Examples of Damage Control in Gaming: What’s Happening at Nippon Ichi Software?

It’s possible that all isn’t well within the walls of Nippon Ichi Software, if recent reports can be believed.

The info came with an update for the Disgaea RPG mobile game, a title originally released on iOS and Google Play in Japan in March, only to be pulled weeks later in April due to being a glitchy and performance mess. It still hasn’t returned to the marketplaces, and users were allowed to return their in-game purchases for refunds. The project has reportedly been a money sink for NIS and development collaborator ForwardWorks, and it’s become bad enough for the former that they can’t afford to pay the development staff working on it, essentially making them volunteers. Japanese site Ha-Navi reported that NIS is selling stock at a reduced price to raise emergency capital so they can pay the employees.

The news shows how dire NIS’ situation is. The developer hasn’t been in the best of shape for a while, as the days of them releasing a steady stream of hits has long passed. All their strategy RPGs for PlayStation 2 sold well, but they’ve been lost in the wilderness since then, outside relying on the Disgaea series. But even that series hasn’t been in the best of shape in recent years, mainly thanks to Japan, where the SRPG genre as a whole lost popularity outside select franchises (especially Fire Emblem).

NIS has tried several experiments in recent years in order to establish potential hits, but several of them have been lower-budget works that haven’t made a large-enough profit to sustain the company, while the bigger hits have been few and far between. The quality of those games being inconsistent made this even worse. Now, they’re feeling the effects.

This isn’t the first time NIS has run into profitability issues, but the news has never been this dire for them. But there’s debate about just how bad their situation is. NIS America Marketing Manager Travis Shrodes mentioned on the company’s Discord that they’re “not going anywhere.” There are multiple ways to read that, though. It could mean that NIS is in trouble but NISA isn’t, which wouldn’t be a surprise given prior murmurs about the latter being more profitable. It could also be weak damage control to deny issues actually happening behind the scenes.

The concern for NIS’ well-being intensified after Wccftech posted a rumor claiming layoffs were happening at the Japanese and American arms, and that both were at risk of scaling back operations. This was only a rumor, but it seemed true given other reports. But Shrodes once again took to Discord to say the claims were “BS and fake,” a humorously redundant retort given how only one of those terms is necessary. Wccftech’s rumors tend to be hit or miss, so it wouldn’t be a surprise if this one is bunk. But it also wouldn’t be a surprise if it was true.

NIS has released several experimental titles in the last several years in the hopes of establishing hit franchises, but only two of them showed non-indie-level sales potential: The Witch and the Hundred Knight and Labyrinth of Refrain: Coven of Dusk, an action RPG and a dungeon crawling RPG, respectively.

The Witch and the Hundred Knight was a hit due to its good promotional cycle in Japan, because it sure wasn’t due to its quality. This took its toll with The Witch and the Hundred Knight 2’s sales, which sold on par with several other games they’ve released. There were also reports that the second game is even worse quality-wise. NIS recently announced a sequel to Labyrinth of Refrain called Labyrinth of Galleria: Coven of Dusk. But despite being initially confirmed for a July 25th release in Japan, the game was delayed at least eight months until spring 2020 so the developers could improve its quality. Whether that’s actually the reason for the delay and that it’s not related to NIS’ recent financial woes remains to be seen, and may never be confirmed unless there’s a leak.

There’s another key question here: Where the heck is Disgaea? The last new game to release in the franchise was Disgaea 5, which arrived in Japan in March 2015 — over four years ago. It’s true that SRPG sales have seen better days in Japan (again, outside key exceptions), but recent games have performed well in western territories. The original PS4 game and especially the Disgaea 5 Complete version on Switch sold well worldwide, indicating that western sales really made them successful. With that, you’d think we would have heard about a follow-up before now, but there’s no indication that it’s in the works.

This is a bad situation for NIS to be in, but hopefully it doesn’t end with their untimely demise. It’s possible they could claw themselves out of their hole by selling stocks and subsequently releasing games that perform well on the market, or if another company is willing to buy them. Keep your fingers crossed.