Report: Konami Drop AAA Games Despite MGS Success

Our chums at Eurogamer are lending their trusted backing to recent claims that publisher Konami are beating a swift retreat from big budget land for a while, even though everyone and their D-Dog seems to be playing Metal Gear Solid V. Pro Evolution Soccer 2016 is out now and Metal Gear Online is still due for release, but if reports are to be believed everything else is getting dropped like a very expensive hot potato.

The rumours arose from French site Gameblog, which claims both that “all current console projects have been stopped or canceled by the new management” and that worldwide technology director Julien Merceron (lead on MGS’ excellent Fox Engine, also used by PES) has parted company with Konami due to an increased focus on mobile games. No new Metal Gear game is in the pipeline, allegedly, which the reports claim are less to do with MGS lead Hideo Kojima leaving Konami and more to do with money. MGSV is alleged to have cost some $80m, which isn’t as much as some games – especially given how well it turned out – but is nonetheless an eywatering sum, a not insubstantial amount of which would have gone towards MGS’ arguably overblown cutscenes and other frippery.

Wesley at long-time RPS allies Eurogamer writes that “he understands both reports to be true”, which is endorsement enough for me to not go sprinkling quite as much salt on this as I do most rumours. IGN also claim that their sources confirm the rumours.

Not long ago, the Kojima-led Silent Hills was cancelled (though a PC version was never announced), which may well be a reflection of these changes. (Although they did, rather bittersweetly, release a Silent Hills pachinko shortly after the cancellation announcement.)

Konami did publicly acknowledge earlier in the year that mobile would become their “main platform”, so this isn’t an enormous surprise in some ways. It’s also worth nothing that the majority of Konami’s revenue doesn’t come from either home or mobile gaming – the likes of coinslots, Pachinko machines and health and fitness tech make up around half their cash. But mobile seems to be where they’re looking to for the future, even noting back in May that “We hope that our overseas games such as MGSV and Winning Eleven continue to do well, but we are always thinking about how to push our franchises onto mobile there too.”

As a new convert I don’t like the idea that MGS is potentially going away for a long, long time, but I guess everything depends on exactly how well MGSV does over the months to come.

69 Comments

  1. silentdan says:

    While Konami has made some pretty impressive games, it’s widely known to be a horribly broken company. Hostile towards the press, spiteful towards fans, and apparently little better to their own employees, it’s not a company we can count on.

  2. X_kot says:

    #FucKonami

    • Smashbox says:

      Do you say “fuck” every company that makes things you’re not interested in buying?

      • CookPassBabtridge says:

        Its a Jim Sterling related hashtag

      • epeternally says:

        When it’s at the expense of them making the products that one has traditionally bought and enjoyed? Yes, that is generally the reaction that any company would get. We’re not getting upset that Konami is branching out into new domains here, and if that was all that was happening there would be no legitimate room for complaint, but they’re completely abandoning what they’ve become known and respected for. Of course that’s going to draw vitriol from the people who have previously been their loyal customers.

      • ScubaMonster says:

        You mean fuck every company that made good games then dumps them entirely? Yes. Nice try though.

        • Syt says:

          Yeah. Nintendo should also never have stopped making playing cards! And Sega should still make slot machines!

          Sometimes companies change their focus. Whether it’s for better or worse remains to be seen. This could be the move that makes Konami super profitable. Or it could break them. It’s sad to see them leave, but there’s no human right to more Castlevania/Silent Hill/MGS games.

      • brat-sampson says:

        Pretty sure them making other things isn’t the issue. The issue is they still own the rights to beloved franchises such as Silent Hills, MGS and Castlevania and will now happily let this languish so if you were a fan of those games you’re sol. This coming after sticking Microtransactions in MGSV, rushing the game out, treating their employees terribly, abandoning P.T. etc etc etc. Konami are a fucking awful games publisher and that’s all there is to it.

