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Square Enix: long development periods are “dishonest” – and unprofitable

Monday, 27 May 2013 06:49 GMT By Brenna Hillier

Following a disappointing FY2013 punctuated by an “extraordinary loss“, Square Enix has announced plans to dramatically alter the way it approaches games development.

“One could go as far as to say that in today’s times, making customers wait for years with little to no information is being dishonest to them. We’re no longer in an age where customers are left in the dark until a product is completed. We need to shift to a businessmodel where we frequently interact with our customers for our products that are in‐development and/or prior to being sold, have our customers understand games under development, and finally make sure we develop games that meet their expectations.”

In a financial briefing session, senior executive managing director Yosuke Matsuda reminded investors that major releases like Sleeping Dogs, Hitman: Absolution and Tomb Raider did not meet sales targets. He said that there were a number of factors which caused the lower than expected sales, but said these occurrences are indicative of a broader trend which the publisher cannot ignore.

“I believe that this situation is not a one‐time event for the fiscal year ended March 2013, but is a structural issue within the packaged product sales model. As a result, I believe it is difficult to guarantee an appropriate return on our investments within the revenue model of purely packaged software,” he said.

“It is important to consider how to change business models in light of rigidity fromthe perspective of pricing, and I believe that the transformation to online titles and the diversification of profit opportunities is the key. While we have stated this before, we intend to pursue this with further intensity going forward.”

Matsuda said the publisher has three major reforms in mind, and the first of these is to back away from its traditional development model, which has developers beavering away at games in secrecy for years before a profit is made.

“Poor asset turnover means that we have little contact with customers during several years of development of a game title,” he added.

“In a model where a game is developed without customers knowing what it’s like for many years, the product is presented to customers only after it has been finished, and all investment is recovered at one time, customers are forced to wait for too long, and opportunities for profit are passed up.

“One could go as far as to say that in today’s times, making customers wait for years with little to no information is being dishonest to them. We’re no longer in an age where customers are left in the dark until a product is completed. We need to shift to a businessmodel where we frequently interact with our customers for our products that are in‐development and/or prior to being sold, have our customers understand games under development, and finally make sure we develop games that meet their expectations.”

Matsuda then cited Kickstarter, Steam Greenlight and Steam Early Access as good examples of the kind of business he means, in that all allow potential customers to get a good idea of a product early on and provide feedback to its creators.

“This is what I would like to realize with respect to long‐term, large‐scale developments. It is not an easy task, but I believe that it has become quite possible under the current environment,” he concluded.

As for the remaining two initiatives, Matsuda said Square Enix will begin producing new, console-quality games for smart devices instead of using them as dumping grounds for ports and social games, and that it will stop trying to develop universally appealing games for a global market – instead focusing on region-specific titles.

The full briefing is fascinating reading – especially if you think of Square Enix as a bit of a lumbering old guard dinosaur. A translated PDF is available.

Thanks, Siliconera.

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27 Comments

  1. machy

    and they need to make the games that ppl are asking for KH3 .. and they r wondering why losses gve us what we want and we gonna buy them

    #1 2 years ago
  2. Clupula

    No Kingdom Hearts 3 until all the other games in the series are on PS3. Which makes sense because the storyline is too convoluted to just give KH3 to those of us who never played Birth by Sleep and 3D.

    #2 2 years ago
  3. POOP CRUSTY

    @1 Exactly.
    Enough with these handheld story fill ins that half of the fanbase will never play. Make them for consoles. You know, the system that got you the sales in the first place.

    #3 2 years ago
  4. Clupula

    @3 – That’s what they’re doing with the 1.5HD and soon the 2.5HD collections.

    #4 2 years ago
  5. Mjorh

    Reduction in development periods ain’t gonna solve no shit! the more u work on the game based on some solid thoughts n innovations , the more successful u are , u can make a game within three years which is a long period n it turns out 2 be the best n vice versa.

    #5 2 years ago
  6. salarta

    I like what Matsuda is proposing here, but they’ve fucked up good IPs one too many times for me to start believing that they’ll listen to consumer feedback and make the changes that actually should be made out of that feedback. I’m thoroughly expecting that the extent of feedback they’ll accept is “what color should this gun be” or “a large chunk of our consumers think this female character needs to get beat up so let’s brutalize her every chance we get.”

