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

Monday, 27th 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

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  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 11 months 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 11 months 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 11 months ago
  4. Clupula

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

    #4 11 months 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 11 months 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 11 months 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 11 months 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 11 months ago
  9. Clupula

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

    #9 11 months 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 11 months 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 11 months 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 11 months ago
  13. Clupula

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

    #13 11 months ago
  14. Clupula

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

    #14 11 months 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 11 months ago
  16. Keivz

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

    #16 11 months 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 11 months 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 11 months ago
  19. ps3fanboy

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

    #19 11 months 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 11 months 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 11 months 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 11 months ago
  23. Lord Gremlin

    It doesn’t sit well with what they DO.

    #23 11 months 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 11 months ago
  25. DLTDawnlight

    Three words Square Enix….NO MORE REMAKES!

    #25 11 months 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 11 months 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 11 months ago