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NIS Issues Securities to Raise Funds, Mainly for Workforce Expenses

NIS Issues Securities to Raise Funds, Mainly for Workforce Expenses - News

by Thomas Froehlicher , posted on 18 May 2019 / 1,540 Views

Nippon Ichi Software has decided to issue new securities in order to collect fresh funds, as reported by Japanese site Game Koryaku Wiki yesterday. Indeed, the precise fact sheet of this financing plan can be found on Nippon Ichi Software's business website.

The company will issue 375,000 new shares in the form of warrants and intends to collect 573 million yen, with Daiwa Securities in charge of the operation. Warrants, as a right to buy stock at a fixed price, are an effective way to raise funds. That said, existing stockholders face stock dilution, which can lead to weaker stock price later on. No doubt Nippon Ichi Software's stock will be closely watched next week and beyond.

Disgaea RPG

What raises questions is the intended use of the cash: 370 million (65%) is dedicated to payroll, 170 million (30%) will be used to pay third party contractors, which leaves only 34 million (5%) for internal investment at Nippon Ichi Software. The plan reveals that the firm will need 1.1 billion yen for workforce in the next three years, so 370 million is a good chunk of that. While the fact sheet says that the funding is aimed at accelerating the development of its IPs in Japan and abroad, Game Koryaku Wiki believes that Nippon Ichi Software's ailing smartphone game business could be the real reason behind the sudden need for financing.
 
Having launched on March 19th, Disgaea RPG for smartphones has undergone a lengthy period of maintenance and the service still hasn't resumed to-date. Nippon Ichi Software has an entire team in Osaka in charge of the smartphone business, which means the company currently has no revenue to cover the development costs in Osaka. Developer Forward Works and Nippon Ichi Software recently urged all players who have paid for microtransactions in Disgaea RPG to contact the costumer support department. The notice says that all play data in the game has had to be reset, which probably calls for some kind of compensation for players who have invested real money in the game.
 
 
For almost a year, Nippon Ichi Software has seen its sales dwindle in Japan, with no title hitting even 10,000 units sold since The Liar Princess and the Blind Prince, which happens to be its last PSVita game on the market. It had sold 22,000 units across Switch, PS4, and PSVita by June 2018. The company's most recent title, Murder Detective Jack the Ripper, sold just 4,000 units in Dengeki's sales ranking three weeks ago. Profits in the recent fiscal term were down 27%. Nippon Ichi Software has also recently delayed Coven and the Labyrinth of Galleria by almost a year, fuelling concerns about its current situation.
 
It's difficult to assess if Nippon Ichi Software is really in financial trouble purely as a result of the decision to raise money; the company may simply be laying down plans to extend the business further globally. Issuing more shares could also be a way to prevent a hostile takeover, as the share price has gone down already. Still, the publisher will have to convince investors if it wants the fund raising drive to succeed, and that might be difficult given the recent weak performance of the Japanese console market and the firm's deadlock in the mobile business. Nippon Ichi Software's next moves should give us further hints on what to expect.

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11 Comments

BraLoD (on 18 May 2019)

Give us Disgaea 6 already. Now with NS support as well as PS4 you should have a good launch to make some money. Just please don't die because of freaking smartphone failures. Disgaea is my favorite video game series ever, I don't want to see it go.


estebxx (on 19 May 2019)

"Disgaea is my favorite video game series ever"

Ufff... *Cries in LOD*


  • +3
Bandorr (on 19 May 2019)

But don't forget the trophies. Do like you did with Disgaea 5 and put an "in person" character that will have all the trophies as the PS4.


  • +1
BraLoD (on 19 May 2019)

Sadly LoD is not a series Esteban D=


  • +2
Machina (on 18 May 2019)

Great article Thomas.


Soren0079 (on 18 May 2019)

This was a really well written article. I do hope that they pull through this as it seemed like they were growing outside of Japan and it'd be a shame for failures in that market to drag the whole company down.


KLAMarine (on 18 May 2019)

Please be okay! Love your games!


Kresnik (on 18 May 2019)

This was a brilliant, well-researched read Ryu!


ThatDreamcastTho (on 20 May 2019)

after Koei Tecmo bought Gust it has been all downhill for NIS.


LivingMetal (on 20 May 2019)

If there has been any company I've strongly supported with their Atelier Limited Editions plus others, it's NIS America. I've been helping all I can.


Ganoncrotch (on 19 May 2019)

Liar princess and the blind prince is a really cool game, very easy to get into and doesn't overstay its welcome.Just picked it up recently on the switch and completed over 8 or so hours, help them raise funds by buying that awesome title. As for their other titles, I mean the remaster of the ps2 disgaea for 50 or 60euro was insane. that wss never goimg to sell well at that price, wss a wasted effort when it could have been priced better and won over some new fans for their series