    As long as games like 3rd Birthday, FFX-2, FF13 and the recent Tomb Raider keep being made, I’m not holding my breath for having a reason to buy anything they put out.

    #6 2 years ago
  7. redwood

    i would love to have a final fantasy game where they actually engage the fans more. ff’s love for fashion-obsessed youngsters has gone overboard in ff13

    #7 2 years ago
  8. salarta

    @7: Yeah, it became pretty clear that Squeenix lost all sight of what Final Fantasy is following Sakaguchi’s departure with the growing emphasis on flash and looks over actual substance and fitting the franchise’s nature. Final Fantasy games used to tell deep and thoughtful stories based in fantasy (but not purely sci fi fantasy, which was FF13′s approach), but today they’re all about soulless, brainless Hollywood style flair. The last game I know of out of Squeenix that actually has some value and substance to it is Nier, and they only published that.

    #8 2 years ago
  9. Clupula

    @8 – Yeah, because FFVIII wasn’t sci-fi, at all.

    #9 2 years ago
  10. POOP CRUSTY

    @4
    Wrong, kingdom hearts 358/2 days won’t be playable. It’s just the cutscenes and I have a feeling one of the ports will have the same fate. In 2.5HD. I miss it when it used to be Square Soft……

    #10 2 years ago
  11. Clupula

    @10 – When did I say it was playable? Do take the time to read my statement again. It’s okay. I’ll wait. Read it slowly. What did I speak about?

    Oh yeah, the storyline.

    Chances are 3D might end up just cutscenes, as well. But that’s not what matters. What matters is getting the storyline in one place before KH3 comes out.

    #11 2 years ago
  12. POOP CRUSTY

    @11
    Tsk tsk I said in my comment “Enough with these handheld story fill ins which half of the fanbase will never PLAY” Where you replied “That’s what they are doing with 1.5HD and 2.5HD” Oh boy…. Looks like someone missed 2nd grade…..:/

    #12 2 years ago
  13. Clupula

    @12 – Says the guy whose screenname was last funny when I was in 2nd grade.

    #13 2 years ago
  14. Clupula

    Not to mention, dumbass, that I am referencing the comment I made before you even entered the discussion.

    #14 2 years ago
  15. POOP CRUSTY

    You mean the comment that was literally seconds after yours? Check it please. I believe they taught math in second grade. Or were you too busy laughing at my screen name?

    #15 2 years ago
  16. Keivz

    Here’s looking at you, FF vs. XIII.

    #16 2 years ago
  17. SplatteredHouse

    I think another overlooked point against protracted, silent development is that the game is not regularly featured, seen or present in people’s consideration. Like Matsuda says, they don’t get any level of feedback, and the games just go from ‘in development’ to available, and the effect – disconnect – is all the more exasperated by the common move towards shunning demos. I really hope that Versus works out after all this time, and being sidelined.

    #17 2 years ago
  18. oreogod

    MAKE BETTER GAMES. Make the games people want to play. Make the kind of games people are excited about.

    This guy is speaking business sense but forgetting what really makes people want to pick up games in the first place, and the company hasn’t taken responsibility that maybe a lot of their most current product catalog they moved away from making the kind of adventures people want to play though.

    #18 2 years ago
  19. ps3fanboy

    make better games and you get money… make crap and you get none… its that simple.

    #19 2 years ago
  20. Phoenixblight

    “This guy is speaking business sense but forgetting what really makes people want to pick up games in the first place, and the company hasn’t taken responsibility that maybe a lot of their most current product catalog they moved away from making the kind of adventures people want to play though.”

    That is only partly right as Tomb Raider,Sleeping DOgs were in fact good games received high review scores and still didn’t meet expectations. THis guy is absolutely right you can’t keep a game being in development so long because (1) It starts to become irrelevant (2) Cost of development make it increasing difficult to make a profit.

