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Square financials: Tomb Raider, Hitman & Sleeping Dogs fail to hit sales targets

Tuesday, 26 March 2013 14:22 GMT By Dave Cook

Tomb Raider has sold 3.4 million units in the last four weeks, which is still a failure in the eyes of Square-Enix’s financial report. The company published a grim revision of its expected financials this morning, citing the poor performance of several titles as a key contributor.

I recommend that you check out our first report on Square’s financial revision here, and our report on Square president Yoichi Wada’s resignation as a result. It’ll put the below into context.

Another part of the Square financial report has now surfaced, breaking down sales figures for each of its key releases for across the current financial year. Here’s an excerpt of one presentation slide:

All three games have failed to hit their sales targets so far.

The report continued, “Despite the high critical acclaim, [the games] failed to meet each target. In particular North America sales force as ineffective, ending up with two-thirds of number of units sold in Europe.

“Moreover, price pressure was strong, which forced spending additional channel costs such as price protection.”

Some would say 3.4 million units of Tomb Raider sold in four weeks is good considering the decline in some areas of the triple-a market.

What do you think? Should Square be concerned? Let us know below.

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54 Comments

  1. Erthazus

    3.4 and 3.6 is bad? Then gaming industry is in big trouble.

    #1 2 years ago
  2. larzarus

    What were the particular expectations for each title?

    #2 2 years ago
  3. Jet Black

    3.4 Million in 1 month, surely thats amazing, no!?

    #3 2 years ago
  4. stealth

    when those games dont make as much profit as a game like bravely default its a issue of budget and cost

    the japanese games are keeping this company afloat

    unit sales are irrelevant and dont matter

    budget and cost matter much more to profit

    #4 2 years ago
  5. Jet Black

    Those totals don’t include Digital Downloads either…

    #5 2 years ago
  6. sh4dow

    A damn shame that Sleeping Dogs didn’t sell better. Although close to 2 Mill. doesn’t seem THAT bad to me…

    #6 2 years ago
  7. Jet Black

    Here’s the full PDF: -

    http://www.hd.square-enix.com/eng/news/pdf/130326slides.pdf

    #7 2 years ago
  8. Clupula

    Honestly, none of the three held any interest for me.

    I can’t help but think the Eidos acquisition was a bad idea. I mean, if Eidos was in a position to be purchased in the first place, wouldn’t it stand to reason that relying almost 100% on those games to keep your bigger company afloat was not particular smart?

    #8 2 years ago
  9. Bashtee

    Sleeping Dogs is saleswise a disappointment. I expected way more than that. A real shame. People don’t know what a good game is anymore. Hitman did better, but still not as good as it should. Damn… Really disappointing.

    #9 2 years ago
  10. Clupula

    @9 – I played the demo for Sleeping Dogs, but it just didn’t do anything for me. I found myself more interesting in breaking the legs of random NPCs than doing any of the actual missions.

    #10 2 years ago
  11. Jet Black

    @Clupula

    What else would square have if it wasn’t for Eidos products? Final Fantasy? Dragon Quest? Kingdom Hearts? All of those three sales at retail have tanked lately, Final fantasy is no longer the title it once was…
    Looks like taking Eidos on was a wise decision, I think Square’s forcasts were very unrealistic. Remember Square also owns the “Thief” property too.

    #11 2 years ago
  12. bluemanrule

    Sales expectations were too high for SE. Wada’s departure is due to the underperformance of Japanese-developed games. SE’s western publishing strategy is garnering mindshare to offset the bad moves in FF.

    Wada’s departure comes at the inflection point where SE will turn it all around. His initiatives will propel the company forward in years to come. It’s a shame he will not get the credit he deserves for this. Bad move Square.

    #12 2 years ago
  13. viralshag

    They clearly set themselves unrealistic targets and then set problematic budgets.

    3.4m copies of Tomb Raider sold… how can they say that “failed” considering how competitve games sales are these days?

