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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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    Bungie has reset the weekly cap of Crucible and Vanguard marks and added new Heroic and Nightfall strikes, now with burn. From now until next Tuesday, the weekly Heroic strike will be The Devil’s Lair with Heroic and Lightswitch modifiers. As for the Nightfall, you’ll be fighting Sepiks Prime with the help of Arc burn. […]

  • Few Mass Effect FemShep cosplays are as elaborate as this one

    The internet is full of Female Commander Shepard cosplay from Mass Effect, but very few are as terrific as this one. Visual artist Freya Willia has spent over two years painstakingly creating the perfect suit of armour and the best weapons to make her cosplay of Female Shepard as authentic as possible, Omni tool and […]

  • Deals with Gold: Assassin’s Creed Unity, Red Dead Redemption and more discounted

    This week’s Deals with Gold titles for Xbox Live subscribers is a good mix of modern games and old favourites. The list of discounted games through this week’s Deals with Gold is live with discounts on Assassin’s Creed Unity, Amazing Spider-Man 2, Red Dead Redemption, Max Payne 3, and more. The deals are live now […]

  • Destiny guide: how to maximise your Grimoire Points

    Destiny players regularly compare the size of their Grimoire Points. Learn how to make yours the biggest. Destiny guide: how to earn Grimoire Points In Destiny, earning most Grimoire cards is just a matter of playing the game, maybe a little more attentively than usual. You’ll either need to complete a certain number of actions […]

  • Shovel Knight: Plague of Shadows will let you play as a baddie

    Shovel Knight owners will benefit from the generosity of Kickstarter backers quite soon. Because Shovel Knight was overfunded during its Kickstarter campaign, developer Yacht Club Games committed to releasing free content updates. The first of these, Plague of Shadows, has now been detailed. The expansion stars baddy Plague Knight, who turns on his former allies, […]

  • GTA controversies, from Hot Coffee to PR manipulation

    GTA has a long history of controversy. The latest Did You Know Gaming tells the full stories behind the sensational headlines. Grand Theft Auto is such a byword for controversy that it’s easy to forget the full context of what actually happened to bring mainstream press, politicians and interest group awareness to the Rockstar series. […]

  • Infamous 2 one of five new PlayStation Now additions for March

    PlayStation Now will expand to the tune of five new games this month. The March PS Now additions are Infamous 2, Twisted Metal, R-Type Dimensions, Alone in the Dark: Inferno and Operation Flashpoint: Red River. PS Now will set you back $20 per month or $45 for a three month subscription. It offers all you […]

  • Final Fantasy 10/10-2 HD Remaster gets PS4 release date

    Final Fantasy 10/10-2 HD Remaster hits PS4 in May. The PS4 release date for Final Fantasy 10/10-2 HD Remaster is May 12 in North America and May 15 in Europe. Gematsu reports a special pre-order bonus calendar with art by Yoshitaka Amano is available through the Square Enix Store and participating retailers. In Europe, pre-ordering […]

  • Call of Duty: Advanced Warfare getting 15 new Prestige levels

    Call of Duty: Advanced Warfare players can now aspire to the ranks of Grand Master Prestige. Advanced Warfare developer Sledgehammer Games will add 15 more Prestige levels to the latest Call of Duty, giving players at max XP a chance to grow even further. According to the Sledgehammer Games blog, when you enter Master level […]

  • Destiny: Crota’s End recreated in Minecraft

    Destiny’s toughest challenge gets even nastier if you throw Creepers into the mix. The ultimate Destiny challenge – for now – is the Crota’s End raid. Taking place in an alternate dimension accessed through the Hellmouth on the Moon, the Raid takes Guardians through a pit of darkness to the resting place of Crota himself. […]

  • Xenoblade Chronicles 3D trailer introduces the Heir to the Monado

    Xenoblade Chronicles 3D protagonist Shulk is the Heir to the Monado, his distinctive red sword. Let this trailer fill you in on what that means. Xenoblade Chronicles 3D releases for New 3DS on April 2 in Europe and April 10 in North America. As well as all the content of the Wii original, it has […]

  • The Elder Scrolls: Total War mod covers Morrowind, Oblivion and more

    The Elder Scrolls: Total War is a terrific mod allowing you get get intimately involved with the history of Bethesda’s detailed fantasy universe. The first release of The Elder Scrolls: Total War dropped on the weekend, giving players their first chance to try out LoRdNazgu1‘s creation. This version runs from 3E 427 to 4E 45, […]