      • X_kot says:

        Wot they said :D

      • Ashrand says:

        I would love to buy MGS5, the fact that i won’t because it means having to give money to Konami is a massive disappointment to me. Lets ignore their treatment of the people that work hard to make them money (i.e here is a job on an assembly line until you leave in disgrace or kill yourself) and move right on to the fact that they really don’t see any benefit to treating their own customers any better and ask youself why you would want to support that.

        Good day and HIT THE LEVER!!

        • Smashbox says:

          Is that a reference to Kojima?

          You do realize he had one of the best jobs in the entire industry for like 2 decades.

          I would kill to have Kojima’s job.

  3. prettychillguy says:

    Although they are definitely missing out on making more games (MGS VI), you have to admire the fact that Konami has a vision and that they are sticking to it regardless of what money they are missing out on. Is it great for gaming as a whole? Probably not. Is it good for Konami’s bottom line? Probably not. Is it consistent and even slightly comforting that there is a vision and end goal for the company? Yeah. I’d say so.

    • Mokinokaro says:

      Gaming (as in AAA and mobile) is a tiny fraction of Konami’s profits nowadays. Killing their costly AAA development isn’t going to really hurt their bottom line at all.

      Konami’s big breadwinners are their line of fitness clubs and gambling machines (which are going to only get more popular as Japan’s relaxing the gambling rules soon.)

      It makes perfect sense for them to be moving out of AAA game development. It’s a dying sector in Japan.

      • Timbrelaine says:

        Patently false. By their own accounting (link to konami.co.jp) their fitness clubs and pachinko business have lost money as often as they’ve made it in recent years; only their American gambling machine and digital entertainment business are consistently profitable. How much of digital entertainment is what is hard to tease out; it includes AAA, mobile development, and a lot of other stuff like yu-gi-oh cards, but they’ve said that most of their profit growth in recent years has been driven by their mobile games, so it makes sense to chase that money.

    • darkath says:

      Their vision and end goal being making more slot machines, pachinkos for casinos and quick cash grab games/app for mobile phones. I have a hard time finding that comforting. Especially when they are killing off one of my favorite series and studio in the process.

      • CptPlanet says:

        They are not killing off the series considering this would be Kojima’s last MGS game.

        • Emeraude says:

          This has been Kojima’s “last Metal Gear game” since MGS2, so people have a hard time believing him.

          • Timbrelaine says:

            Sure, but this time he was basically fired and his studio dissolved. Makes it a bit more believable.

          • aleander says:

            Conductive Cog Robust VI: Vengeful Serpentes.

    • Premium User Badge

      gritz says:

      No, I don’t find that comforting. History is full of terrible ideas that are nonetheless clear and consistent. That doesn’t make them non-terrible.

  4. BooleanBob says:

    My dreams of more Goemon games lie in ruin.

    • Drew says:

      Please, please let them sell that property to someone who’ll give it some love. Goemon’s Great Adventure is still maybe my favorite co-op game of all time.

  5. ChrisGWaine says:

    They might well end up more or less dropping out of Western awareness, even if they have hits in the Japanese mobile market.

  6. ResonanceCascade says:

    Oh well. Game publishers come and go. Also, people should not be shocked that a company known for its gambling machines is run by scumbags. The gambling industry is about as scummy as it gets.

    • darkath says:

      Konami’s old geezer CEO certainly seems like a mafia boss to me.

      • Mokinokaro says:

        He likely is. Konami has very strong Yakuza ties, as does pretty much anything relating to the semi-illegal gambling industry in Japan.

  7. davidgilbert says:

    Sounds like they are focusing on where the low risk / big money is, which in this case is the mobile market.

    • Lord Byte says:

      I’m still wondering when the Mobile gaming bubble will burst. The amount of crap and pure money-sinks on it is staggering, yet nothing like the Atari bubble is happening… Is it because they’re all stuck in a sunk-cost fallacy loop? Stockholm syndrome from the money they’ve sunk in crap?

      Granted there may be some good games on there, but they’re few and far between.

      • vlonk says:

        With brand recognition alone they can push out mediocre mobile titles until their fanbases will to suffer through it runs dry… Think of casting shows in the showbiz in your country and you find the monetization pattern.

