Video game publisher Bandai Namco Holdings Inc is cutting its workforce after cancelling several titles due to lacklustre demand, according to people familiar with the matter.

The Tokyo-based company is taking a traditionally Japanese approach to reducing staff and sending workers to rooms where they are given nothing to do, putting pressure on them to leave voluntarily, said the people, asking not to be named discussing private information. Since April, affiliate Bandai Namco Studios Inc has moved about 200 of its roughly 1,300 employees to such rooms and nearly 100 have resigned, said the people. More are expected to leave in the coming months, they said.

Such oidashi beya, or “expulsion rooms”, are sometimes used by Japanese corporations in a country with some of the world’s strictest labour protection laws. Employees are typically given no work-related tasks but are left with the knowledge that their performance will give managers ammunition to cut severance when they do leave. Many employees use their time in such rooms to look for other jobs.

Bandai Namco said its goal is not to push employees out of the company.

“Our decisions to discontinue games are based on comprehensive assessments of the situation. Some employees may need to wait a certain amount of time before they are assigned their next project, but we do move forward with assignments as new projects emerge,” a representative of Bandai Namco said. “There is no organisation like oidashi beya at Bandai Namco Studios designed to pressure people to leave voluntarily.”

Bandai Namco is a storied name in the games industry, tracing its roots back to the introduction of the Pac-Man arcade title in 1980. Its current games include Dragon Ball and Gundam.

Like its competitors, the company’s now under pressure to cut costs and adjust to a post-pandemic drop in the time users have for games. Smartphone and online games have born the brunt of cooled sentiment, forcing Bandai Namco to overhaul its game title lineup, resulting in ¥21 billion (RM606.72 million) in writedowns in the three quarters to December.

Over the summer, the company further shuttered smartphone game Tales of the Rays and said it would take down big-budget online game Blue Protocol in January. It’s also decided to either cancel or pause development of several games, including ones that feature characters from animes Naruto and One Piece, as well as a project commissioned by Nintendo Co.

Rival Square Enix Holdings Co also cancelled multiple loss-making smartphone titles, while Sony Group Corp pulled the plug on online game Concord just two weeks after its launch.

An anonymous website launched last month alleges that Bandai Namco is using various methods to persuade people to leave. The company is aware of the website, but the information is not accurate, a representative said, declining to elaborate.

Source: The edge markets

Higher profits enjoyed by global banks over the last two years could prove “fleeting,” consultants at McKinsey & Co. warned in their annual state of the industry report, predicting headwinds from lower interest rates and flagging loan demand.

Return on tangible equity across a group of around 1,700 listed deposit takers rose to 11.7% last year, confirming that the past two years were “the best for banking since before the global financial crisis,” according to McKinsey.

The report, whose authors include seven partners from across the firm’s global practice, said under some scenarios recent profitability could only be maintained if banks cut costs at five times their usual annual rate, a tall order for an industry that has struggled to meaningfully boost productivity.

“The improvement in returns could be fleeting,” McKinsey said, describing how its analysis showed ROTE could have been just 8% — or below the cost of capital — in several geographies for the last few years without the backing of higher interest rates. That support is now fading.

The study by the New York-based consultancy reinforces concerns raised by industry analysts about falling profitability as monetary authorities around the world turn their focus away from taming inflation to stimulating economic growth. The US Federal Reserve cut its benchmark rate by half a percentage point in September, its first reduction in more than four years. The European Central Bank and the Bank of England have also started lowering theirs, with more expected in the coming months.

McKinsey said lower interest rates could lead to net interest margins – a key profitability measure that describes the gap between a bank’s cost of funding and its lending – dropping by about 16% by 2030 from 2023. In anticipation, many of the biggest lenders have already started to tighten their belts, including by way of job cuts across the board.

But these cost reductions may not be able to bridge the industrywide profitability gap. To maintain current ROTE in the face of some macro-driven scenarios, the industry would need to reduce its cost per asset by 5% a year, or five times the industry’s historic performance of 1%, McKinsey said.

“Banks are going to have to work a lot harder as they go forward,” said Vik Sohoni, a McKinsey partner based in Chicago.

The consultancy, known as a factory that’s produced some of the high-profile bank chief executive officers including Citigroup Inc.’s Jane Fraser, Lloyds Banking Group Plc’s Charlie Nunn and former Morgan Stanley CEO James Gorman, argues that lenders can “avoid gravity” by following the tried and tested methods of current leaders, including being selective about their markets and embracing wealth management.

The report also showed that banks’ share-price discount to other publicly listed companies widened to 68% last year based on the ratio of price-to-book value of assets. Banks trade at 90% the value of their assets.

“Even though banking is the single largest profit-generating sector in the world, the market is skeptical of long-term value creation and ranks banking dead last among sectors on price-to-book multiples,” McKinsey said.

Pradip Patiath, a McKinsey partner based in Miami, said that banking so far defied the logic that growth in other sectors would fuel growth in the sector financing their activities, partly because finance has not had the same labor productivity gains as other industries.

“There’s no evidence of scale benefit,” Patiath added. “Biggest doesn’t necessarily mean better.”

Banks, particularly those in Europe, also blame post-crisis regulation for the discount. The landscape there is shifting, with policymakers in the US and UK watering down the latest package of reforms, and the EU’s three biggest economies calling for an easing of rules more generally.

Source: The edge markets

Brazil’s Petrobras plans to extract every last drop of oil from existing oil fields, Bloomberg has reported, while also searching for fresh deposits to avoid a decline in output in the next decade.

As part of these plans, Petrobras will seek to revitalize production from aging fields, such as those in the Campos Basin, where recovery rates have declined to just 17% and this “bothers” the company’s management, according to chief executive Magda Chambriard.

The guiding principle for the company would be “all the oil counts”, with the detailed plan for its future production to be made public next month.

The news comes on the heels of a report that Petrobras would spend less capital next year, cutting its capex plan to $17 billion from an earlier target of $21 billion to make it more realistic. The five-year capex plan for 2024-2028, however, remains at 31% higher than the previous five-year period.

Meanwhile, efforts to increase oil and gas production are bearing fruit. Petrobras produced 2.7 million barrels of oil equivalent in the second quarter of the year, which represented a 2.4% increase as the company ramped up production at five platforms and started 12 new wells, of which eight in the Campos Basin and four in the Santos Basin.

The ramp-up follows a 25% drop in Brazilian output earlier this year amid platform maintenance. Now, platforms are returning from maintenance and producing more oil. Earlier-than-expected starts to some projects are also set to help Brazil recover its oil output later this year, and production could exceed forecasts.

For next year, the International Energy Agency has forecast that Brazilian oil production would go up by 190,000 barrels daily. With Petrobras accounting for as much as 90% of that total, that increase will fall to its platforms. Yet the company is adding production capacity of a lot more than 190,000 bpd right now: by the end of the year it would add three new floating production and storage vessels with a combined production capacity of over 500,000 barrels daily.

Source: OILPRICE

Source: Burhan Khadbai