losses incurred as part of its headcount-reducing retirement plan.

Along with cutting its workforce, Namco Bandai said that the Restart Plan involves streamlining its operations across its Toys and Hobby, Amusement Facility, and Content groups. For Toys and Hobby, the Japanese company plans to expand its product portfolio, specifically by bringing to market products aimed at young girls and preschoolers. Conversely, the publisher plans to close 10 of its weakest-performing amusement facilities by the end of its next fiscal year.

Namco Bandai also said that it will bifurcate its Content group into Production Group and Publisher Function segments. The Production Group, which focuses on content creation for the game maker, will now emphasize "the respective strengths of multiple smaller organizations rather than being consolidated into a single organization."

As for the Publisher Function, Namco Bandai said it will be "bolstering quality control in Japan to improve development quality at the Worldwide Studio." The Japanese company also said that it would be making a bid to enter the live entertainment business through the creation of Namco Bandai Live Co. The segment will be backed with ¥10 million ($111,000) and will focus on the planning and production of events and live performances.

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