      • Xocrates says:

        The average cost of developing a mobile app is around 20.000$. The median amount of money they make is 400$. One of the big games (forgot which) makes 5 million a month and spends 2 million in advertising.

        Pretty much everyone that’s on top of the charts has been there since mobile exploded.

        (for reference, these were all presented at a dev conference I attended last weekend)

        The bubble has either burst long ago or it never will. The reason mobile has so much stuff is because its focus of small games makes it a good place for straight out of college startups to get their feet wet, fail, and move on.

  8. Myrdinn says:

    The real question is ‘what will they do with their IPs’? I’m sure they’ll continue to produce a boatload of franchise related pachinko machines but I’m really hoping they’ll lease the IP’s to other companies to make games.

    Suikoden VI, here we come!

    • vlonk says:

      They won’t do that. No one ever sells their IP and brands unless they are facing bankrupcy. They will drag all their brands onto the mobile space and only if they can turn a safe profit that will under no circumstance tarnish their IPs. That makes further iterations on console or PC rather unlikely.

      • vlonk says:

        *missing: … tarnish their IPs they will consider lending the IP to a third party. And that is often times the story of failed projects because the IP giver leans so heavily into the project. Yager and Gas Powered Games come to mind, also basically everyone that got sucked into the EA vortex lately.

        Edit button RPS :(

        • Myrdinn says:

          While it’s true that they probably will never sell their IP’s directly (at least not their largish ones) I still hope it’s possible they give some companies the opportunity to use their IP’s to make games. A bit like how Bethesda Softworks ‘licensed’ Fallout to Obsidian to make New Vegas. I can’t really think of any other examples though.

          • LogicalDash says:

            Metal Gear Rising: Revengeance. It was developed by Platinum, with Konami’s license.

      • Timbrelaine says:

        This is true, and I wonder why. It seems obvious that the IP isn’t worth as much to them as to companies chasing the AAA/console/desktop market, and the longer they sit on it the less valuable it becomes.

        A lot of great IP dies because its owner would rather write it off in twenty years than admit that they have no plans to make use of it.

  9. vlonk says:

    And since they want to keep their “brands” they hop onto the mobile train and take their IPs like MGS with them. As we all know mobile is THE space to be with immersion and complex, interlocking mechanisms. Pivot out of my sight then Konami. Lets hope some other company picks up the better half of your game designers. Those fine chaps can then once more achieve brilliance under a new flag. flag… Black flaaaag… oh one can dream on Friday afternoons.

  10. MrFinnishDude says:

    They have all gone mad. There’s nothing more to it.

  11. Shuck says:

    But is it a success? That’s reportedly $80 million just for development. An $80M game plus, let’s assume, $40M in marketing costs (but it’s very likely more, quite possibly more than twice that) means they have to sell at least 5 million copies just to break even. AAA games just aren’t a sustainable business for most publishers now. It sadly makes a lot of sense to drop out of it.

    • vorador says:

      Making AAA games is like making AAA movies. You need to invest big to earn big. Sometimes you just break even, sometimes you take losses. And sometimes you hit it out of the park.

      The problem at Konami is that their current CEO believes that they can do as well or better in the freemium mobile market that they did with AAA titles and AAA budgets. And that is a huge mistake IMHO.

      As it has been demonstrated before, the mobile market is an extremely fickle mistress where being successful once doesn’t mean you will be successful again.

      • Shuck says:

        Last I heard, MGS hadn’t even broken even – far from it, in fact. If your flagship IP comes out with a well received game that still gives you a loss measured in tens of millions of dollars, you stop what you’re doing because it’s not going to get better. And this is the larger problem with AAA development now – the budgets have gotten so much bigger but the profits, for the most part, haven’t. There are a tiny number of AAA games that “hit it out of the park” now, but the rest make modest or no profit, which is why so many developers and publishers have gotten out of the business. Most publishers can’t afford to take the kind of loss that comes from a single unsuccessful AAA title now. Hell, some can’t afford the kind of loss that comes with a (seemingly) “successful” AAA title that simply fails to sell the five, six, seven million copies necessary to turn a modest profit (never mind make up for the other, unsuccessful games that collectively lost hundreds of millions of dollars).

