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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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    Dead Island 2 has been delayed into 2016 by Yager in order to ensure the sequel “takes Dead Island to the next level.” According to a tweet from the developer, it set “big goal” for the game, and in order to deliver what fans expect, the team needs more time to reach development goals. “We […]

  • Project Cars: here’s a list of all available cars at launch

    Project Cars will contain many, many cars and if we are counting correctly, there will be 74 total at launch. The standard edition contains 65 total, and when factoring the free car as well as the Modified and Limited Edition cars packs, you can add an additional nine cars to the mix. Comb through the […]

  • Competitive matchmaking support is coming to Team Fortress 2

    Team Fortress 2 will soon feature support for competitive matchmaking, which Valve says is a “high priority” project for it at the moment. According to a report from TeamFortress.tv, which visited Valve headquarters recently, Valve is looking into the possibility of 6v6 or 9v9 matches 9v9, a possible quick play option and it is also […]

  • GTA 5 PC patch fixes garage, Job crashes – full notes here

    Rockstar has pushed out a 353 MB patch for GTA 5 on PC The patch fixes a number of annoying bugs related to vehicles and garages, some deathmatch issues and purchase errors. It should also fix various freezing and crashing bugs, as well as a little issue with Steam. Time will tell if the patch […]

  • Fire Emblem If will come in White Kingdom and Black Kingdom versions with amiibo support

    We’ve finally got some juicy details on the next Fire Emblem game, but the most interesting aspect is that there will be two versions of the game. According to Siliconera, who translated an interview between Intelligent Systems and 4Gamer, there will a White Kingdom and a Black Kingdom version that offer different aspects of the […]

  • Deception 4: The Nightmare Princess heads west with “Golden Toilet” pre-order bonus

    Deception 4: The Nightmare Princess will debut on western PlayStation 4 systems this summer, Koei Tecmo has announced. It is also coming to PS3 and Vita. The game was produced by Keisuke Kikuchi of Fatal Frame fame and takes up where Deception 4: Blood Ties left off allowing players to relive Laegrinna’s pursuit to free […]

  • Nintendo US eShop update: Puzzle & Dragons Super Mario demo, Paper Mario, more

    Nintendo has updated the North American end of the eShop with a demo of Puzzle & Dragons Super Mario Bros. Edition, Paper Mario on Virtual Console, and amiibo Tap. The full update is below. eShop update amiibo Tap – free – Wii U Star Wars Pinball DLC – Wii U Paper Mario – Wii U […]

  • Deus Ex: Mankind Divided PC port handed off to Nixxes

    The PC port of the new Deus Ex has been handed over to Netherlands based studio, Nixxes software. After the initial reveal trailer at the beginning of April, we’ve only had a few morsels in the way of additional news. The most intriguing tidbit to date has got to be the fact that you’ll be […]

  • First-ever PC Gaming Show to take place at E3 2015 in June

    PC gaming will finally have its very own E3 press conference this year, thanks to PC Gamer and AMD. The PC Gaming Show will take place on June 16 at the Belasco Theater in Los Angeles and it will be livestreamed on Twitch. PC Gamer said speakers at the presentation will include representatives from Blizzard, […]

  • Majora’s Mask light available now on Club Nintendo for 6000 stars

    Club Nintendo shuts up shop on September 30 and members are being encouraged to spend accumulated stars before then. And what better to spend them on, than this adorable Majora’s Mask light? If you’re a member based in Europe you can nab it for 6000 stars. If you’re in Australia or New Zealand, it’ll only […]

  • Unity support announced for HoloLens, will work with Windows universal apps

    Microsoft is partnering with game engine developers Unity in order to make HoloLens compatible with apps and games which use the cross-platform engine. The partnership was announced yesterday during its Build Developer Conference. Universal apps for Windows 10 systems will also be available on Xbox One later this year, suggesting possible HoloLens functionality with the […]

  • Splatoon Nintendo Direct airs Thursday, May 7

    A Nintendo Direct focused on Splatoon, the Wii U multiplayer title, on May 7. It will kick off at 7am PDT/10am EDT/3pm UK and it can be watched via the Nintendo Direct website. You can also have a look at the game through Nintendo’s Twitch channel. The last game-specific presentation took place last week and […]

  • GTA 5 PC: clean up the streets as a member of the San Andreas PD with this new mod

    Remember the awesome mods for GTA 4 and San Andreas that let you run amok online as a member of the po-po? Well, dust off your taser and load up your gun, because it’s coming to GTA 5. The new mod for GTA 5 is currently in alpha and can be downloaded at palmbeachgames.com. You […]

  • Indie shoot ‘em up Project Root comes to Xbox One, PS4 and PSVita

    Project Root is a self-proclaimed rejig of the shoot ‘em up genre that was released on PC last year, and it’s finally coming to consoles. Combining free-roaming elements with the usual business of shooting things, Project Root was released this week for Xbox One, PS4 and the PSVita.