    #20 2 years ago
  21. Cobra951

    @23 (Phoenixblight): Tomb Raider at least sold well. That they considered it a disappointment goes to show how unrealistic their sales goals were. What he’s saying is that they can no longer expect to make 5 years worth of profits on a single game. There is simply not enough consumer money to go around for that. How they address the issue remains to be seen, but I am not hopeful the results will benefit traditional gamers.

    #21 2 years ago
  22. salarta

    @25: Or, Tomb Raider being a sales disappointment goes to show how much insane amounts of money they spent on development and marketing to get that many millions of people to buy it and believe it was a good thing.

    #22 2 years ago
  23. Lord Gremlin

    It doesn’t sit well with what they DO.

    #23 2 years ago
  24. Zohar

    SE needs a creative leading force. Someone with a vision and passion for making really good games. Whether that be another FF, or something new. For the last… 7-8 years they have been working on nothing but FFXIII, re-hashing that over and over despite the fact that it’s one of the worst received in the franchise.

    Well and then there’s the MMO, which bombed so badly they are now in the process of completely re-doing the entire game. Companies bleed money and close their doors after producing a single MMO and failing to return the profit. SE basically made 2 FF XIV MMOs and hopes to gain profit on it? I do wish them good luck.

    What I think is dishonest is placing the blame for your the companies’ financial problems on western devs. Did they think they could just sit back in Japan and throw money away on 10 year development cycles on games that will never come out? Did they honestly think games like Tomb Raider and Hitman would sell 5m copies a piece?

    #24 2 years ago
  25. DLTDawnlight

    Three words Square Enix….NO MORE REMAKES!

    #25 2 years ago
  26. DSB

    @23 That’s kinda backwards.

    You believe the game is bad based on never having played it, and as such that is really just belief. The people who have played it generally think it’s good, and they can base that on the actual experience of the game itself.

    It’s all opinion, of course, but it’s not hard to see which one is the educated one, and which one is based on arbitrary information and conjecture.

    #26 2 years ago
  27. X-Guard

    Personally, I think they wasted money trying to sell FF13 on Xbox. It gimped the game in half and they held back Versus XIII by doing this too. Only 20-30% of sales of FF13 was on 360. I play Xbox for shooter games and not for RPGs unless it’s exclusive.

    The FF13 games didn’t sell well and had decent ratings. Also their lame idea to release many handheld games that nobody in America ever plays besides the hardcore KH fans, and then you have the flopped XIV (which I will try out on PS3), that many beta players said that it was not ready for release but yet they decided to go with it. They fucked up big time, and I would personally blame their past CEO who really has no idea about gaming whatsoever – Yoichi Wada.

    SE needs to stop exercising their ego by feeding us the same FF game nobody really liked and instead force out the games people ask for. I’m sure it’s a hit on their ego to do remakes because they’d have to admit that they fucked up and the games they’ve been making haven’t been good enough.

    #27 2 years ago

Comments are now closed on this article.

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    Nintendo has updated the North American end of the eShop with a Super Smash Bros. update and the StreetPass Mii Plaza games Battleground Z and Ultimate Angler. The update is rather detailed, and a bit larger than normal, and you may wish to pay special attention to the activities listed. Here’s the full update: StreetPass […]

  • Here’s your first look at Sony boss Shuhei Yoshida in Super Time Force Ultra

    Sony Worldwide boss Shuhei Yoshida is a playable character in Super Time Force Ultra, and today, Capy Games has provided a couple images of the man himself in the game. Yoshida was announced as a playable character in the game during Sony’s PlayStation Experience event back in December 2014. The PS4 and Vita version will […]

  • The wait is almost over – The Witcher 3: Wild Hunt has gone gold

    CD Projekt RED has announced the news we’ve all been waiting to hear: The Witcher 3 has gone gold. This means Geralt’s latest, and possibly last, adventure has been sent to the factory to be pressed into lovely gaming discs. “We worked so damn hard over the past three years to bring you this game,” […]

  • Everybody’s Gone to the Rapture is a “couple weeks out from beta,” new trailer

    Everybody’s Gone to the Rapture is just a “couple of weeks out from beta,” according to development studio The Chinese Room, and a release date will be announced “shortly.” To give you an idea of how development has been coming along since it was announced at gamescom 2013, the team has released a new trailer […]