        Meanwhile some mobile games make AAA-level profits. Given that they cost a tiny, tiny, tiny fraction of a AAA budget, the risk/reward ratio is much better, even if most mobile games completely fail to take off.

    • ffordesoon says:

      Oh, getting out of AAA totally makes sense from a business perspective. What doesn’t make sense is the vindictive, disrespectful, salt-the-earth-that-nothing-else-may-grow-there way Konami (or, really, Kagemasa Kozuki and his cronies on Konami’s board – I don’t like tarring everyone who works at Konami with the same brush, because there are obviously plenty of good people who still work there) has acted in the process of leaving AAA. And the toxic corporate culture that’s been exposed as that process has occurred suggests to me that they may not be particularly successful outside of videogames either. They certainly won’t be successful in mobile gaming, since creating a mobile hit still requires talent, and Konami seems to feel nothing but contempt for its talent.

      This is all on top of the fact that they’re going about this the wrong way around. I’ve been a diehard fan of Konami games for more or less my entire life, but they’ve let so many of their IPs lie fallow that I find myself struggling to remember the names of their IPs that aren’t Metal Gear, Silent Hill, or Castlevania. I mean, in the composition of this post, it took me an embarrassingly long time to remember Contra and Gradius. I love Contra and Gradius.

      Let’s say I’m a kid with a smartphone. What Konami IPs would I give a shit about at this point? Yu-Gi-Oh, maybe Metal Gear Solid since it’s such a big deal right now. That’s pretty much it. What am I playing now? Puzzle & Dragons if I’m Japanese, Candy Crush and/or Minecraft: Pocket Edition and/or Angry Birds if I’m American… I dunno what the European market’s into, but it ain’t a Konami game. Unless it’s PES, and that’s not really a mobile game.

      Do you see what I’m saying? Like, Konami has a foothold in the mobile market, and a mobile Yu-Gi-Oh game might do pretty well, but a lot of Konami’s success in the mobile space depends on a market that doesn’t give a shit about most of their IPs giving a shit about their IPs. I mean, sure, they could strike gold with a new IP, but I’d argue that it’s next to impossible to do so without motivated talent.

      • Shuck says:

        Well, at this point we don’t know what they’ll do with their IPs if/when they completely leave AAA development. It’s possible they might sell/license them off to someone who will make good use of them. And from what I’ve been reading about the terrible work conditions there, it unfortunately doesn’t sound all that different from other Japanese and Korean game developers. (Better than some, frankly.)

      • ChrisGWaine says:

        If you were Japanese you might be playing Power Pro

    • GunFox says:

      It is a success if you have basic business sense. They have set themselves up with a brand new engine that runs like a champ and gameplay that is easily expanded and fun for a considerable length of time.

      They could have released a few sequels without kojima with just basic mercenary escapades in various locations with a few mechanics here and there and made serious cash with a much smaller upfront cost.

      Asscree certainly ran itself into the ground, but I still thoroughly enjoyed a few of the titles and it was almost undoubtedly a financial success for UbiSoft overall. Konami could have easily done the same here and turned a loss into a huge gain with limited effort.

  12. Auru says:

    Lets hope they actually sell off the IP’s people love.. if they keep them and turn them into vending machines or pachinkos… ugh the sadness.

  13. Timbrelaine says:

    I’ll be contrary. Konami’s fallout with Kojima, which may not be entirely their fault(!), scuttled the future of their largest console/PC franchises regardless of how well MGS V does. Mobile games are already very profitable to them, and have more potential for growth than any of their other business. They would be crazy to do anything else.

  14. Geebs says:

    What’s kind of stupid about this is that the gameplay systems in both MGS and PES are pretty mature by now, and the Fox Engine seems well suited to current hardware – i.e. even if the Konami top brass don’t care any more, they could fart out another MGS which would at least play damn well with minimal effort or expense.