    #13 2 years ago
  14. G1GAHURTZ

    AFAIK, Sales predictions are usually based on retail estimates, which in turn, are based on sales of competing IPs/general YoY sales, etc.

    Squenix would also have to take sales of their own previous titles into consideration, looking at so-called ‘long tail’ and ‘short tail’ sales performance. By doing this, they can gauge how many they expect to sell, overall, based on initial units sold.

    In short, I don’t think it’s that easy to just assume that they guessed at too high a figure…

    #14 2 years ago
  15. Darth-Bader

    I don’t get it. 3.4 million copies in 4 weeks sounds pretty amazing to me!

    #15 2 years ago
  16. General.Graybush

    3.4 million X $60 = $204,000,000 If development cost were so high that profit levels were not acceptable, then there is an internal management issue at Square Enix. Blue Sky expectations will lead to “poor” financial performance every time. There is no other logical outcome when you set youself up for failure.

    I found Tomb Raider to be one of the best games I’ve had the pleasure to play and will readily recommend it to anyone who enjoys games of that genre.

    #16 2 years ago
  17. Phoenixblight

    @16

    That is the gross sum there are a lot of hands in the cookie jar, retail takes 30% off the top,manufacturing, console manufacturers,etc,etc.

    #17 2 years ago
  18. Mike W

    Yea those seem like good numbers, but apparently they’re not. Something is wrong, most games don’t even sell that much, how the hell is either of those failures?

    #18 2 years ago
  19. Clupula

    @11 – Uh…what Kingdom Hearts console title have they released this gen again? What Dragon Quest console title have they released this gen again?

    And FFXIII was pretty financially successful, even if a lot of people get anal leakage when that game gets mentioned. Even its cheap cash-in sequel was successful for what it was. It’s FFXIV that has been a money sink and from the very moment it was announced, it was seen as a bad idea.

    The lack of profits from their Japanese division comes from THE LACK OF ACTUALLY RELEASING ANY JAPANESE GAMES ON ANYTHING BUT HANDHELDS! It stands to reason that if you don’t sell any of something, you’re not going to make money on it.

    #19 2 years ago
  20. Clupula

    @11 – And “Thief” is another property that will sell about as well as any of these.

    #20 2 years ago
  21. Mike W

    Well I guess TR 2 is a no go.

    #21 2 years ago
  22. zinc

    If these are considered failures, it’s Gamers who are in trouble.

    #22 2 years ago
  23. General.Graybush

    A 30% markup may be a little strong but I don’t have any evidence to counter with. Even so, backing out the retail cut @ 30% leaves you just shy of $143 million, which is leads me back to my original comments. Today’s business models rely to much on the goals of “record” profits for every fiscal quarter. Good solid profits and strong steady growth will build a more solid growth foundation for any business.

    #23 2 years ago
  24. Clupula

    In fact, I’d go so far as to say that Squeenix failed to release its two most anticipated titles for this gen. One was the constantly rumored FFVII remake, which would have sold amazingly and the other was VersusXIII. Both of those titles would have sold better than anything on this list. But one isn’t even a real thing and the other might be being moved to PS4, where it will garner a bit of bad blood by a lot of people who had been anticipating it this gen. All bad decisions by Wada.

    #24 2 years ago
  25. Dragon246

    @19,
    “THE LACK OF ACTUALLY RELEASING ANY JAPANESE GAMES ON ANYTHING BUT HANDHELDS!”
    Completely disagree. They are catering to their Japanese fans who buy most games on handhelds, and most of them are very profitable, like Bravery Default, DQ7 3ds etc.

    Although I am these numbers are good enough (except sleeping dogs). SE is just hiding the fact that their Japanese division is not making money on big console games- FF14 has been a very big money sink, Versus has been on and off again and again. And I am thinking FF13 wasn’t up to snuff in terms of profits also.
    Add to that an entire HD game engine (Cryatal Tools) has been discontinued after just 3 games, another huge money sink.
    Acquiring Eidos is probably the best thing for everyone- Eidos, SE and consumers, the game quality has increased and Japanese pubs generally allow for more experimentation than their western counterparts.

