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Square-Enix financials: ¥5.7b loss amid ‘increasingly difficult’ console market

Tuesday, 5th February 2013 09:25 GMT By Dave Cook

Square-Enix had a strong run of IP last year, but its latest financial report makes for uneasy reading. The Japanese firm has published a loss of ¥5.7 billion for the nine-month period ended December 31st 2012, and cites the increasingly difficult console market as a key factor.

Square Enix in Q3

Year-on-year profits are up ¥5 billion for the nine-year period ended December 31st 2012.

The company’s financial project for the end of year is ¥3.5 billion, which is down 42.2% year-on-year. The company is still banking on big sales of Tomb Raider.

Game sales were positive for the period, up ¥95.7 billion to ¥102.7 billion.

Square-Enix cites, “the increasingly difficult condition of the world-wide console game market” as a key issue in its financial report.

It’s an about-face for the company, which posted a ¥5 billion profit year-on-year for the previous period, begging questions about the console market’s volatility in the run-up to next-gen formats.

Although profits were down, game sales were up from ¥95.7 billion to ¥102.7 billion, in a year that saw Hitman: Absolution, Final Fantasy XIII-2 and Sleeping Dogs go to market. It also published Call of Duty: Black Ops 2 in Japan, to no avail.

The company still has high hopes for its year-end financial report – presumably as Tomb Raider has yet to launch – with its net profit projection sitting at ¥3.5 billion, which is a 42.2% year-on-year decrease. Still, black is better than red.

In a statement issued this morning – via GI.biz – Square-Enix discussed its slumping financials:

“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. [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.”

We’ll have more on this report as it comes.

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10 Comments

  1. OmegaSlayer

    All of this happened because they didn’t trust and invested on PS3 brand.
    They had a market share that no one filled.
    Even Koei/Tecmo posted a big income.
    The publishers that made more mistakes this gen are Square-Enix and Capcom because they wanted to appeal too much to the West and “bastardized” their original stuff

    #1 2 years ago
  2. viralshag

    If the console manufacturers hold off on a new gen any longer there won’t be any studios to develop games when they launch.

    Maybe that’s their intention… maybe this is their way of trimming the competition so come launch time, your choice is Sony/MS console with Sony/MS developed games…

    >.>

    <.<

    /Runs for the hills!

    #2 2 years ago
  3. OmegaSlayer

    How many games did the Japanese Square-Enix branch released this gen over 8 years?
    They did terribly.

    #3 2 years ago
  4. chaoszage

    @1

    Agree,Sucks Enix and Crapcom made mistakes during this gen. SE deserves to get loss from what they did.

    #4 2 years ago
  5. Ireland Michael

    @1 Yeah, because only selling to a quarter of the market is totally going to help bolster the company’s income.

    I swear… people… *head wall*

    #5 2 years ago
  6. Mike W

    @2

    Damn you may be right :(

    I don’t think we’re going to see any new ips. We’re going to see a lot remakes and reboots of some titles that are not even that old yet.

    Why you ask? Because it’s a tough an economy and also, these third party developers are just entirely to greedy nowadays. They just want to make an ‘AAA’ title and make 55 damn sequels off that.

    #6 2 years ago
  7. Clupula

    Gee, Squeenix, maybe if you actually put out something besides Eidos games and Final Fantasy XIV, you’d make a profit. You have about 50 Japanese franchises that people would go crazy to see over here, PLUS, there’s that whole Versus XIII thing, remember that? And yet, you’re still sinking money into a PS3 MMORPG that no one on PS3 is going to play and a constant stream of Eidos titles that appeal to the PC crowd more than the console one.

    #7 2 years ago
  8. KrazyKraut

    they lie. they just want to have an excuse to sell 15€-games on iOS or Android games.

    #8 2 years ago
  9. salarta

    I’d say the problem is less “volatility of the console market” and more perception of the company and how they treat their IPs.

    Most of their sales and any positive buzz these days seems to come from games from their Western branches and contracts. The games and properties that are uniquely from the main branch seem to have a strange issue where the worst of what they do gets released globally and the best of what they do gets held back to only Japan, with a few exceptions. I’ve seen plenty of hyping up for Bravely Default and Agito XIII, yet those stay over in Japan, while they spread crap like 3rd Birthday to every corner of the world.

    I still think that cleaning house with the things happening at the main branch is what Squeenix needs to do most of all if they want to bounce back. Personally, I think this would mean firing or demoting Toriyama (he’s ruined FFX with FFX-2, he’s ruined Parasite Eve and Aya Brea with 3rd Birthday, and he tried to force things that don’t belong in a Final Fantasy game into FF13, to name a few), and at the minimum making a Parasite Eve 3 that treats Aya right and makes 3rd Birthday entirely noncanon. But, again, as I said, that’s personally. There are probably other ways to go about it, but I think that no matter what, Toriyama is a big part of the problem and he needs to at least be reined in or put on only brand new projects where he can fail without damaging existing IPs in the process.

    #9 2 years ago
  10. Cobra951

    “Although profits were down, game sales were up from ¥95.7 billion to ¥102.7 billion . . .”

    This needs more explanation. It seems to me that going from ¥5 billion in the black to ¥5.7 billion in the red despite an *increase* in sales raises questions about their accounting or business decisions. The “difficult console market” saw them bring in an increase in sales, so it can’t be the cause of the dip into the negative.

    #10 2 years ago

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