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Square Enix sees revenue and profit tumble in quiet Q1 for games

Octopath Traveler's successful launch on Switch will make for a happier Q2

Square Enix had a weak first fiscal quarter, with revenue and operating profit declining across console, PC, mobile and MMOs.

In the three-month period ended June 30, 2018, the Japanese publisher earned 45.5 billion in revenue overall, but that was down 20 per cent from Q1 in the last fiscal year. Net profit declined, too, falling 30 per cent year-on-year to 5.9 billion.

The company's video games business was key to the decline, given that it contributes the majority of the company's revenue. The Digital Entertainment division earned 32.4 billion in Q1, down 27 per cent year-on-year, while operating profit plummeted 56 per cent to 6.1 billion.

Square Enix released no new console games in the quarter, but it did spend money advertising its big games due for release this year. As such, the console business actually made an operating loss in Q1, despite "brisk" sales of catalogue titles.

The company's mobile and PC browser titles performed "below expectations", resulting in declining revenue and operating profit in that area, too. The absence of an expansion for Final Fantasy XIV - which it had in Q1 of the prior year - meant that the MMORPG business showed the same downward trend in revenue and operating profit, although ARPU "remained strong."

The second quarter is likely to be more positive for Square Enix, largely thanks to the successful launch of Octopath Traveler for Nintendo Switch. The acclaimed RPG sold one million units after just three weeks on sale.

The company will also launch Shadow of the Tomb Raider before the end of the quarter, on September 14.

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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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