    #25 2 years ago
  26. Moonwalker1982

    Yeah, looking at those numbers you’d say it’s not bad at all. Wtf man. Tomb Raider hasn’t even been out for a month yet.

    #26 2 years ago
  27. Phoenixblight

    @23

    That’s just retail. There are other bills they have to pay not to mention marketing. If I remember correctly publishers only see 5 to 10$ per unit sold. You can see why they want to go digital.

    #27 2 years ago
  28. DrDamn

    @23 and @27
    Note the caveats, and this is a very fairly rough breakdown, but it gives you an idea of the splits and various fingers in the pie …

    http://cdn.unrealitymag.com/wp-content/uploads/2011/04/game-pie.jpg

    #28 2 years ago
  29. Edo

    Da fuq?!Those are pretty good numbers,especially for Tomb Raider considering the time that has passed since it was released…ffs I hope this doesn’t affect the sequel…sigh.

    #29 2 years ago
  30. Blue Oni

    Tomb Raider didn’t sell 3.4 million copies.You are spreading misinformation.

    That was what SE estimated to ship so far but obviously the game failed to reach their goals.

    #30 2 years ago
  31. Edo

    @30 Yep,that makes more sense.

    #31 2 years ago
  32. xxJPRACERxx

    Ok, maybe I’m just dumb but why you people are talking like these number are units sold. The title of the column is EXPECTED number, not actual sale number. On that slide there’s no way to know if the actual units sold were close to their goal. That 3.4 million copies is the expected number. Maybe it just sold 2 millions so far…

    edit: Ok, #30 beat me to it (too many tabs opened at the same time, #28 was the last when I posted) So maybe I’m not dumb after all….

    #32 2 years ago
  33. Richenbaum

    #30 is right. The pic here has been cut out from a larger picture with text explaining how those numbers were sales estimates that didn’t get met.

    #33 2 years ago
  34. Mike W

    @30

    You’re right, I misread the information

    #34 2 years ago
  35. Sini

    The reason why he should have been let go long time ago:
    Final Fantasy Versus…. how many years now LOL
    Final Fantasy 14… LOL
    Final Fantasy Type-0… still not released outside Japan.
    and finally Final Fantasy 13.. even worse than 10/12, which was already downhill from 7/8/9.

    #35 2 years ago
  36. viralshag

    Yep, you are correct and I have to admit I read that completely wrong. Even so, 1.5 million in the first month isn’t too bad. 3.4 million is, to me at least, quite a high expectation for a game that isn’t a big name sequel.

    Let’s face it, if devs and publishers are hoping for strong sales based purely on the merit of the actual game, they’re fooling themselves. Games that are genuinely great do not actually make great sales, I don’t think it’s been that way for a long time in this gen.

    #36 2 years ago
  37. Clupula

    @25 – You are wrong about the XIII numbers. It sold more than all three of the games on this list combined.

    @35 – FFXIII is nowhere near as bad as the flaming bag of shit that XII was. And X is my favorite in the series, with IX slightly behind it.

    #37 2 years ago
  38. salarta

    I would have thought “expected units sold” meant that’s the target amount of money they expected to make from each game, not how much they actually made. If that’s how much they made, I would’ve expected them to leave the “expected” out of the heading. You don’t “expect” what has already happened.

    Even if those are the numbers sold rather than numbers they thought they would sell, I’m not surprised that $3.4 million is considered a loss. The first four weeks is where the bulk of the money comes in until the game gets significantly cheaper.