  • Five Nights at Freddy’s 3 out now on Steam

    Five Nights at Freddy’s 3 is out now. Yes, we’re surprised too. You can grab Five Nights at Freddy’s 3 on Steam for $8. Developer Scott Cawthon really doesn’t mess about; the game was only announced in early January. Here’s the blurb: Thirty years after Freddy Fazbear’s Pizza closed it’s doors, the events that took […]

  • EVE Online heister makes off with $13,000 worth of goods

    EVE Online is a hotbed of villainy, espionage and backstabbing, but one intrepid corporate thief has made waves even in this setting. The thing about EVE Online is that it’s a true sandbox: the game’s rules are very loose, and allow players to make careers out of theft, piracy, assassination and espionage in addition to […]

  • Marth Amiibo getting a stock refresh in North America

    Nintendo of America has announced a fresh supply of the difficult to find Marth Amiibo. The Marth Amiibo will be back in stock in the US in late April, the platform holder said on Twitter today. Planning to pick up Code Name: S.T.E.A.M. and don’t have a Marth amiibo? More are headed to stores in […]

  • Skyrim beta update upgrades creation kit file size

    Skyrim has been granted a new beta update – more than three years after launch! – to improve the experience for modders and those who use them. The Elder Scrolls V: Skyrim released in November 2011. I think that’s worth noting before we discuss the beta update that dropped today, even as Bethesda is working […]

  • Paradox’s next epic RPG is, uh, Knights of Pen & Paper 2

    Knights of Pen & Paper 2 is very serious business so please enjoy this very serious trailer. “Return to the dicey world of Knights of Pen & Paper for a new turn-based adventure, where players get to take on the role of players, and also of the game’s encounter-designing, rules-laywering GM in a fully customizable […]

  • Amplitude looks amazing in new gameplay trailer, has a team multiplayer mode

    Amplitude may have been delayed but we still get something this March: a fine new gameplay trailer. Amplitude is coming to PlayStation 3 and PS4 sometime in northern summer. It’s a reprisal of Harmonix’s classic rhythm action game, a forerunner to its later efforts with Guitar Hero and Rock Band, and was crowdfunded. Update: Turns […]

  • DayZ creator’s “crazy”, “esoteric” next game developed with Improbable

    DayZ creator Dean “Rocket” Hall has dropped the first vague details of his new game project. “I do not want to make safe games. I do not want to make games the way we have been making them. What if the most experienced video game staff in the world collaborated on the most esoteric and […]

  • Battlefield Hardline will support AMD’s Mantle

    AMD has confirmed what most Battlefield fans thought. Battlefield Hardline will indeed support Mantle. Battlefield Hardline will support Mantle, AMD has confirmed. Some players weren’t sure whether the retail version of the game will support AMD’s API, due to its absence from the recent PC beta. AMD did not say whether the feature will be […]

  • Unreal Engine 4 GDC 2015 sizzle reel shows what the tech can do

    Unreal Engine 4 is a pretty versatile bit of tech, as this new sizzle reel shows. As one of the more ubiquitous engines, Unreal will be on show at GDC this week. Developer Epic produced the following sizzle reel to quickly demonstrate what it can do – cutting edge graphics (there are very few games […]

  • Survarium’s latest patch removes limit on battle ammo, rebalances experience gain

    The latest Survarium patch has readjusted the value of experience and reputation points gained and removed the limit to the maximum amount of ammo you can use in combat. Survarium developer Vostok Games has released patch 0.27a to the public, having recently finished testing it. The patch is a major one and covers changes to […]

  • The Hunt Begins in new Bloodborne TV spot

    Bloodborne is so close you can almost smell its coppery tang on the wind – and also you can watch commercials for it. Bloodborne arrives on PS4 at the end of this month (March 24 North America, March 25 Europe, March 27 UK) so excitement is starting to build. Sony isn’t helping keep us calm […]

  • World of Warcraft: you’ll soon be able to buy game time with gold

    Blizzard will soon allow World of Warcraft players to exchange in-game gold for game time and vice versa. Blizzard has announced a new system that will launch soon for World of Warcraft. The system is called WoW Token. Using this system, players will be able to buy game time using in-game gold. Here’s how it […]

  • 3D Realms’ Bombshell returns with the first gameplay trailer

    Remember 3D Realms’ Bombshell? The isometric ARPG that was announced last year? Well, it’s back, and we get to see gameplay footage. The game stars Shelly “Bombshell” Harrison, a bomb technician turned mercenary with a mechanical arm. She will embark on a quest to rescue the president and save Earth, all while shooting aliens. The […]

  • Unreal Engine 4 is now free for everyone to use

    Epic Games has made Unreal Engine 4 available for anyone to download and use, for free. Unreal Engine 4 is now free. Anyone can download it and start using it, the developer announced today in a blog post. The download features the the full set of tools used by Epic, and includes 100% of the […]