  • You can now bet on eSports online, starting with League of Legends

    If you’re getting bored with sticking a pony on the races, you can expand your gambling horizons at Unikrn where you can watch esports streams and get a little action on the side. The new platform was set up by Rahul Sood – previously the general manager of Microsoft Ventures. At the moment, customers are […]

  • Has Watch Dogs 2 been leaked?

    Ubisoft employee, Julien Risse, may have inadvertently confirmed Watch Dogs 2, thanks to his online CV over at LinkedIn. Videogamer.com spotted the slip up, in which Risse lists Watch Dogs, the DLC Bad Blood, and Watch Dogs 2 on his profile. Creative Director Jonathan Morin has already talked about his ideas for improvements for the […]

  • GTA 5′s Trevor makes his Jackass debut, complete with leopard-print knickers

    YouTuber Abstract Mode has shared his vision of what Trevor Philips’ life might have been like, had he not been completely batshit crazy. Watch Trevor get mauled, run over, and hit by a train, before taking a majestic swan-dive into someone else’s pool at the climax. Thanks, Kotaku.

  • Call of Duty: Black Ops 3 season pass will cost you £35

    Call of Duty: Black Ops 3 isn’t released until November 6, but you can already hand over your cash for the Season Pass. The Season Pass is available for pre-purchase on Steam for £34.99, and will cover four DLC packs – although the details we have on the content are limited to ‘exciting’ at this […]

  • GTA Online’s cheating assholes are no match for this player’s vengeance

    Think you’re smart for using invisibility and infinite ammo glitches? You need to be taught a lesson, sucker. You can have all the hacks you want but if your GTA Online game is weak, you’ll still get your ass handed to you. As this fool discovered when attempting to hassle another player. There’s a fair […]

  • PS4 sales help Sony’s games division swing to profit

    Sony’s PlayStation business has made an operating profit of 48.1 billion yen ($404m / £261.5m) in the past 12 months. That’s thanks to stellar sales of the PlayStation 4 and PS Plus, even as sales of the PS3 have stalled and the company wrote off costs for the PSTV and PS Vita. The profit puts […]

  • New patch for Dirt Rally gives co-driver’s attitude a tune-up

    Dirt Rally gets a new patch three days after release on Steam. On Monday, we reported that the newest Dirt game has popped up on Steam’s Early Access and is available to pick up for £24.99, as well as giving you an eyeful of tasty screenshots. The patch – released yesterday – fixes some issues […]

  • New The Witcher 3 screenshots show combat, exploration and general carousing

    New screenshots released on the official facebook page for The Witcher 3 show Geralt annihilating a winged beast, out and about in the world exploring, and living the life of Reily amidst a bustling feast. We were already treated to some glorious screenshots a few days ago, but these new ones are in-game and give […]

  • Destiny: 14 things you might have missed during House of Wolves intel drops

    Destiny: House of Wolves does a great deal more than just slap some new content on the existing game structure. House of Wolves changes Destiny in a lot of interesting and very welcome ways. Bungie showed off many of these changes in its livestream, and let both me and Arekkz come and have a look […]

  • Scratch that cyberpunk itch with Technobabylon on May 21 – new trailer

    Technobabylon more like Wrecked-yo-babbling with my smooth flow about how good Wadjet Eye games are. I don’t know y’all, it’s clock off time and everything feels like a reach. Wadjet Eye makes pretty good adventure games – award winning, in fact. The latest project to spring forth from the benevolent, sheltering hand of the label […]

  • Skullgirls 2nd Encore brings exclusive new features to PS4, Vita in northern summer

    Skullgirls, the little indie fighter that could, is getting another crack at it. Skullgirls 2nd Encore is the second re-release of the one-time troubled 2D versus fighter from lab Zero Games. Having survived the shut down of its developer and collapse of its publishing contrast, Skullgirls re-emerged as Skullgirls: Encore, adding in a ton of […]

  • Danganronpa series generates “impressive” sales for Vita exclusive

    Danganronpa is selling quite nicely, thank you, says NIS America. Danganronpa is a series of murder mystery visual novel puzzlers in a similar vein to games like 999. Two of these have been released for Vita in the west – Trigger Happy Havoc and Goodbye Despair. Speaking to MCV, NIS America CEO and president Takuro […]

  • I have no idea what is going on in J-Stars Victory VS+ but I kind of like it

    In this J-Stars Victory VS+ trailer, we see – uhh. Well. We certainly see some things. Look y’all, I was a massive weaboo in high school, but that was back in the dark ages when we had to take out Manga Entertainment VHS tapes from dingy little specialist rental joints that were literally underground, and […]

