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Single-player IP will cause problems for Square Enix

Veteran analyst Billy Pidgeon says Tomb Raider needs 5 to 10 million sales to be successful

The single-player focus of Square Enix's IP stable has left the company in a difficult position, according to veteran video game analyst Billy Pidgeon.

In a note passed to GamesIndustry International, Pidgeon predicted that that the imminent departure of CEO and president Yoichi Wada will herald positive changes for the company. However, the coming year will be "very tough" for Square Enix, as it waits to see returns on its investments in new markets.

"On the positive side, the company has made investments in online, social and mobile games including free-to-play games," said Pidgeon, an independent analyst who previously worked at Inside Network, M2 Research and IDC. "Many of these, such as the browser based games, won't bring in significant income for a year or more.

"For games with development budgets approaching $100 million to be truly profitable, ratings have to be above 8.5 and sales need to be in the five to ten million unit range"

"Some of these have done well in Korea, which is a very competitive and mature market, but Square Enix's micro-transaction-based role playing and collectible card games haven't performed well in Japan or in the West."

On the console side, the outlook is somewhat ambiguous. Square Enix has strong IP to work with, but making properties like Hitman, Tomb Raider and Thief successful enough in the landscape of modern AAA games is no small task.

"The AAA market is extremely competitive," he said. "Most of Square Enix's franchises are single player games, which are less popular than multiplayer. Square Enix has been a leader in that sector, but now faces stronger competition from multiple publishers, both large and small, including Bethesda, Capcom, Xseed, Atlus and Level 5.

"Square Enix's franchises are well established and require ever-higher production budgets to match and surpass past performance. The latest Hitman and Tomb Raider sold in the three million unit range and got Metacritic ratings above 8. Those numbers would rate as successful for JRPGs that earn more from vendors as exclusives and have manageable budgets.

"But for games with development budgets approaching $100 million to be truly profitable, ratings have to be above 8.5 and sales need to be in the five to ten million unit range."

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Matthew Handrahan avatar

Matthew Handrahan

Editor-in-Chief

Matthew Handrahan joined GamesIndustry in 2011, bringing long-form feature-writing experience to the team as well as a deep understanding of the video game development business. He previously spent more than five years at award-winning magazine gamesTM.

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