Drecom Earnings for OCT through DEC

Posted 18:17 EST on 04FEB2014 by: indie navi news staff in news » drecom, financials, furubokko heroes, one piece: treasure cruise

January 30th: Drecom held a conference to report its Q3 earnings (OCT through DEC) and to address its financial situation. Drecom reported Q3 sales of one billion 713 million yen (USD 17.13M), up from one billion 681 million yen the previous quarter (JUL through SEP). This is the first quarter-on-quarter rise in sales for Drecom in four financial quarters.

Although Drecom reported an operating loss of 91 million yen (USD 910K), this was a marked improvement from its previous quarter operating loss of 232 million yen (USD 2.32M).

Although Drecom continues to lose users of its browser-based titles, the pace of the drop relaxed in Q3, and growth in Drecom’s smartphone advertising programs helped to compensate. Cost-cutting efforts also contributed toward Drecom’s turnaround.

Drecom’s president Yuuki Naitou also announced Drecom’s involvement in the development of two smartphone titles: JoJo’s Bizarre Adventure: Stardust Shooters and One Piece: Treasure Cruise. Both titles are based on extremely popular franchises, and are expected to draw a large audience.

Drecom released Furubokko Heroes (developed in collaboration with CyberConnect2) on January 27th for iOS and February 3rd for Android. Drecom intends for these three titles to reach the top 10 in sales on the Japan App Store and Google Play Japan.

QoQ comparison of sales and profits

Although Drecom’s Q3 sales and profits are down from those of the same quarter one year prior, they represent Drecom’s first QonQ improvement in a year and exceeded Drecom’s own predictions. Drecom had predicted sales of 1.6 billion yen (USD 16M) and an operating loss of 300 million yen (USD 3M).

Drecom reports it had been more successful than it had predicted it would be in bringing expenses under control, and that its data indicates its losses on browser-based titles have bottomed out and stabilized. Drecom reports it has taken efforts to cater to its remaining core users of its browser-based titles, and that these efforts appear to have been effective.

Drecom’s advertising solutions and technologies aimed at smartphone users have rapidly turned a profit, bringing the advertising solutions segment of Drecom’s business up 90 percent. Q3 sales related to advertising solutions totaled 191 million yen (USD 1.91M), up from 101 million yen (USD 1.01) one quarter prior.

Drecom reports that its “social learning” technologies, utilized in its advertising solutions, had been still been under development in previous quarters and have now begun to mature and contribute toward profit.

Furubokko Heroes

To build anticipation for the release of Furubokko Heroes, Drecom had given pre-registrants the chance to try their luck on a special gacha (random prize dispenser) to receive powerful items to use from the title’s release. The unusual tactic was successful, bringing in 350K pre-registrants in the space of a month, which contributed toward positive buzz for Furubokko Heroes before its release.

Naitou went into the details of the pre-registration campaign. Many titles give users a gacha chance when they download the title. The result has been the phenomenon of the “download marathon”, wherein a user will download a title, cash in his free try at the gacha, and then delete the game from his smartphone and repeat the process until he gets a rare prize.

Rather than try to curb this behavior, Drecom tried a different tactic. Pre-registrants were given five opportunities to win prizes from the gacha. Users who shared the results of their gacha attempts via Twitter automatically received more chances, effectively allowing them to repeat the process as long as they wished. Naitou explains, “This way, the more users tried the gacha, the more viral it went.”

Typically, pre-registration campaigns result in an early surge of registrants followed by a quick and large drop-off. For Furubokko Heroes, the opposite was the case: the more people who registered and sent out tweets, the more new registrants joined. Without spending a single yen on post-release advertising, Furubokko Heroes has already surpassed over 100K downloads. (Furubokko Heroes was released on iOS on the January 27th, and on Android on February 3rd.)

All is not positive, however. After approaching 30th in sales on the 28th, Furubokko Heroes plateaued, dropping below 40th place as of the 30th. Naitou explains: “Their are two approaches to including gacha systems in social games. One approach is to allow users to try their hand at the gacha to get powerful cards for their decks right from the outset. Another approach is to limit the costs involved in putting together a deck, including new cards won through the gacha in users’ decks when they level up. [...] We went with the latter, so we expect that sales will slowly increase as more users level up. [...] We’ll also run promotions to keep players invested.”

