Square Enix suffers declining revenue and profits

Yoichi Wada attributes poor financial results to lack of major releases

Square Enix's financial results for the quarter ending June 30 show a significant drop in revenue and profits.

The company posted overall revenue of 24,529 million ($312.4m), down from 32,540 million in the same quarterin 2010, and net profit of 690 million ($87.7m), a 61.9 percent drop from last year's figure of 1,575 million.

In the digital division, which inlcudes the group's game business, revenue was down 29.1 per cent year-on-year to 11,793 million ($150.2m). Operating income declined by 51.9 percent to 2,834 million ($36.1m).

"In a quarter without major title releases, our group's sales and profit were lower compared to the previous fiscal year," said CEO Yoichi Wada. "At the same time, however, we are making solid progress toward our targets for the full fiscal year ending March 2012."

The report highlighted growth in PCs and smartphones, particularly the online portal Nicotto Town and the online simulation game Sengoku Ixa, and expects an earnings recovery, "from next fiscal year ending March 31, 2013 and beyond.

The company's targets for the fiscal year ending March 2012 are 130,000 million ($1.6b) in revenue, a marginal increase on last year's figure of 124,271 million. Net profit is forceast as 5,000 million ($63.6m), versus last year's net loss of 12,043 million.

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Latest comments (12)

Rick Lopez Illustrator, Graphic Designer 6 years ago
No kidding... Start making good games and creating original IP. I mean look what ATLUS did with Catherine. I purchased Final Fantasy 13 and White knight chronicles. They arent bad, but they follow old formulas and have all the anime cliche you could expect from a japanese RPG. Square enix has been making the same games for over 20 years. I think japanese RPGs would benefit from story telling methods of western games such as Mass Effect, FallOut and halflife. Sometimes the stories they come up with are so bizarre or cliche that they are hard to take seriously. And I think technology now a days offers opportunity to tell a story in a differant way and have the gamer interact with it more and actually be more a part of whats going. Unlike a movie i think for a game its important to give a gamer differant ways to interact with characters and enviroments in ways that a gamers actions affect the events and outcome of the story or results of a game. Before we were limited to a Hi-Score, no games can provide much more ways to interact with it.
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BUT - you also want Japanes games to be japanese games. New IP is certainly relevant, so a fine balance betwixt the two is often hard. do you pay too much homage to what has gone before, reinvent the wheel 13 times...its incredibly tough..

perhaps take a leaf from demon souls and make a uber hard final fantasy!
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Kevin Patterson musician 6 years ago
I really Hope DeuxEx: Human revolution is a big seller, I want more games in the series, and it looks excellent.
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Show all comments (12)
Luis Moreno6 years ago
Honestly, I'm glad this is happening to Square Enix, they have been lazy lately and have forgotten what kind of company they are, the whole focus of FFXIII went to make pretty graphics and the gameplay ended up in a "secondary role", it's like they wanted to make a movie rather than a game. And now that rhythm game they're releasing, that's really dissapointing for a "new" IP.

That's just as a developer, though, as a publisher, they've been doing a great job.
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Andrew Goodchild Studying development, Train2Game6 years ago
The profits are down, and Shareholders may not be over the moon about that, although Deus Ex and Tomb Raider both look very promising, but the important thing is they still had a net profit, not a loss, so they are hardly struggling when so many big publishers always seem to post losses.
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Reilly Davis6 years ago
they are getting what they deserve i mean seriously you cant forget your roots and just make pretty games and expect them to sell well you need gameplay and a story thats epic like the other games i got quite bored with ffxiii hopefully they take stock of this loss and up the anti
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Andrew Goodchild Studying development, Train2Game6 years ago
Firstly FFXIII sold well, and was released way before this quarter that we are talking about, so suffice to say these results have nothing to do with FFXIII.
Secondly, $87M may not be stellar, but it is not a loss.
Thirdly, while I can understand frustration of people who don't like the changes to a successful formula, I think shaking up Final Fantasy was a brave move, we constantly hear how people think that big games publishers should shake up there big franchises and not release the same game over and over, but when Square Enix do that, they get a whole load of criticism. I don't think they "deserve" to make a loss based purely on the fact that they are trying to keep things fresh (even if in the case of FFXIII the audience is split as to whether they succeeded in doing that).

It actually seems that Final Fantasy XIV was a lot more responsible for this, which seems more understandable as it seemed like a very cynical and underbaked product from all that I have read about it so far.

Edited 1 times. Last edit by Andrew Goodchild on 7th August 2011 9:48am

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Murray Lorden Game Designer & Developer, MUZBOZ6 years ago
WHATEVER happens, please please please make THIEF IV awesome!

My light.
My hope.
My one true love!

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Alfonso Sexto Lead Tester, Ubisoft Germany6 years ago
Provably the revenue from the distribution of "Deus Ex: HR" will help change next year's results, although it cannot be the only big project. They definitely need a new IP.
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Dominic Jakube Student 6 years ago
Yeah Final Fantasy 14 to blame you can buy it new for 5 quid if you shop around and it's still not in a playable state even squareenix aren't yet charging monthly fee's meanwhile FF11 online is still going strong for a second tier MMORPG at 500k subscribers and still 2 expansions planned.
And all those sequels no one wants kane and lynch, tombraider etc...
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Terence Gage Freelance writer 6 years ago
@ Chee - "perhaps take a leaf from demon souls and make a uber hard final fantasy!"

Actually, I thought that Fortress game which was in development at GRIN looked really interesting - kind of like a mix between Demon's Souls and Monster Hunter. I definitely agree though that they need new IP though, and need to stop pandering to what they think are the West's tastes, and just make good games with plenty of style and character.

I used to be a massive Final Fantasy fan, but these days I feel totally nonchalant over the franchise. I will become interested if they go back to making a swords and sorcery fantasy adventure like FFIX. I don't really like the sci-fi elements the series has increasingly adopted, and I think the turn-based gameplay needs either to be dropped altogether or a complete reinvention. But then, I still think Materia is the pinnacle of FF's combat, so I wouldn't grumble at a return to that system.

EDIT - although I do agree with Andrew's comments that it was brave of them to totally reinvent the series as they did with FFXIII (there was an article on Gamecentral a while back saying much the same). I just don't think it was a change for the better.

Edited 1 times. Last edit by Terence Gage on 8th August 2011 11:15am

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Stefano Ronchi Indie Game Developer 6 years ago
Pretty much what everyone is saying: since Enix and Squaresoft merged I've seen a significant reduction of original IP and instead over-milking of their golden cow -and that golden cow has run dry. FF x-2 this, FF type 32 there, FF origins deluxe remastered elsewhere...releases of old FFs and slight changes on them, while the Dragon Quest franchise fairs a wee bit better.

I used to look forward to releases of FF, but they've stopped injecting that necessary re-imaging of familiar ideas that came with each FF, so I'll steer clear until they get their act together -which I sincerely hope they do.
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