    Also bear in mind that they splashed the new Tomb Raider’s name and image out the ass on every conceivable surface available. I literally could not go anywhere or do anything without seeing the game promoted. Want to look up information on a movie? Game’s plastered on IMDb. Want to watch TV? The commercial’s on at least once per hour. It was literally inescapable, the only way you could have missed it was if you lived in a cave. They even ran contests on deviantart and all these other places just to further forcefully promote the game. Short of breaking into your home and putting ads on your walls, they did just about everything that could be done to make people notice the new Tomb Raider whether they wanted to or not.

    Think about how many people HAD to see the game’s existence whether they wanted to or not. Now add the budget for marketing the game, which must have been astronomical with everything they did. Suddenly, $3.4 million isn’t quite the amazing number it once was.

    I have to say, I didn’t expect this, but hearing the new Tomb Raider is considered a failure by the company in terms of sales goals actually restores my faith in the future of the industry. After a slew of games that increasingly treated their existing IPs horribly for the sake of forcing ideas that should have been for new IPs onto them, this Tomb Raider was the straw that broke the camel’s back for me. It took everything I ever believed in, every hope I had for the medium, and ripped it to shreds. After so many games that treated their source material exactly the same way, as if the very foundations of the IP were some disgusting freak to be stomped on and purged, the seeming success of the new Tomb Raider had literally destroyed my faith in the future for both video games and fiction in pop culture in general.

    This news changes a lot for me. I feel a lot more uplifted and hopeful, that maybe there is hope after all. This news gives me hope that maybe a silent majority truly does have more respect for existing IPs than critical acclaim suggests, and it gives me hope that people are not just sheep that will eat anything if given the “right spin” and enough marketing. And it just may restore my desire to push for female characters being treated better in games, because there may yet be hope of seeing female characters that are treated as just as capable, just as smart, just as strong and just as brave as male characters. I was ready to give up on an issue that started with FFX-2 and reached a fever pitch for me with 3rd Birthday, because what I saw told me that people prefer disrespecting existing IPs and characters, especially female ones, over treating them respectfully.

    Maybe there really is a chance at seeing women treated like equals to men in games, not like fragile inferior creatures. Maybe one day I’ll be able to play another Aya Brea or Lara Croft game where I can admire the protagonist’s wit, strength and courage just as I would with a male character rather than feel sorry for her, or get a few cheap thrills at her showing lots of skin and making sexual puns.

    I’m not saying anything bad about Rhianna Pratchett; unlike Motomu Toriyama, I actually have some respect for her as a writer. Nor am I saying the general IDEA of the new Tomb Raider was bad; if it was a brand new IP, I might have bought it, played it, and maybe even enjoyed it.

    This will probably get a lot of heated replies, and I understand why, but this is how I feel. I don’t think I’ll reply to any replies that are hostile, because I feel very peaceful and calm in light of this news, and don’t want to fight with anyone. And so ends my tl;dr that I felt like I needed to say.

    #38 2 years ago
  39. Clupula

    @25 – Also, you seem to be completely missing the point of why those games are successful on handhelds. It’s because that’s the only place they are being released. You make the games, people will buy the systems to play them on. They were moved to handhelds because they were cheaper to produce than console systems. However, if Dragon Quest IX or Type O had been console titles, they would have been just as, if not more successful than they had been as handheld titles in Japan.

    #39 2 years ago
  40. Cobra951

    If 1.5 millions sold in a month is no longer enough, the game industry really is in trouble. To depend on 3.4 million sales out of the starting gate is asking for failure. How depressing.

    #40 2 years ago
  41. viralshag

    @40, I think that really is the problem. I think companies set too high standards and expectations for sales figures and in turn their “disappointment”, when relayed to the news outlets, has helped grow this negative reaction you often get from gamers who claim games have flopped, failed, or not been successful.

    This gen, more than any other, has turned into a giant sales-cock waving competition and it feeds gamers need for trivial rivalry, who in turn gobble it up all day long.