  15. wilynumber13 says:

    I know not much Konami stuff has ever really come out on PC, so it might just not have been something the folks here paid attention to, but this seemed like the pretty obvious conclusion to make at least two years ago, just from looking at the quantity and quality of their output over the past half a decade.

  16. vorador says:

    Absolutely everything in the last half of the year was pointing to this.

    Predictable, but sad nonetheless. Konami has a long and rich gaming story and it’s sad to see it destroying itself like that.

  17. fuggles says:

    Totally misread that, but metal gear vs pro evolution soccer 2016 sounds amazing!

  18. Premium User Badge

    Aerothorn says:

    There’s a silver lining here that I am delighted about: no more Metal Gear.

    And no, I’m not one of those intolerable people who pops up in every thread about the series complaining about its cutscenes – I am, in fact, a proper Metal Gear fanboy. I adore the series, I adore the run it’s had, I adored the finale that was MGS4 and while MGSV definitely tarnishes things a bit on the storytelling front it is otherwise as fantastic a game as everyone says.

    But this series has been going for twenty-eight year. Help me, RPS: can you name another series that’s been going that long, featuring a strong narrative focus and a connected narrative (i.e. not Final Fantasy)?

    Metal Gear is great, but all things must end, and I think Peace Walker/MGSV show it spinning its thematic wheels in regards to WMDs, etc. The best we can hope for is other games take inspiration from its open-world stealth, though given the budget I don’t suspect we’ll see it properly topped for a very long time.

    • kud13 says:

      WarCraft’s been around almost as long.

      • RedWurm says:

        Which explains why it ran out of old story threads a couple of expansions back and the latest expansion was predicated on time travel.

    • Emeraude says:

      I guess it’s nice Sir Pratchett finally stopped with the Discworld, I mean, after 35 years, things were getting a bit stale.

      Seriously, though, issue isn’t about how long it’s been going but whether it manged to remain significant.

  19. Fade2Gray says:

    Isn’t this what Super BunnyHop reported several months ago in his Kojima vs. Konami video?

    • Baines says:

      It has been unofficially known for quite a while.

      The difference I guess is that instead of everyone saying that it looks like Konami is dropping out of the AAA gaming market, now a site has posted that Konami is dropping out of the AAA gaming market (without the “looks like” part.)

  20. CookPassBabtridge says:

    I’m just off to see the aneurysm that Jim Sterling will definitely be having over this right about now

  21. Chaoslord AJ says:

    They made good games in the past but it doesn’t matter if they exist or not at the end of the day.
    There will always be great gaming.
    Sadness is reserved for real tragedies.

  22. Deadly Habit says:

    I hope this isn’t the death of Castlevania…

    • Baines says:

      Has the newest Pachislot game been released yet? It might not be the future you want, but it is the future Konami wants. Maybe they’ll also port the other Castlevania pachislots to mobile, like they apparently did last year for the first one.

      And there is still the Castlevania animated series that is in the works. Castlevania still has years of (non-console, non-PC) like left in it.

  23. koeklimas says:

    I don’t see what they are doing. First they stop a game that went viral on the web: PT. Silent hills would have made a lot of money. Then they kick out arguably one of the best game directors in the world and now they do this.

    Maybe they don’t want to exist?

    • Chaoslord AJ says:

      Honest business is too much of a risk for companies these days. They might misproduce the game and then flop regardless of being viral.
      Producing something of value then selling it doesn’t work anymore -it shows everywhere. Selling a finished polished top-product? Why that’s financial suicide, investors jump off.

      Only way of making money in this society is ads, selling data and investment, note I say make money not earn money.

  24. DanMan says:

    “…except for PES…”

    Whose “2016” installment this year on PC is a PS3 port. AGAIN. Just like last year. Good job, Konami. Well done indeed….

  25. KenTWOu says:

    Judging by several interviews Julien Merceron was their Clint Hocking.