Square Enix announces earnings, talks FFXII

TOKYO--Today, Square Enix announced its first earnings since the company was formed in a merger between rival publishers Square and Enix. For the 2004 fiscal year ending March 31, 2004, Square Enix's sales tallied 63.2 billion yen ($563.5 million). Its operation profits were 19.3 billion yen ($172.1 million), and net profits were 10.9 billion yen ($97.2 million). While Square Enix couldn't release comparisons to its previous fiscal year--since the company didn't exist then--its profit for FY2004 is about 67 percent of the total of Square and Enix's separate incomes. Before the April 2003 merger, Square and Enix's combined net profit totaled 16.4 billion yen ($145 million).

In the console game sector, Square Enix made a total of 37.9 billion yen ($337.9 million) from sales and reported 16.4 billion yen ($146.3 million) in operation profits. The company sold over 2 million units of Final Fantasy X-2 (PS2) in America and Europe combined, and Final Fantasy Tactics Advance (GBA) sold a total of one million units in the two regions. In Japan, the PlayStation 2 port of the Super Famicom's Dragon Quest V sold well, shipping 1.3 million units during the first two days of launch.

The online gaming sector made 8.9 billion yen ($79.4 million) in sales and 2.3 billion yen ($20.5 million) in operation profits, with its massively multiplayer online role-playing game Final Fantasy XI responsible for most of that figure. FFXI currently has about 500,000 subscribers, and the figure continues to grow. Since the Japanese release of the game's expansion disc, Rise of the Zilart, the number of subcribers has spiked. FFXI saw a jump in subscribers in October and March when services launched in America for the PC and the PS2 versions. In Asia, the online PC MMORPG, CrossGate, which has a total of over 10 million members in China, Taiwan, and Japan, continued to turn a profit for the company.

In the mobile phone sector, Square Enix earned 2.8 billion yen ($24.9 million) in sales and 1.1 billion ($8.9 million) in operation profits from its various content and game services. In Japan, the company released ports of Final Fantasy and Dragon Quest on next-generation NTT mobile phones. In America, Square Enix began launching services on Verizon Wireless, and AT&T Wireless. With plans to continue expanding into the American mobile phone market, Square Enix purchased the multimedia content provider UIEvolution in March, which will allow Square Enix to use that company's cross-platform technology to distribute content targeted toward various mobile devices.

Its publishing division in Japan made 9.6 billion yen ($85.6 million) in sales and 3.1 billion yen ($27.6 million) in operation profits. In particular, the manga FullMetal Alchemist sold over 11 million issues, due largely to the franchise's animated TV series that began airing last October. FullMetal Alchemist also made its way to gamers on both the PS2 and GBA.

For the fiscal year 2005, Square Enix forecasts that sales will rise 20 percent to 76 billion yen ($677.6 million), and profits will climb 4.6 percent to 11.5 billon yen ($102.5 million). In Japan, Square Enix plans to release 8.06 million game units during FY2005, which is about 3 million more than the 4.93 million units that sold during FY2005.

Square Enix president Yoichi Wada stated that the estimate in unit sales isn't the result of a fixed-release calendar. "We're still discussing in which order to release our three major upcoming titles: Final Fantasy XII, Dragon Quest VIII, and Kingdom Hearts 2. We have a number of plans, but we're committed to reaching our goal [in unit sales] under any circumstance." Wada also stated that a FY2004 release of Dragon Quest VIII and Final Fantasy XII is a possibility.

In terms of online games, Wada commented that with FFXI expanding to Europe the number of online subscribers will continue to grow during the year, but the increase in subscribers will be more gradual than before. Wada also mentioned how FFXI is currently incompatible with Xbox Live, commenting that, "The Xbox live is a closed network, and we won't be joining it since it's different from our beliefs. The recently announced XNA comes very close to our philosophy. In that sense, we'll have [continued] discussions about it."

Wada also talked about the company's views on the next-generation handheld game machines, the DS and PSP. "The Nintendo DS is an interesting [device] that's different from conventional game machines. We hope to release a title at launch, and we're also planning to start other projects [for the DS]," commented Wada. "We're thinking of developing original games for the PSP rather than ports, but it's difficult. However, the [PSP's] visual capabilities are great, and as we announced at E3, we've decided to release Final Fantasy VII: Advent Children on the UMD."