Square-Enix financials: ¥5.7b loss amid ‘increasingly difficult’ console market

By Dave Cook, Tuesday, 5 February 2013 09:25 GMT

Square-Enix had a strong run of IP last year, but its latest financial report makes for uneasy reading. The Japanese firm has published a loss of ¥5.7 billion for the nine-month period ended December 31st 2012, and cites the increasingly difficult console market as a key factor.

Square Enix in Q3

Year-on-year profits are up ¥5 billion for the nine-year period ended December 31st 2012.

The company’s financial project for the end of year is ¥3.5 billion, which is down 42.2% year-on-year. The company is still banking on big sales of Tomb Raider.

Game sales were positive for the period, up ¥95.7 billion to ¥102.7 billion.

Square-Enix cites, “the increasingly difficult condition of the world-wide console game market” as a key issue in its financial report.

It’s an about-face for the company, which posted a ¥5 billion profit year-on-year for the previous period, begging questions about the console market’s volatility in the run-up to next-gen formats.

Although profits were down, game sales were up from ¥95.7 billion to ¥102.7 billion, in a year that saw Hitman: Absolution, Final Fantasy XIII-2 and Sleeping Dogs go to market. It also published Call of Duty: Black Ops 2 in Japan, to no avail.

The company still has high hopes for its year-end financial report – presumably as Tomb Raider has yet to launch – with its net profit projection sitting at ¥3.5 billion, which is a 42.2% year-on-year decrease. Still, black is better than red.

In a statement issued this morning – via GI.biz – Square-Enix discussed its slumping financials:

“During the nine-month period ended December 31, 2012, the Company has not recovered the operating loss posted in the six-month period ended September 30, 2012. [This is] primarily due to the increasingly difficult condition of the world-wide console game market, under which the Group is struggling to achieve a fair expected return on its investment.

“On the other hand, content for other platforms such as PCs, smartphones and SNS such as ‘Sengoku Ixa,’ a browser game, and ‘Final Fantasy Brigade,’ a social networking game for Mobage, are generating an acceptable profit.

“In addition, newly released game titles, such as ‘Kaku-San-Sei Million Arthur,’ a social networking game released in April, 2012 serving more than 1 million registered users, have been expanding at a satisfactory pace. Registered users of Final Fantasy Artniks,’ a social networking game released in November, 2012 for Gree, exceeded 1 million at the end of December, 2012.”

We’ll have more on this report as it comes.

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