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Tomb Raider, Hitman: Absolution & Sleeping Dogs All Under-Performed For Square Enix

Author:
Jonathan Lester
Category:
News
Tags:
Financials, Hitman: Absolution, Sleeping Dogs, Square Enix, Tomb Raider

Tomb Raider, Hitman: Absolution & Sleeping Dogs All Under-Performed For Square Enix

European Sales Higher Than US

This morning we learned that Square Enix president Yoichi Wada resigned following a truly depressing financial forecast for the company. Slow western console game sales were blamed for massive projected losses, and now that more details have come to light, it appears that even Square's biggest success stories haven't been hitting sales targets Stateside.

You can view the full slideshow online, which elaborates on today's forecast in more detail, but slide 9 is worth taking a closer look at. Despite receiving high metascores and charting for several weeks - especially Tomb Raider, easily the fastest-selling game of 2013 thus far - Square Enix' heavy hitters aren't hitting their targets.

“Despite the high critical acclaim, [each game] failed to meet each target," reads the offending slide. "In particular North America sales force was ineffective, ending up with two-thirds of number of units sold in Europe."

Depreciation and price protection has also been hitting Square Enix square in the bottom line. "Moreover, price pressure was strong, which forced spending additional channel costs such as price protection," the slide concludes, though GetsugaTenshoS reminds us that digital sales aren't included.

Tomb Raider, Hitman: Absolution & Sleeping Dogs All Under-Performed For Square Enix

Tomb Raider is currently flying off the shelves, but as far as we can see, the problem simply lies with hopelessly unrealistic targets rather than underperforming games. If becoming the fastest launch of 2013 and shifting 3.4 million units in two weeks isn't hitting expectations, sorry, but there's something wrong with the expectations.

http://www.dealspwn.com/square-enix-president-resigns-extraordinary-loss-projections-134454
Add a comment16 comments
GetsugaTenshoS  Mar. 26, 2013 at 16:00

One or two people on Polygon have been talking about this a little in PDaily, the sales figures don't count digital sales, only retail.

It's getting a bit ridiculous with publishers these days setting unrealistic goals and now, not counting digital distribution towards sales. Tomb Raider is doing very well on steam and from what I'm aware, there's no retail copies available for the PC version in North America.

DivideByZero  Mar. 26, 2013 at 16:09

They expect Hitman to Outsell Tomb Raider?

They don't count digital, in this day and age?

The f***?

nodham  Mar. 26, 2013 at 16:27

Hitman "scored highly", but the reviews of the fans said they took out a lot of the Hitman gameplay, so I didn't buy it. I'm sure many fans followed suit. That's what happens when you jettison four games' worth of fans to chase the coveted 3rd person cover shooting mechanic audience. We read between the lines now, not just the review numbers.

Quietus  Mar. 26, 2013 at 16:43

With Tomb Raider selling like the proverbial hot cakes, it does make you wonder what ridiculous figure they were expecting to shift if they still consider it as underperforming.

googleberry  Mar. 26, 2013 at 16:53

Hypothesis: these games cost a lot of money and resources to make, and the unrealistic targets reflect the sales required to make those ventures profitable.

If a game ships late, the length of the delay is proportional to the additional amount you pay a 100+ development team that cuts into your profit margin. That's got to cause a bigwig to ask: "I'll accept the delay, if you tell me the game will ship x million copies", and some guy at the studio says it will.

I used to work for a big corporate (not in video games mind), and believe it or not, this is exactly the way the annual targets and budgets were developed under stress: sales required to make a venture profitable given costs become the targets, no matter how unrealistic they are.

I think shipping delays are hurting the big companies alot, and the sales figures are taking the heat for poor management and execution (as the responsibility for this aspect sits squarely on the leadership)

Last edited by googleberry, Mar. 26, 2013 at 16:54
DivideByZero  Mar. 26, 2013 at 17:28

Lets not forget the global economy and also just for good measure, throw in that releasing a game late is going to get you better reviews than releasing a game too early that is unplayable.

SimCity, to name one that released in the last couple of weeks.

I was almost tempted with SimCity, but no way am I putting any money down now. Maybe when it's £5 in the Steam sale.

DivideByZero  Mar. 26, 2013 at 17:29

Oh, and for the record, I bought Tomb Raider on day 2 it was out.

