Bandai Namco Online has recorded a net loss of ¥8.201 billion yen (approximately $51.57 million USD) for the fiscal year ending in March 2024. This substantial loss has led to the company becoming insolvent due to its accumulating negative net income as per GameBiz.
Bandai Namco Online, established in 2009 is a subsidiary of Bandai Namco Games, specializes in the development and management of online-only games. The company’s current lineup includes titles such as Blue Protocol, IDOLiSH7, Gundam Tribe, and SD Gundam Operation.
Notably, Blue Protocol, a free-to-play MMORPG, was the sole new release during the fiscal year, but its performance fell short of expectations, contributing significantly to the financial downturn acknowledged by Bandai Namco Holdings.
The reasoning behind Blue Protocol’s failures become more obvious when you realize the fact that the game was made as a collaborative effort between Bandai Namco and Amazon Games, who previously butchered the Western localized release for the Lost Ark MMO.
Under the helm of Amazon Games as a publisher, Lost Ark witnessed the most hilarious form of censorship imaginable, countless outfits for female characters had been radically altered so that they show virtually zero skin, with breast size reductions being aplenty for European and North American players.
Amazon, a global icon known for promoting diversity and inclusion, has been criticized for its handling of Lost Ark. The localized Western release of Lost Ark was altered to pander to a more diverse player base, and what way to show “representation” to players of all backgrounds than by imposing superficial race swaps of NPC characters.
Instead of offering genuine and thoughtful representation, Amazon simply applied darker skin tones to various characters without making meaningful design changes, in an apparent effort to achieve diversity and inclusivity.
This is a significant reason why Blue Protocol struggled to gain traction. The reveal trailer underwent notable changes between the Japanese version and the Western reveal at the 2022 Game Awards.
In an effort to appeal to Western audiences, the Western trailer featured characters with diverse ethnicities, which were not present in the Japanese version. However, the “anime art style” often does not resonate with the average Western consumer as they cannot distinguish between fiction and reality, leading them to view characters in this art style as problematic.
Bandai Namco and Amazon racially segregated game trailers by region, seemingly to avoid alienating the Japanese audience by showing them non-White characters. Following its launch, Blue Protocol failed domestically, partly due to censorship for its Sony PlayStation 5 release in Japan.
This included significant changes to costume designs to reveal less skin, alterations to default underwear clothing in the character creation screen, and the removal of jiggle physics.
Blue Protocol has yet to be properly released in Western regions, where it will receive the same levels of censorship if not more. The result of this has driven off the niche Western audience that would have appreciated an “anime” style MMO similar to Genshin Impact. Bandai Namco, once respected, now prioritizes ESG social ethical values over its traditional approach.
Recently, Bandai Namco has faced financial difficulties, as highlighted by their Q3 financial report. The company had canceled five undisclosed game projects, shifting their focus towards “quality” over “quantity” in game production.
It is likely that Blue Protocol had a significant developmental budget allocated towards it as a live service game, which is due to launch in the West, censored, sometime in the fourth quarter of this year. Japanese players on Sony PlayStation consoles will also have to contend with the Western version. The game’s reputation has suffered immensely and seems beyond repair.
Needless to say, Bandai’s Online gaming division has been hemorrhaging funds for awhile, one recent title, Gundam Evolution, a 6v6 competitive hero shooter based on the immensely popular Gundam franchise, was released on September 21, 2022, but was ultimately shut down by its one-year anniversary. Despite the game’s potential, poor management by Bandai led to its downfall.
Gundam Evolution was designed as a team-based competitive title, yet Bandai failed to invest in promoting it as an e-sports contender. Additionally, the game received minimal content updates, which were sporadic and insufficient.
The predatory nature of its monetized season passes, which allowed players to acquire powerful Gundams, effectively turned the game into a pay-to-win scheme. Rather than focusing on regular balance updates and meaningful content additions like new maps and game modes, Bandai prioritized profit by frequently introducing new paid Gundams.
This strategy alienated players and failed to generate enough revenue to sustain the game, leading to its termination on November 29, 2023.
The substantial net losses can be attributed to the increasingly unsustainable nature of modern game development. Games now require more money and time to develop than ever before. Titles like Gundam Evolution and Blue Protocol, two recent online-only live service games, have failed to resonate with audiences both domestically and globally. The revenue from their aggressive microtransactions has been insufficient to recover the massive development costs and maintain expensive game servers.
Bandai Namco’s poor management and censorship practices have contributed to the decline of their online-focused division. As a result, Bandai Namco Online is facing insolvency, a serious financial condition that can lead to bankruptcy, requiring the company to seek legal protection and potentially reorganize or liquidate assets to pay off creditors. Essentially, the company does not have enough cash flow or liquid assets to cover its debts.
However, it’s unlikely that Bandai Namco will shutter its entire live service operation outright. While insolvency is alarming, I’d expect Bandai to respond with staff reductions rather than a complete shutdown. The failures of Gundam Evolution and Blue Protocol will not go unnoticed, but Bandai Namco itself remains in a challenging situation.
For instance, the financial report for Bandai Namco Studios revealed a loss of ¥3.983 billion yen (approximately $25.06 million USD.) This marks the first time Bandai Namco Studios has ever seen a negative annual income since it was founded in 2012.
Bandai Namco Studios, a wholly owned subsidiary of Bandai Namco Entertainment, specializes in planning and developing video games for home consoles, PC, mobile, and arcade systems. Their recent titles include Tekken 8, The Idolmaster Shiny Colors: Song for Prism, and Blue Protocol, a collaborative effort between branches.
While the studio had been consistently profitable in previous years, it reported a negative net income for the fiscal year from April 2023 to March 2024 which is a grim sign indeed.
While their net sales exceeded ¥1,050,210 million yen (6.6 billion USD), up 6.1%, this increase in sales does not necessarily translate to a healthy profit. Their operating income totaled ¥90,682 million yen, or just $570.33 million USD, this marks a 22.1% decline.
Despite the overwhelming success of Elden Ring and Armored Core 6, the video game sector experienced a year-on-year decline. With the release of the Elden Ring DLC: Shadow of the Erdtree, it is anticipated that Bandai Namco’s game sales will improve in the next fiscal period.
Or, if you prefer to live life on the edge and wish for Bandai Namco’s demise, you can withhold your financial support for the one product they have that holds considerable value. I won’t judge.
However, it is doubtful they will return to profitability soon, especially with Blue Protocol expected to fail upon its Western release later in the year.
Bandai Namco has essentially wasted a year trying to bring their latest MMORPG to the West, facing setbacks and delays due to efforts to appease their Western ESG benefactors by imposing censorship on jiggle physics, costume designs, and fanservice.
In marketing, it is crucial to know your audience, but Bandai Namco and others seem out of touch. Game production costs are higher than ever, and they are not seeing sales that justify these expenses outside of FromSoftware. Their entire gaming division is currently a sinking ship, with the online-only segment bearing much of the blame.
If Bandai Namco wants to remain viable, they need to curb excessive spending and return to their roots. Abandoning the Western plague and catering to the core audience of gamers, who largely appreciate fanservice, and are male. Maybe then can Bandai Namco survive the impending video game industry collapse that will likely engulf the company whole.