Jojo and One Piece

Drecom has teamed up with Bandai Namco to bring titles based on the Jojo’s Bizarre Adventure and One Piece franchises to smartphones.　Naitou was limited in what he could say about both titles, revealing only that Drecom would calculate profits from both titles as net profits (rather than gross), after commissions and fees and revenues shared with Bandai Namco had been factored out.

Naitou stressed that Bandai Namco entrusting Drecom with this franchises was indicative of the strong bond between the two companies.

Smartphone advertising solutions and social learning tech

Naitou goes on to address Drecom’s smartphone advertising solutions. “Apple frequently changes the programming logic by which it calculates download aggregates, and it can be difficult for content providers to keep up. Because rankings are so important to the success of smartphone titles, Drecom has gone to great lengths to address this concern for its own products. Because other companies are wrestling with the same concern, we thought we’d put together advertising solutions based on our own technologies. The response has been quite positive.”

When asked if Drecom has plans to incorporate popular franchises with its social learning technologies, Naitou responds, “We’re getting a lot of requests to work with other companies. There are a lot of companies who are glad to lend out their licenses so long as it’s not for a game.” However, Naitou explains that the technology is still under development, so Drecom will maintain a neutral stance for the immediate future.

Drecom going forward

Naitou also took some time to discuss Drecom’s plans moving forward. “We aren’t factoring Jojo and One Piece into our plans for the current quarter much. We’re largely basing our plans on the titles that have already been released.” Naitou points out that Furubokko Heroes has only just been released, and that the release dates for Jojo and One Piece may change. (Both titles are currently scheduled for a spring release.)

As for advertising expenses: “It depends on how things go. If our applications produce steady growth, we may consider purchasing advertising ahead of time.” Regarding Furubokko Heroes and Drecom’s upcoming releases: “We’re not looking just to reap short-term gains. Our intent is to see all of these titles reach the top 10 [on the App Store and Google Play]. Any advertising expenses will be with the intent of reaping large, long-term gains.”

News source: Social Game Info

One Piece: Treasure Cruise images source: Famitsu.com

Graphs source: Drecom’s official press release

Drecom Shares Rise on Furubokko Heroes Release and One Piece Release Date

Posted 15:32 EST on 27JAN2014 by: indie navi news staff in news » bandai namco, drecom, furubokko heroes, one piece: treasure cruise

Drecom shares reached their maximum allowable single-day gain of 70,000 yen to end trading on the 27th at 375,000 yen per share on the news that its iOS release Furubokko Heroes had surpassed 350,000 pre-registrations, and the announcement of a spring release for the One Piece smartphone title that Drecom is developing jointly with Bandai Namco.

Drecom developed Furubokko Heroes in collaboration with CyberConnect2. Promising simple and satisfying gesture-based controls, Furubokko Heroes was voted to Social Game Info’s list of the top 20 titles to look out for in 2014.

Information that Furubokko Heroes allows players to assemble a team of heroes drawn from all ages and corners of the world to duke it out in what Drecom claims will be a “new genre of RPG” has also piqued the interest of many smartphone gamers, helping the title gather over 350,000 pre-registrations in the space of just over a month. Although specific figures are not yet publicly available, it’s a safe bet that the huge number of pre-registered players will mean a strong start for Furubokko Heroes, released on iOS today.

Drecom’s share price also benefited from the announcement of a spring release for the smartphone title One Piece: Treasure Cruise, which Drecom is developing in collaboration with Bandai Namco.

Treasure Cruise loosely follows the story of the animé version of the popular franchise. Players will assemble their party of pirates (likely starting the game with only Luffy, the leader of the motley crew) and develop their stats in what Bandai Namco is calling a “role playing-type game”. Of note, players are not limited to the usual band of One Piece protagonists; parties can be made up of friends and foes alike (as seen in the character selection screen below).

Different party members will have different abilities and stats suited to their characters, with battles managed through slides, taps, and other gestures.

In another testament to the ongoing popularity of the One Piece franchise, the announcement of a spring release date for Treasure Cruise was accompanied by an improvement in Bandai Namco’s share price, as well. Bandai Namco’s shares went up just over 100 yen to end the day’s trading slightly north of 2,200 yen apiece.

News and images source: Social Game Info [ 1, 2 ] and Famitsu.com