  • Please just watch this terrific trailer for Toren

    Toren is the kind of game I dream about when I drift off to sleep at night. This indie puzzle adventure strikes a spark in my little soul in the same way as Ico and Tequila Works’ Rime do. Mysterious, almost ethereal fantasy setting – check. Chance to actually walk around in that setting – […]

  • Play classic MS-DOS games on your own tweets

    In today’s episode of “what will they think of next”, someone’s figured out how to post playable versions of classic games in tweets. For some time now, Twitter has allowed you to embed various forms of media in tweets, most noticeably YouTube videos, simply by pasting a URL into the compose field. Turns out this […]

  • VR: Unreal Engine to add HTC Vive support

    The biggest digital PC game distributor and the most popular game development engine have both backed VR. It’s going to happen. An upcoming Unreal Engine 4 update will expand the development suite’s support to the HTC Vive, Valve’s VR headset. In this glorious new future where work on one of the most important engines in […]

  • WWE 2K15 PC supports modding

    WWE 2K15 may be the series’ PC debut, but it’s already getting into the spirit of the platform. WWE 2K15 does indeed support mods on PC, 2K’s Marcus Stephenson has confirmed. @ElementGamesTV you can. Now buy. — Marcus Stephenson (@stephensonmc) April 28, 2015 As Destructoid points out, this opens the door to all sorts of […]

  • Overkill’s The Walking Dead coming to PC, PS4 and Xbox One in 2016

    Overkill’s The Walking Dead is one step closer to your grasping little paws. Overkill’s The Walking Dead will be published by 505 Games, Overkill parent Starbreeze has announced. 505 also published Payday 2, Overkill’s previous title, so the two companies have established a working relationship. In a press release, the publisher said the co-op title […]

  • Call of Duty: Black Ops 3 pre-orders net Advanced Warfare DLC

    Buy Call of Duty: Black Ops 3 for later, enjoy bonus Advanced Warfare content now. Blacks Ops 3 is being supported by a rather cunning pre-order incentive even more likely to get you to lay your cash down sooner than you might otherwise. Gamespot reports a Black Ops 3 pre-order will receive a couple of […]

  • Steam Game Ban system lets developers determine who to block

    Steam users can now be blocked from individual games by their developers. Steam has always supported multiplayer bans for disruptive users, but a newly-implemented system allows developers to ban users from individual games using their own anti-cheat systems. Game Bans are enforced by Valve, but are enacted at the developer’s request and discretion. This change […]

  • Far Cry 4 devs matching Red Cross donations up to $100K to aid Nepal earthquake victims

    Far Cry 4 developer Ubisoft Montreal will match any pledges made to The Red Cross up to $100,000 to aid Nepal after the 7.8 earthquake struck the area in and around Kathmandu in Nepal. According to Ubisoft: “Having spent the last few years working on Far Cry 4, a game heavily inspired by Nepal and […]

  • Tales of Zestiria retail listing notes September release date, PS4 version

    Tales of Zestiria is coming west in northern autumn, and while it’s confirmed as a PlayStation 3 release, a Dutch retailer has it listed as coming to PS4 as well. Of course, listing it for PS4 could also be a typo, not that I would personally know about that sort of thing, really. However, according […]

  • Official mod tools for Total War: Attila are now available

    Official mod tools for Total War: Attila are now available and you can grab the new Assembly Kit as a beta through the tools menu via your Steam library. The Creative Assembly said the tools will be “immediately familiar” to modders of Rome 2 and Shogun 2, but the new version is the most “extensive” […]

  • How to get level 34 Ascended Raid gear in Destiny: House of Wolves

    Watch: two videos showing you how to get level 34 raid gear and a shopping list of what you need. One of the big changes that House of Wolves is bringing to Destiny is the chance to upgrade your weapons and gear to level 34. In these videos Arekkz Gaming shows you how to use […]

  • Destiny: House of Wolves puts PvP back in the spotlight

    Destiny PvP players, your time has come to shine. New Crucible maps. New Crucible rewards. And the glorious wonder of Elimination mode. Destiny: House of Wolves puts PvP front and centre. When Destiny was first detailed, one of the things Bungie stressed was that there’d be something for everyone. If you wanted to play solo […]

  • Destiny: Trials of Osiris – everything you need to know in one video

    The Destiny: House of Wolves embargo has lifted, and with so much information floating around pertaining to Trials of Osiris, it can be overwhelming. Thankfully, Arekkz Gaming tells you everything you need to know in one video. In the video above you will be informed of how the 3v3 Team Deathmatch event works, how you […]