  • GTA 5 on PC looks incredible, but I can’t recommend it to console players

    As much as Matt Martin loves GTA 5, he can’t recommend upgrading from console to PC just for a slick editing suite and even prettier graphics. “This is the third time in as many years that I’ve bought GTA 5.” I have a Grand Theft Auto 5 obsession, as I’m sure you know if you’ve […]

  • The Forest engine updated to Unity 5, major graphical and gameplay improvements made

    The Forest’s latest patch added substantial improvements to the game. The Forest version 0.16 is now live on Steam with plenty of new additions. The game has been ported over to Unity engine version 5. The plant and skin shaders have been replaced or rewritten. Many other visual tweaks have been made, such as model […]

  • Star Wars: Battlefront banner leaks from Star Wars Convention

    EA has been setting up the Battlefront booth at Star Wars Celebration, and one leaked picture shows what could be the game’s main art. Someone on Reddit posted a picture of the game banner at EA’s booth. Here it is: Lots of things happening here. There’s a Star Destroyer in the distance, TIE Fighters and […]

  • Get GTA 5 working with Oculus Rift using this tool

    There’s a way you can play GTA 5 in VR if you own an Oculus Rift Dev Kit and have a bit of cash to spare. VorpX, the go-to program for adding VR support to games has received an update recently to support GTA 5. This is far from perfect, as it only translates the […]

  • FIFA Ultimate Team: week of April 15 team revealed

    This week’s Team of the Week is now available for anyone to challenge in FIFA Ultimate Team. The team members get selected each week based on their performance during the weekend matches. You can fire up FIFA Ultimate Team on any platform and challenge this squad. You’ll also find some Team of the Week items […]

  • Deus Ex: Mankind Divided will let you stealth all encounters, including bosses

    Deus Ex: Mankind Divided will bring back one of the original game’s major features. Deus Ex: Human Revolution is considered by many to be a great game and worthy of bearing the franchise name. One of its grating issues though was its boss fights. You only had one way to fight them: be confrontational. The […]

  • Project Cars PC specs and supported wheels announced

    The release date of Project Cars is inching ever closer and more details have been revealed to answer all your burning questions. Project Cars developer Slightly Mad Studios has revealed the full list of supported steering wheels on all platforms, as well as the minimum and recommended PC specs. Minimum specs CPU – 2.66 GHz […]

  • GTA 5 gets custom FOV mod on PC

    Those not satisfied with GTA 5′s built-in field of view slider can use a new mod to push the number even further. The PC versions of GTA 5 – just like its PS4 and Xbox One counterparts – lets you switch between third and first-person view in shooting and driving. The game has an FOV […]

  • Win! GTA 5 on PC!

    Want to win a Steam key for Grand Theft Auto 5 on PC? Just enter here. GTA 5 released on PC this week and is going down a storm. We like it a lot, which is why we’re giving away a Steam code for Rockstar’s latest. All you need to do is enter your email […]

  • GTA 5 topples Skyrim’s record for highest concurrent players on Steam

    Not factoring in Valve games, GTA 5 is the new king of concurrent player numbers on Steam. GTA 5 is very popular on PC, even more popular than games like Skyrim in its heyday. The number of concurrent players for GTA 5 has peaked today at 301,246. This makes it the only non-Valve game to […]

  • Mortal Kombat X: what does a modern fighting game look like?

    Mortal Kombat continues to evolve as NetherRealm adds RPG systems and daily challenges to a solid fighting game, says Sherif Saed. “Mortal Kombat X takes many cues from games like Destiny, Call of Duty, and GTA Online with hourly, daily and weekly events.” For as many of its familiar facets, Mortal Kombat X has enough […]

  • J-Stars Victory VS+ coming west in June – new trailer

    J-Stars Victory VS+ will make the jump (see what I did there) to the west after all. J-Stars Victory VS+ is the western title for the fighting game which stars characters from a variety of Shonen Jump-published manga. Bandai Namco has announced the fighter will release in Europe on June 26 and in the Americas […]

