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Square Enix Posts ¥13.7 Billion Loss For FY2013, Financial Report Released

Author:
Matt Gardner
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Square Enix

Square Enix Posts ¥13.7 Billion Loss For FY2013, Financial Report Released

Square Enix have posted their report for the financial year just gone, and as expected, it does not make for happy reading.

Former president Yoichi Wada resigned his position earlier this year in response to the "extraordinary loss" that the company had made.

First, the good news. Square Enix did post an increase in net sales for this financial year, racking up ¥14.7 billion (£94m) for FY2013, up 15.7 per cent from the previous year's ¥12.7 billion.

But company-wide restructuring and spiralling costs have taken their toll. The company’s Digital Entertainment branch, responsible for games, saw a 99.7% decrease in operating income. Square Enix barely broke even, making ¥44 million (£282k) on sales of ¥89 billion. In contrast,  FY2012 saw an operating income of ¥12 billion (£77m) on sales of ¥72 billion (£461m).

The explanation given in the report? Square Enix, much like Nintendo, are falling short in the West.

"During the fiscal year ended March 31, 2013, the Group’s operating income decreased significantly, primarily due to underperformance of major titles for consumer game consoles in North America and Europe."

Later on, the point is expanded upon, and it looks like Square Enix will be refocusing efforts on the PC, mobile, and tablet markets.

"In response to the latest environmental changes in the game industry, the Group has implemented various strategic initiatives such as a change in its development policy, organizational reforms and redesign of some business models," the report reads.

"The business environment surrounding the Group is in the midst of major changes, where smart devices such as smartphone and tablet PCs are spreading rapidly, while the console game markets in North America and Europe are increasingly competitive and oligopolistic."

The last point comes no doubt in partial reference to the demise of a long-standing, large publisher in the form of THQ, and the perception of a shrinking market in the console space. But there are precious few concrete suggestions for the year ahead, and the worry is that next-gen costs are likely to be even higher.

Add a comment10 comments
Late  May. 13, 2013 at 15:47

They're making/publishing some of the best games out there*, and those games are selling bucket-loads. The only way they're under-performing is they're not selling enough to cover their astronomical costs.

They also have a reputation for their games dropping in price very quickly. Whilst we can't say for certain why they do, it's hard to deny, and I suspect it's because they mainly stick to single-player games with limited replay value - so people are blitzing them then selling them, which of course drives prices down. (Hitman Absolution belies that, though.)

That's two nasty problems, to be honest. If they're to cut costs then output quality will almost certainly suffer. And I'm not sure there's an easy fix to their games dropping in price so very fast without alienating a lot of people.

I've said it before, I'll say it again. Square Enix could learn a lot from Bethesda.
Both companies have made a lot of fantastic single-player games in the last few years, and both have largely ignored the multiplayer market - and yet Bethesda appear to be flourishing while Square Enix are posting horrendous losses.
They're definitely missing something. Not sure what that is, personally, but I do know that when I see a Square Enix game I want I will almost always wait approx. six months - because I'm pretty sure it'll be dirt cheap. Perhaps it's because their games are shorter and/or have less replay appeal?


_________________________________________________________

*It's hard to criticise Tomb Raider and Sleeping Dogs - and Final Fantasy is a fantastic series despite falling short of expectations in recent years.

cisfor  May. 13, 2013 at 17:22

I reckon that if Square Enix sort out the Final Fantasy series, they'll make a whole lot more money. The last few years (FFXIII, FFXIII-2 and the obvious FFXIV) have yielded a massive disappointment. If FFXV comes out on the next-gen consoles, and they manage to even come close to the playability of the earlier games (up until FFXII, really) then they'd probably do better...

Zeipher  May. 13, 2013 at 19:18

I've hated every Final Fantasy since FFX. I have no idea why they moved away from turn based battles, and more into the realms of real-time. I loved the fact that I could sit and plan my next move, as well as name my character(s).

I won't be buying another FF game until it goes back to turn based. I do, however, own Hitman, Tomb Raider, Sleeping Dogs and Deus Ex. Guess it's just bad management.

Quietus  May. 13, 2013 at 20:42

Pretty much echoing Zeipher's comment. Players have been barking the mantra (We want Final Fantasy!) for long enough, and if they choose not to listen, then they will have nobody to blame but themselves. Players want a Final Fantasy game in the same style as they used to be. There's an army of us just waiting to lap it up (not to mention HD remakes), but they insist on ignoring us.

Realhoneyman  May. 14, 2013 at 00:42

Pretty much echoing Zeipher's comment. Players have been barking the mantra (We want Final Fantasy!) for long enough, and if they choose not to listen, then they will have nobody to blame but themselves. Players want a Final Fantasy game in the same style as they used to be. There's an army of us just waiting to lap it up (not to mention HD remakes), but they insist on ignoring us.


It's fair enough to want more of the same but you know what happens to companies that stick to that formula? They die on their **** because gamers that cry for 'another just like the last one' get bored quickly and stop supporting the developer due to the titles being too similar.

Perhaps not using FFXIII as an example as the direction that took (i.e straight ahead, press X for hours please) was debatable but be happy that Square Enix were willing to change up such a popular franchise with FFXI/XII.

I see FFXIV got ribbed as that was a buggy mess. Shame as that game's world and characters looked fantastic.

Fingers crossed Square Enix can pull something fantastic out of the bag going forward from here. They need to...

Last edited by Realhoneyman, May. 14, 2013 at 00:45
Quietus  May. 14, 2013 at 10:28

I don't think anybody is asking for a clone - only a game in the same style. Suddenly changing a game that has historically been turn based with random battles to an MMORPG is just daft. It's like changing Street Fighter to a racing game. The game's mechanics can be changed, the levelling system can be changed, and the story and world can be changed (as it always has been), but there are core elements that cause players to become fans, and doing away with them is a bad move.

stevenjameshyde  May. 14, 2013 at 11:23

there are core elements that cause players to become fans, and doing away with them is a bad move

This. Squeenix appear to think that these core elements consist of chocobos and nothing else

Late  May. 14, 2013 at 12:23

Squeenix appear to think that these core elements consist of chocobos and nothing else


You made coffee come out of my nose. Well played sir.
=))

Zeipher  May. 14, 2013 at 21:19

you know what happens to companies that stick to that formula? They die on their **** because gamers that cry for 'another just like the last one' get bored quickly and stop supporting the developer due to the titles being too similar


I thought Call of Duty was one of the biggest selling Franchises of all time.

Realhoneyman  May. 15, 2013 at 00:16

you know what happens to companies that stick to that formula? They die on their **** because gamers that cry for 'another just like the last one' get bored quickly and stop supporting the developer due to the titles being too similar


I thought Call of Duty was one of the biggest selling Franchises of all time.


You're quite right in this respect. I should have been more specific regarding Square Enix. Maybe innovation will help them with generating reasonable revenue. That, and more manageable budgets for future titles.

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