Breadster  Mar. 26, 2013 at 17:59

So really it should say "required sales" instead of "expected sales". I don't see how they're not making a profit on Tomb Raider at least. I know AAA games cost a lot but come on. Maybe they've been going overboard with marketing considering things like the live action trailer for Sleeping Dogs and the ridiculously fancy graphics trailers they have for all their games.

googleberry  Mar. 26, 2013 at 18:17

if the required vs. expected sales hypothesis is true, it's definitely not something any large company is going to admit publicly: it would tantamount to declaring the company is run terribly, to the very people who are investing in it!

Also it would be an admission of incompetence by the top management and thus a career limiting move. The only guy I've seen man up is Ninty-man Iwata.

If you can't hit the sales numbers, costs must come down. This might mean we see less in-game CGI as a trend.

Or more DLC.....ugh

Last edited by googleberry, Mar. 26, 2013 at 18:17
Breadster  Mar. 26, 2013 at 18:23

Season passes, locked disc content and bs microtransactions for everyone! Yeaaahh!!

JonLester  Mar. 27, 2013 at 11:31

@googleberry: I fear that you've hit the nail right on the head. Games of this scale have never been more expensive to develop and publish, let alone market, manufacture and ship, and the sales required to recoup those losses are fast becoming outrageous. It's why we're seeing so many smaller indie games with low overheads flourishing while EA and Square get pens thrown at them by their shareholders

It's a shame, but this is going to be a huge problem in the next-gen. The PC-esque hardware will be easier to develop for, but the raw graphical expectations are going to be enormous. AAA publishers will have to keep a tight leash on their budgets moving forwards, while being realistic about how many they can hope to sell.

What effect this will have on the medium (beyond making indie/boutique development even more important and awesome) remains to be seen.

Last edited by JonLester, Mar. 27, 2013 at 11:34
googleberry  Mar. 27, 2013 at 12:26

@JonLester

Gabe Newell has spoken a lot about digital economies built on user-generated content as the next phase for the gaming economy. Totally fascinating:

My take on what he is saying is: 1. Game companies build a base game experience, 2.users create the long term content (modding etc.), 3. Game companies finds a way to monetize this content production, and create economic value from themselves in these self-contained economic systems.

The impact would be that production of game content (and thus revenue and risk) gets distributed around the community, and a middleman like Steam takes a cut. Quality is preserved (as monetisation + competition drives up quality of user content). I think Skyrim, Gary's Mod, Crysis show what the user community is capable of!

Crytek CEO suggests free-to-play is the way forward. Which plays into Gabe's vision. My interpretation here is: "I'll invite as many people to participate in my self-contained economic system (which is the base game experience) and we'll make it a profitable environment through in-game digital content sales."

And around the edges, Indie games continue to work their magic.

It's exciting. I see it as the democratisation of gaming, and erosion of power for the current industry gatekeepers.

An Arab spring of sorts!

Last edited by googleberry, Mar. 27, 2013 at 12:30
Realhoneyman  Mar. 27, 2013 at 12:27

Perhaps a developer should make a quirky title where shareholders throw pens at a stressed game publisher CEO, them becoming increasingly quicker the longer you can dodge them?

Call it Final Stationary III or something along those lines...

Late  Mar. 27, 2013 at 12:29

Moreover, price pressure was strong, which forced spending additional channel costs such as price protection,


They're actively trying to protect prices? Because I definitely don't get that impression.
Square Enix games in recent years have acquired a reputation for prices diving shortly after (or even before) release.

Personally, I've not yet bought Tomb Raider or Hitman Absolution. I fully intend getting the former - I love the Tomb Raider games. But I'm pretty sure it'll be less than £20 within a month or two. Semi-interested in Hitman, but again I'll wait - it'll be cheap as chips soon enough.
Recently bought Sleeping Dogs, and thoroughly enjoyed it. Fantastic game. Best £8 I've spent in a long time. And there's the problem. You ain't gonna get rich making fantastic games and selling them for £8 six months after they're released...

I do feel slightly guilty for playing the waiting game and paying a quarter of a game's value, but it's a fleeting guilt. Realistically, I'm extremely unlikely to pay £35 for a (mainly single player) game if I'm pretty sure I'll be able to get it for £15 if I wait a few months...

googleberry  Mar. 27, 2013 at 12:30

@JonLester
"I'll invite as many people to participate in my self-contained economic system (which is the base game experience) and we'll make it a profitable environment through in-game digital content sales."


http://www.dealspwn.com/american-mcgee-pitching-online-alice-game-ea-134569

case in point!

Realhoneyman  Apr. 4, 2013 at 12:46

Guess this has had a knock-on effect with Yoichi Wada's resignation as CEO of SE Japan and the appointing of a fellow colleague to the top with a firmly strict business approach.

Question is, which franchises will remain and which will we see disappear?

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