  • Codemasters F1 license good through 2016

    Codemasters has at least one more F1 game in it. F1 2015 isn’t out yet, so Codemasters is naturally not talking about what it might get up to in the future. We do know what it can get up to, though; Codemasters’ Steven Embling told Videogamer has the option to continue the series. “We have […]

  • Project Cars has pretty deep graphics options on consoles

    Project Cars offers players a wide variety of ways to customise their graphic settings on PS4 and Xbox One. Project Cars is a graphics showcase and all early indications suggest it’s going to be one of the best-looking games out there. Slightly Mad’s commitment to graphics seems to go deeper than making things pretty, though: […]

  • Super Smash Bros. patch nerfs Diddy Kong – report

    Super Smash Bros. 3DS and Wii U is great but Diddy Kong is a beast and must be stopped. The latest Super Smash Bros. 3Ds and Wii U patch seems to have nerfed Diddy Kong, a character so over-powered that serious tournament players generate controversy by choosing to use him. Nintendo doesn’t publish patch notes, […]

  • Borderlands: The Pre-Sequel developer shuttered

    Borderlands: The Pre-Sequel developer 2K Australia has been closed down. Kotaku broke the news, and also had word from an anonymous source, who said that all staff have been let go. 2K responded to our request for comment with the following statement: We can confirm we have taken steps to begin the studio closure process […]

  • Samorost 3 trailer shows Amanita still in fine form

    Samorost 3 looks as delicately beautiful as its siblings. Samarost 3 developer Amanita Design has a reputation for gorgeous, slightly surreal world building. This new trailer for its latest adventure looks just as if not more lovely than the previous Samarost games and Botanicula. Samarost 3 is coming to Mac and PC later this year, […]

  • Amnesia dev’s new project SOMA now in beta

    SOMA is nearly here and I am torn between excitement and horrified dread. SOMA is the latest horror project from Frictional, the team behind Amnesia: The Dark Descent. We’re pretty excited to see what Frictional comes up with next, and we won’t have too long to wait, apparently; the developer has announced that SOMA is […]

  • Steam Guard mobile authenticator now in beta testing

    Steam is now testing its latest security measure. Steam helps you protect your account by offering two-factor authentication, a solution so beautifully elegant and effective that it’s astounding every gaming network doesn’t do the same (looking at you, Sony). Valve’s version is called Steam Guard, and it works via email. This isn’t always super convenient, […]

  • Godzilla battles Mothra in new trailer

    Godzilla lets you stomp around cities and battle classic kaiju. I’m in. Godzilla is coming to PlayStation 3 and PS4 in early July, but we haven’t seen a great deal of it since its December reveal. The new trailer below gives you an idea of just what Natsume has done with one of the biggest […]

  • Tales of Zestiria to launch this year – new trailer

    Tales of Zestiria continues Bandai Namco’s delightful new habit of bringing the popular JRPG series to the west before the shine wears off. Tales of Zestiria is coming west in northern autumn, the publisher has announced. That’s not a bad turnaround, given it first hit Japan in January, and localisation of text-heavy titles is expensive […]

  • Project Cars release date locked down, new trailer released

    Project Cars finally has a release date. Project Cars will release on May 8, Bandai Namco UK has announced. We haven’t yet had an update from Namco Bandai’s other regional offices, but its probably safe to bet the racer will release around the same time in the Americas, Europe and ANZ region. We can now […]

  • Attack on Titan: Humanity in Chains trailer shows combat, online multiplayer

    Attack on Titan: Humanity in Chains has plenty to offer fans of the anime. Previously known as Attack on Titan: The Last Wings of Mankind, the Spike Chunsoft action game is coming west thanks to Atlus. Gematsu reports it’s due in both Europe and North America in May, via the 3DS eShop. The trailer below […]

  • Bloodborne stamina recovery rate affected by equip weight

    Bloodborne players have unearthed an important gameplay detail not mentioned in the game’s menus or manual. In Bloodborne, players need to manage their stamina carefully for best results. A far more aggressively-tuned affair than past Souls games, Bloodborne does away with equip weight limits, and items have no listed weight details. As far as players […]

  • Street Fighter’s Ryu, Fire Emblem’s Roy spotted in Super Smash Bros. patch – rumour

