Nippon Ichi, Publisher of Disgaea Series, In Financial Strife

Internal news about the business side of game development is pretty rare. The exceptions are for publishers who are listed on a stock exchange. By law, they have to keep a level of openness with the public which means balance sheets, certain strategies and future planning are a matter of public record. This gives those of us who are interested in the details an opportunity to gauge how an industry or business is actually doing versus the hype machines they often build around themselves for their products.

This brings us to Nippon Ichi Software. The Japanese publisher is responsible for a few key series in the West including the Disgaea series (dude), the Uta no Prince-sama series, and worked to publish several hyper-niche titles such as Ys VIII: Lacrimosa of Dana, The 25th Ward: The Silver Case, and Psycho Pass: Mandatory Happiness. The group seemed to be preparing for a major push this year as well until unfortunate news hit from the JASDAQ Stock Exchange that NIS was hoping to raise about ¥573,638,750 (roughly $5.1 Million) if an application for warrant stock was granted through a company called Daiwa Securities. Essentially, they’re hoping to sell a certain amount of stock at cheaper than the current price for a limited time to raise a certain amount of money, quickly.

It is important to note that while this isn’t a sign that the company isn’t going to shut down immediately, it’s not good news for their overall financial health. Selling their corporate stock at a lower price, even for a limited time, undermines the current value and makes it hard for the current stockholders to justifiy holding the stock. It also signals to the markets this is the only way they had to increase their cash on hand; meaning they cannot secure a line of credit or loan from the banks. So, why take such a stark risk? According to both Siliconera and the press release on Gamebiz.jap the bulk of these funds, estimated at ¥369,638,750 (or $3.3 Million), would be for ‘personnel expenses’. Obstensively, that will be for employee salaries for a new IP, as well as back-pay for previous work on older IPs.

So, no one is lighting their heads on fire just yet, but the situation is serious if the company needs to pull this measure to pay their employees. I encourage you all to read Siliconera’s report on the situation as they have several valid ideas as to what has led to this financial shortfall. My own two cents on it at the moment are that NIS hitched their wagon to a dangerous bet in hindsight. A look at their game releases of the past ten years show a heavy push into the Playstation Portable and Playstation Vita. That undoubtedly explains some of their woes, although we won’t get a clear picture until August when they give their next quarterly report.

For now, we’ll keep an eye on the situation. We’ll see what they have to say to their stockholders in their next report and how that will affect the company moving forward. JP3: OUT.