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Square Enix back in the black as a new era dawns

By Matthew Handrahan

Square Enix back in the black as a new era dawns

Wed 06 Nov 2013 9:40am GMT / 4:40am EST / 1:40am PST

All studios will shift focus to mobile and online titles with variable pricing models

Square Enix returned to profitability in the first half of fiscal 2014 as it's new focus on digital and mobile releases started to bear fruit.

For the six-month period ended September 30, 2013, Square Enix earned 61.7 billion ($626 million), up 1 per cent over the prior year. However, net income showed much stronger growth, increasing from a loss of 5.5 billion ($56 million) last year to a profit of 2.6 billion ($26 million).

The bulk of Square Enix's earnings come from its Digital Entertainments business, which covers console, PC and mobile releases. In the first half of fiscal 2014, Digital Entertainments earned 30.6 billion ($310 million) in revenue, essentially flat year-on-year. But net income again showed improvement, rising from a loss last year to a profit of 3.5 billion ($35 million).

In part, this is due to a healthy start for the company's refurbished MMO Final Fantasy XIV: A Realm Reborn, which has gathered 1.45 million players since launching on August 27 - 1.1 million from disc sales, and 350,000 from downloads. According to Square Enix, the game, which uses a monthly subscription model, currently has 600,000 paying users.

In its earnings report, Square Enix stated that Digital Entertainments will now change strategy in two areas: a shift in focus to online games with variable pricing models for its overseas studios, and accelerated production of mobile games for its Japanese studios. This fits with comments made by the company's current president Yosuke Matsuda, who pointed to a future defined by fluid business models, regular content drops and constant customer interaction.

Square Enix expects to make between 140 billion and 150 billion in revenue this fiscal year, the same range as fiscal 2013. However, it expects significant improvement in its net income, up from a loss of 13.7 billion to a profit of between 3.5 and 6 billion.

CORRECTION: This article originally indicated that Square Enix's internal studios would be entirely focused on mobile and online games from now on. We have since received word from Square Enix that these will actually be areas of greater strategic focus, rather than the only projects in development.

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Christophe Danguien games developer

91 101 1.1
So basically, they won't invest into big nice Dragon Quest, Final Fantasy, seiken densetsu solo ? Only mobile games and online...well not sure that's the best decision on the long term at all. Especially since they got their fan base from solo, offline games. But well, I bet they're blaming the bad results of sales (and I am not talking about their insane idea that 3.5M games sold in a couple of weeks isn't enough) on offline solo game not selling any more instead of just realising what they're been doing for 10 years is just s... after s.... games....(of course only my own honest opinion on the matter )

Posted:2 years ago


Adam Campbell Producer, Hopster

1,466 1,566 1.1
I don't think that's completely true Christophe. I doubt Square-Enix created the Luminous Studio engine and FFXV just to focus on online and mobile. That said, those areas are probably the biggest growth sectors for the company.

Posted:2 years ago

What do you reckon digital only means?

Posted:2 years ago


Greg Wilcox Creator, Destroy All Fanboys!

2,610 1,686 0.6
Hmmm... sad news if it means NO physical product on consoles (and horrors, no collector's editions for the hardcore Square Enix fans), but I guess they know what they're doing. We'll see...

Posted:2 years ago


Nuttachai Tipprasert Programmer

79 60 0.8
If they go for online or mobile only that means the end of SQEN for me. If they stop developing FF and DQ I will not bother being their customer anymore.

That being said. The poor sale of recent FF and DQ games doesn't mean solo standalone games are not profitable anymore but it was their stupidity alone to blame. FF XIII is mediocre at best and DQ X online was not the game DQ fans were asking for. If they keep developing TRUE FF and DQ games, they wouldn't have tough times in these past few years. Look at how GTA V and Pokemon X & Y breaking new sale records. Anyone who says there's no future for standalone games is either ignorant or blind.

Posted:2 years ago


Philipp Nassau Student - Business Administration (M. Sc.)

51 19 0.4
It's good news but let's not forget that they first had to go through two years of the disaster that was FF14 1.0 and now delivered a multi platform title on a console which had its successor on the horizon. They'll be hard pressed to keep up with other MMOs in terms of improvements and additions over time if they want to keep it playable on PS3, that (again) doesn't make for long term perspective. Announcing a focus in those areas and then delivering this product doesn't bode too well for SE. I just hope they come back to the strengths of their considerable IP portfolio in time.

Posted:2 years ago


Alfonso Sexto Lead Tester, Ubisoft Germany

1,166 1,297 1.1
So there is the chance that if they do more jRPG they will not get out of Japan, where they still sell a lot. I would not like that. I'm still a big fan of that formerly-great-currently-marginal JRPG consumer base :/

Posted:2 years ago


Christophe Danguien games developer

91 101 1.1
@Adam, well true that would be surprising to have created such an engine for only mobile and online games. But to be fair, looking at how they have been trying to blame poor sales on bad excuses, I wouldn't be surprised they don't use it for proper Solo JRPG games. As Nuttachal Tipprasert said : "The poor sale of recent FF and DQ games doesn't mean solo standalone games are not profitable anymore but it was their stupidity alone to blame". And that's the key-problem here, they're blaming bad sales on others, instead of looking in the mirror and ignoring fans request for years....

Xenoblade sold a lot on Wii (considering it's on Wii), and it's a it doesn't take a Phd to understand what to do with FF and DQ...

Posted:2 years ago


Jim Webb Executive Editor/Community Director, E-mpire Ltd. Co.

2,522 3,225 1.3
Atlus, Level-5 and Monolith Soft have taken over where Square left off.

Square is like Rare. The same company as 15 years ago in name only.

Posted:2 years ago


Steve Goldman Journalist.

81 92 1.1
The company is basically dead

Posted:2 years ago

Bring back the awesome days of FF6

Posted:2 years ago


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