    I think it’s safe to say the days of enjoying a game for enjoyments sake and congratulating its successes are gone unless there is a broken sales record thrown in somewhere. I’m surprised half the game industry hasn’t quit out of sheer depression.

    #41 2 years ago
  42. Samoan Spider

    @40/41 Yes, this is it. This is also why games get slated yet sell so well. The hardcore just aren’t the customer any more. But the flipside is that we get games that go down really well, yet don’t sell the numbers and appear a ‘flop’ to the publisher yet a success to everyone else. Odd situation we find ourselves in.

    #42 2 years ago
  43. YoungZer0

    @40,41: Yep and yep.

    Also 1.7 Mil. for Sleeping Dogs is hardly a failure. Considering new franchises usually sell poorly. 1.7 is a fantastic number.

    #43 2 years ago
  44. Gheritt White

    @43: Bear in mind these figures don’t even include digital sales.

    #44 2 years ago
  45. ItsFade

    Looks like Square severely miscalculated then because either they invested far too much money into these projects or they got over ambitious in what they expected to see from the profits.

    Tomb Raider is already a success compared to Tomb Raider: Underworld which sold 2.6 million units over 4 months something the new Tomb Raider did in less than a month with an additional 800,000 units sold.

    Sleeping Dogs is a new IP and 1.75 million units sold in less than a year is decent, nothing too good but again it all depends on how much they spent on developing it.

    Hitman: Blood Money the last Hitman game before Hitman: Absolution sold 2.1 million units lifetime sales, Hitman: Absolution did 3.6 million again in less than 6 months.

    So there are a couple of possibilities here, development costs have increased so drastically that even the best selling game in a long standing franchise isn’t cutting it anymore (Hitman: Absolution), Square Enix has a management problem and keeps funneling too much funds into projects or Square Enix has unreasonable expectations from their games to the point where they depend on these expectations to turn a profit due to squandering funds elsewhere.

    #45 2 years ago
  46. manamana

    Next-gen game developement on new IPs will be interesting. If well known titles like Dead Space and Tomb Raider need to sell around 4-5m to brake even, the AAA game industry is facing big problems.

    #46 2 years ago
  47. Max Payne

    Maybe its problem because Tomb Raider and Hitman were in development for 4 years instead of 2-3 years ?

    #47 2 years ago
  48. Eddie Rodrigues

    Guys, guys, they just want their millionaire profit margin to be extended, what they got is freaking good, greedy bastards

    #48 2 years ago
  49. Dragon246

    @Clupula,
    And FF13 series costed a hell lot more than these 3 games. They built an entire HD engine for it which is now scrap (luminous will be used). I know FF13 was the fastest selling FF early on, but I am sure its not a smash hit (in terms of sales).
    On handhelds, Japanese devs are handheld focused since they sell in Japan, they are very very cheap to develop and have great profit margins (even 150k is profitable). Wada himself said SE isnt expecting big profits from console biz anytime soon, and his successor would take time to change things.
    And Tomb Raider will reach about 4-5 million, same as ff13 but for smaller cost. And Hitman is more than a million above ff13-2.

    #49 2 years ago
  50. Archon

    When you divide those figures between 3 platforms, then Square is right, that is not good.

    It is never good when you tell investors your company is going to make “X” returns and then revise that figure by subtracting 18 million (based on more than just Tomb Raider).

    #50 2 years ago
  51. Clupula

    @49 – I don’t give a fuck what Wada had to say. Listening to him is what put them in this position in the first place. The sooner they flush the toilet on his legacy, the better.

    #51 2 years ago
  52. noamlol2

    there are microtransactions in the new tomb raider so justise was well served

    #52 2 years ago
  53. Dragon246

    @51,
    No I didn’t mean that.But you have to agree that the new person wont be able to change anything within days, it will take a few years.
    I am hoping the change is for he best. Best of luck to them.

    #53 2 years ago
  54. CodenameD

    Great news!

    #54 2 years ago

Comments are now closed on this article.

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