    Street Fighter’s Ryu is rumoured for future Super Smash bros DLC following datamining of the latest patch. Super Smash Bros. 3DS and Wii U were updated recently, and hacker shinyquagsire23 claims to have found some interesting files while poking around in the 3DS patch data. As detailed on Reddit, the audio files included a new […]

  • Suikoden 3 PEGI rating suggests PS2 Classic re-release

    Suikoden. Suikoden 2. And now: Suikoden 3. Suikoden 3 has been rated by PEGI for PlayStation 3, presumably ahead of an upcoming re-release. Gematsu turned up the rating, and although we have no further information at this time, it’s not much a leap to assume the RPG will turn up as a PS2 Classic on […]

  • Star Wars Battlefront gameplay reveal to be streamed live, new Instagram tease

    The Star Wars Battlefront gameplay reveal will be live-streamed during a panel hosted by EA as part of the Star Wars Celebration festivities this Friday. This is according to an announcement from Verizon and Disney courtesy of MP1ST. The main stream for the event kicks off at 10am PDT/1pm EDT on Thursday, April 16. It […]

  • GameStop to launch retro game and console trade-in experiment

    GameStop wants to get into the retro game and console business, providing it’s a worthwhile endeavor. To test the possibility, it will soon allow customers in Birmingham, Alabama and New York City to trade-in classic consoles and games in-store. Speaking with IGN, a spokesperson for the company said the initiative will kick off on April […]

  • Battlefield Hardline’s first patch addresses five priority issues requested by the community

    Battlefield Hardline’s first patch is in the works, and today, Visceral Games has added Punkbuster and Nvidia DirectX driver fixes to the list of issues to be addressed. Miscellaneous fixes for “the most frequent crashes” will be included in the patch, as well as the following “top five priority” issues voiced by the community. Punkbuster […]

  • GTA 5 user videos: Franklin’s exploits, a traffic jam tickle our funny bone

    Since GTA 5 was released on PC this week, the amount of videos being created with the new editing tools are releasing at a quick rate. Below, are three in particular I found amusing. The first one is from James McVinnie, originally posted on Reddit, showing what occurs after he happens upon vehicles in a […]

  • Invisible Inc. is coming to PS4 and has left Steam Early Access

    Invisible Inc., from Don’t Starve developers Klei Entertainment, has been announced for PlayStation 4 and the game has also a release date on PC. The game has now left Steam Early Access and will arrive on PC May 12. Per a post from studio founder Jamie Cheng on the PS Blog, the game will contain […]

  • Call of Duty: Advanced Warfare Ascendance DLC dated for PC and PlayStation

    The Ascendance DLC pack for Call of Duty: Advanced Warfare now has a release date for PC, PlayStation 3 and PS4. It contains four new maps, the OHM 2-in-1 directed energy light machine gun, the OHM Werewolf custom variant, and the new Exo Grapple ability and playlist. The Infection episode of the exo Zombies saga […]

  • Killing Floor 2 PC specs and Digital Deluxe Edition contents announced by Tripwire

    A Digital Deluxe Edition for Killing Floor 2 along with PC specs for the title have been announced, along with the new of a Steam Early Access launch later this month. According to Tripwire Interactive, the Digital Deluxe Edition will run you $39.99/£26.99/€36.99 starting on April 21 on Steam. This edition contains the following additions […]

  • Content in Wolfenstein: The Old Blood tips its hat to Return to Castle Wolfenstein

    Wolfenstein: The Old Blood, the standalone prequel to last year’s Wolfenstein: The New Order, will contain a few nods to the franchise classic Return to Castle Wolfenstein, according to the developers. According to developer MachineGames, the setting works “well with the pulp B-movie thing we’re going for,” and created a prequel instead of DLC for […]

  • Bloodborne is the latest to receive the Honest Game Trailers treatment

    Smosh Games has released another entry in its Honest Game Trailers series, and this time, it’s poking Bloodborne. According to the trailer, the game is “more disturbing” than the scene in South Park: The Stick of Truth where you are “crushed by your own Dad’s balls.” It also has more “stupid top hats than a […]