■Company Overview

1. Company Overview

CRI Middleware ＜3698＞ is mainly a brand called “CRIWARE,” and it carries out licensing business and technical support for middleware* specialized in audio and video. It has strengths in audio/video digital signal processing technology, develops game business and enterprise business, provides middleware, image optimization solutions, etc. in the game business, and handles sound production as a subsidiary, and in particular, voice middleware has a very high market share in the domestic game market. In the enterprise business, we utilize technology cultivated in the game business and are focusing on the mobility field, embedded fields such as home appliances and IoT devices, and the cloud solution field that handles technology related to web videos, still images, etc., among other things. The company was founded with middleware for games, but it has expanded its domain from games to entertainment fields such as game machines, and further into enterprise businesses such as mobility and embedding, and has re-expanded overseas. The plan is to transform the domestic game-dependent business structure over the medium to long term and make games, mobility, and TeleXUS related three pillars, aiming to become a 10 billion yen enterprise in 5 to 10 years.

* Middleware: Software located in the middle (middle) between hardware, OS (operating system), and application software. By suppressing the characteristics of various hardware and OS, application operation and development are carried out smoothly. It has effects such as improving quality, reducing development man-hours, shortening the development period, and reducing development difficulty, etc., and it also makes it easier to deploy applications on various different platforms.

The predecessor was CSK Research Institute's middleware business

2. HISTORY

The predecessor of the company was CSK Research Institute Co., Ltd., which is a subsidiary of CSK Co., Ltd. (currently SCSK ＜9719＞) and was established in 1983 as a software technology research institute. At the beginning of the establishment, research on AI etc. was carried out, but in the process of proceeding with audio/video related research, the relationship with Sega Enterprises Co., Ltd. (currently SEGA Co., Ltd.), which was a group company of CSK at the time, deepened, and they began developing basic software (middleware) and application software (games) for SEGA home game consoles. After that, it became a subsidiary of SEGA, but since SEGA withdrew from the home game console hardware business in 2001/1, it became necessary to develop the middleware business of CSK Research Institute, which is the predecessor of the company, for home game consoles other than SEGA (multi-platform). For this reason, it was decided that the company was established in 2001/8 in a form where the middleware division became independent from CSK Research Institute. Even now, the company's middleware is used in many SEGA games, which own 12.25% of the company's shares, but the management itself is extremely independent, and the number of customers in the game industry such as Square Enix Holdings ＜9684＞ and Bandai Namco Entertainment Co., Ltd. has increased as a multi-platform. In 2011, it expanded outside of the game industry with a sales presentation system for smart devices, and in 2017 it also expanded into mobility with in-vehicle embedded sound middleware, and the number of customers outside of the game industry is rapidly expanding against the backdrop of technical capabilities cultivated in games. Note, as for the overseas business, it expanded into the US in 2006, but the generation of game consoles changed, and it was decided to withdraw once at the timing when overseas titles became larger. However, overseas expansion was resumed in 2019, and the fact that it started in China, where there was a strong need for video middleware, paid off, and it grew steadily, and re-expansion into Europe and the United States is now in view.

There is a lot of room for enterprise growth

3. Industry environment

In the game industry, the boom in smartphone games has calmed down, and a reversal from smartphones to consoles and PCs is occurring. As titles, as large-scale titles have been sluggish one after another for various reasons in recent years, indie titles with small teams have been revitalized. Meanwhile, the era where the domestic game market grew overwhelmingly is over, so of course they target both domestic and large-scale titles as multi-platforms, but they are also setting their sights on indie. For the company, the number of titles to be introduced is more important than the size of the title, so they are also promoting indie development, such as introducing free products*. Outside of the game industry, the mobility sector is growing in particular. Since they use general-purpose microcomputers in terms of price and quality, the company's middleware has a high advantage in terms of procurement risk avoidance, and automobile manufacturers are shifting away from voice ICs. Also, since there are many places where sound is required in a single car, and overseas manufacturers are almost untapped, it seems that there is plenty of room for expansion.

※ Free products: A mechanism to support indie. Charges are incurred when the sales scale or the like becomes above a certain level.

What is seen as a rival in middleware is “Wwise” by Audiokinetic, Inc. in Canada, which specializes in sound, and RAD Game Tools, which specializes in video. Since the game engine “Unity” of American Unity Technologies (Unity Software Inc.) and “Unreal Engine” by Epic Games in the US are game engines that make it easier to create entire games, the company's middleware is often linked when that function is wanted to be further enhanced, and it can be said that they coexist with the company. Also, since RAD Game Tools was acquired by Epic Games, it seems that development for Epic Games has taken center stage. Under such circumstances, the company is said to have the top market share domestically, but there was also a period when it was withdrawn overseas, and it seems that “Wwise” has solidified its foothold in Europe and America. Since the target is so clear, of course, the goal is to seize market share in overseas game markets, but on the other hand, it can also be said that there is room for growth in the enterprise business, which is showing significant expansion worldwide as a market, attractive to the company.

(Written by FISCO Visiting Analyst Miyata Hitomitsu)