  • Call of Duty European Championship winner announced

    The winner of the European round of the Call of Duty Championship has been announced. This past weekend, 28 teams representing UK, France, Germany, Spain, Italy, Netherlands, Sweden, Finland, the rest of Europe and Middle East attended the final of the European round of the Call of Duty Championship. UK team Epsilon eSports was crowned […]

  • GOG brings back Insomnia sale with discounts up to 90% off

    GOG.com is bringing back its Insomnia sale event with even more games. GOG’s Insomnia sale is back with double the amount of games. This year, there will be two sets of games available at once. The sets are seasoned classics and fresh new titles. Each set will feature games with discounts up to 90% off, […]

  • 2K is shutting down NBA 2K14 online servers, won’t affect career save files

    2K will be shutting down the servers for NBA 2K14 this month. The publisher revealed yesterday that online servers for NBA 2K14 will be turned offline on March 31. “You will no longer be able to play ranked games/online association,” reads the announcement. NBA 2K14 relied on online servers to store save files for MyCareer […]

  • One Dead or Alive tournament organiser is proposing ban of “over-sexualised” costumes

    A Dead or Alive tournament organiser has suggested a soft ban on some of the game’s “over-sexualised” costumes, and not everyone is happy. Tournament organiser “The HuBBs” took to the FreeStepDodge forums to suggest a list of rules that other offline tournaments can follow. The list goes over stages, characters, moves, which is certainly in […]

  • Destiny: all the news from Bungie’s open house Q&A

    Bungie hosted an open house Q&A session with the community last week and lots of exciting news have come out of it. Arekkz Gaming has gathered all the information that came out of Bungie’s open house Q&A in one handy video. The list is massive, going over Exotic weapon balance, upcoming events, PVE, Crucible rewards, […]

  • Elite: Dangerous and Star Citizen to honour Nimoy with in-game memorials

    Developers behind space exploration games Elite: Dangerous and Star Citizen will honour the memory of Leonard Nimoy through in-game memorials. The develops of both games have confirmed separately that in-game memorials will be established to honour the memory of the late Star Trek actor, Leonard Nimoy, famous for playing Spock. Elite: Dangerous executive producer Michael […]

  • Deal: get a PlayStation 4 + three exclusives for $399

    Amazon’s latest PlayStation 4 deal is not one to miss. With purchase of a PlayStation 4 console from Amazon in the US, the online retailer will throw in digital codes for Infamous Second Son, Killzone Shadow Fall and The Last of Us: Remastered, all for the same MSRP of $399. The Last of Us Remastered […]

  • Destiny: this is how one player predicted House of Wolves details and Xur’s inventory

    The method one Redditor possibly used to leak some details from Destiny’s House of Wolves was the same one he used to predict the inventory of Xur: Agent of the Nine. Last week, Reddit user Megamanexe4 leaked a few pieces of House of Wolves expansion content. The leaks included strikes, new Crucible mode, and a […]

  • Mortal Kombat X is coming to iOS… as a card-battler

    Mortal Kombat X will be releasing on mobile devices in some form, just not the one you except. Mortal Kombat X is coming to Android and iOS devices as an extension of the main game. It will launch in April alongside the console versions. The mobile game will be part card collecting and part fighting […]

  • Metal Gear Solid 5: The Phantom Pain announcement coming this Wednesday

    Kojima Productions will unveil something about Metal Gear Solid 5: The Phantom Pain this Wednesday. Metal Gear Solid fans should standby for a Phantom Pain-related announcement on Wednesday, March 4. According to developer Kojima Productions’ Twitter, there’s going to be an announcement at 2pm GMT on Wednesday. The developer posted the following image. The image […]

  • Reader survey: time to let us get to know you better!

    We’d really appreciate it if you could fill in this survey about the websites you read and the games you buy. It massively helps! You can fill out the survey right here and obviously all the information you supply is confidential. It helps us build a better picture of the people who read our site […]

  • Battlefield Hardline Premium: here’s everything you get for $50

    Battlefield Hardline’s Premium membership will give players access to 4 new features, early access to expansion packs and more. EA detailed the offer today – it costs $50 in total (£40 in the UK) and gives players a whole bundle of new gear and content. Check it all out in handy list form below: Masks […]

  • Hayter’s gonna hate: the voice of Solid Snake wouldn’t answer my Metal Gear question

    Voice actor and Hollywood writer David Hayter discusses the differences between movies and games. And politely declines my leading question. “It might be fun to do a crazy, over-the-top film version of Saint’s Row.” Yeah, that headline is a bit cheap but you’re reading the work of a man who once asked the maker of […]