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Square-Enix "struggling to achieve a fair expected return" on console

Group swings to ¥5.7bn loss for 9 months ending Dec 31

Square-Enix has announced a loss of ¥5.7 billion for the nine months ending on December 31, 2012. For the same period a year prior, the company secured profits of just over ¥5 billion. Despite that disparity, sales actually improved over that period, jumping from ¥95.7 billion to ¥102.7 billion.

Whilst the group showed some growth in mobile markets, with the successful launch of socially networked games on both DeNA's Mobage and Gree's mobile platform, the console business has proven less rewarding. Despite the launch of Hitman: Absolution and Sleeping Dogs during the period, and a publishing deal for Black Ops 2 in Japan, the company's report largely glosses over the sector's contribution.

"During the nine-month period ended December 31, 2012, the Company has not recovered the operating loss posted in the six-month period ended September 30, 2012," reads the statement accompanying the figures. "[This is] primarily due to the increasingly difficult condition of the world-wide console game market, under which the Group is struggling to achieve a fair expected return on its investment.

"On the other hand, content for other platforms such as PCs, smartphones and SNS such as 'Sengoku Ixa,' a browser game, and 'Final Fantasy Brigade,' a social networking game for Mobage, are generating an acceptable profit. In addition, newly released game titles, such as 'Kaku-San-Sei Million Arthur,' a social networking game released in April, 2012 serving more than 1 million registered users, have been expanding at a satisfactory pace. Registered users of Final Fantasy Artniks,' a social networking game released in November, 2012 for Gree, exceeded 1 million at the end of December, 2012."

Square's console titles may have generally reviewed well and shown a healthy chart position in the last year, but they've clearly been buried under the success of the aggressive monetisation strategies shown in projects like Final Fantasy Brigade.

A brief mention is also made of increased corporate level expenses, which presumably include some of the costs for the launch of the company's Core-Online game streaming service.

Forecasts for the full year represent a significant drop in year on year income, but maintain a positive balance, with a predicted full-year net income pinned at ¥3.5 billion - a 42.2 per cent drop from the profits for the previous financial year.

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