Square Enix blasts 'oligopolistic' market for $134m loss

Despite posting a loss this year, Square Enix expects to return to profitability next year.

Square Enix has confirmed its expected extraordinary loss for the fiscal year ending March 31, 2013, blaming an "increasingly competitive and oligopolistic" video games market in North America and Europe for poor sales of its products.

The publisher posted a higher-than-expected net loss of ¥13.7 billion (approximately $134.9m/£87.6m) for the financial year, restating that the company's emergency restructuring--announced back in March--has taken a large chunk out of the company's coffers.

Tomb Raider, Hitman: Absolution, and Sleeping Dogs have all failed to meet Square Enix's expectations, though all three games have sold millions of copies.

Right now Square Enix is working on Lightning Returns: Final Fantasy XIII and HD versions of Final Fantasy X and X-2. Eidos Montreal is also readying a next-gen reboot of Thief for 2014.

Square Enix has also a brand new Final Fantasy announcement at E3 2013.

In response to the financials, Square Enix pledged to increase the turnover of its titles, increase its amount of mobile and tablet games, and create titles more specifically suited for the regions they are primarily being sold in; Square Enix's phone and browser games have been hugely successful in the Japanese and Korean markets, for example.

Square Enix now expects to make a net profit between ¥3.5 and ¥6 billion by this time next year.

Former Square Enix CEO Yoichi Wada resigned in March after spending 12 years in the role, and the company has made job cuts at its Los Angeles and London studios.

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Discussion

460 comments
DigiRave
DigiRave

Of course they are going to name the final escape the number one moment in the game (referring to the video), but is it really #1? Or is it just some bullshit they say because the developers want it to be?

blaze_boy30
blaze_boy30

Release KH3 and Versus XIII. Problem solved.

Hurvl
Hurvl

"Tomb Raider, Hitman: Absolution, and Sleeping Dogs have all failed to meet Square Enix's expectations, though all three games have sold millions of copies." Games journalists at Gamespot don't often offer opinions about the things they report on, that's not their job, they're reporters who report news. However, even they cannot keep themselves from question how games that sold millions of copies can be considered failures. I hope Square Enix manages their money better this fiscal year, because you can't allow a game that sells millions of copies be a failure.

nextgenbringit
nextgenbringit

Square/Enix, why don't you focus on your IPs that you haven't milked to death?  Chrono, DQ, Actraiser....   Give FF a rest until you have something that is actually different.  I like Tomb Raider and Sleeping Dogs though.

sequekhan
sequekhan

Release more mobile and tablet games then. Just don't expect hardcore platform gamers to buy anything at all from your worthless hides.

WantYouBad
WantYouBad

It's true the market is an oligopoly, but that isn't the reason you're losing money. How about making a good game for once. Ruined every Final Fantasy they got their hands on. Squaresoft was excellent though, RIP.

GothikaGeist
GothikaGeist

SquareEnix needs to stop blaming their western developer's titles. Those games sold millions! It seems to me that their losses are more connected to all their Final Fantasy Remakes and HD upgrades, spin-offs, sequels , and endless development cycles/delays.

Shaoran_Li
Shaoran_Li

I swear they might as well remaster older titles. I know this is crazy but if they REMASTER (not remake - REMASTER) FINAL FANTASY VIII in HD I'd so buy it DAY ONE. Higher res rendered backgrounds, HD masters of CGI clips, whole game expanded for widescreen viewing. I guess there'll be a little remake involve but ONLY GAMEPLAY GRAPHICS. There doesn't have to be dialogue because it's essentially the SAME GAME, just with enhanced graphics.

  I think it's time to think a little backwards with past games that are actually games and re-release them to today's HD standards.

Fastphase1
Fastphase1

I think the reason for so high expetations was the fact that Squar Enix is the Japanese ditributor for Activision and COD has been a smash even in Japan.

Darth_Ultima
Darth_Ultima

Maybe they shouldn't waste money on features like tacked on multiplayer.  Perhaps that money should have been spent on, I don't know putting the tomb in Tomb Raider.

jxsilicon9
jxsilicon9

They should have took into account the recession and limited game budgets. 

istuffedsunny
istuffedsunny

Maybe it's not the market and it's your shitty games. Stick to what you're good at, JAPANESE GAMES FOR JAPANESE PEOPLE. Why do companies like Square suddenly think Americans only like crap like Gears of War? Create what you know, it will be good, and people across the world will buy it.

jesusismyhomie
jesusismyhomie

Lower the price of games!!!!! There.. fixed your issue.

cosades2002
cosades2002

I appreciate the fact that Square is taking risks but there sales expectations were way to high.

PinchySkree
PinchySkree

"ol·i·gop·o·ly

A market condition in which sellers are so few that the actions of any one of them will materially affect price and have a measurable impact on competitors."

Ohhhh, so there's so few sellers of the game that it didn't sell due to one seller lowering their price too low and others following suit.

Bullshit.

travadinho
travadinho

Hmmmmm......I agree with most of the posters here on the forum.  However, I don't think SquareEnix has "lost touch" with reality and with what fans really want.  I say that because I don't think SquareEnix ever really had their head in the right place.  To me, things went into the sh*tter after Square and Enix merged.  I've really only enjoyed 2 titles with the SquareEnix logo stamped on the front....and that was FF12 and Kingdom Hearts 2.  And even those 2 games, in my opinion, don't hold a candle to classic Square games.  Personally, I never really enjoyed any of Enix's catalog (I'm sorry...but the Dragon Warrior/Quest series needs to be put down like Old Yellar....). 

The company is posting huge financial losses because their output has been very lackluster.  Did we need all the remakes, sequels, and international versions of games?  That's just what I've...uhhh...always...wanted......an HD version of FFX (maybe if we are lucky, we'll get a 3-D version of FF13 in a few years!!!).  Speaking of FF13...like someone else said.....WHO is demanding all these FF13 games?   I didn't like 13 and 13-2 was ridiculous, so 13-3 is forever on my "I don't care list".  And we all know of the fiasco named Versus 13 (....and don't get me started on FF14.......).  Once upon a time, I'd jump all over a Square release.  I knew the game would be a unique, quality product (ahem...Vagrant Story).  Now, I don't trust the company to release a quality game.  Even if they release a game that does appear to be a very good game, I won't buy any SquareEnix games until dramatic price drops or they become available on the secondary market for the cheap cheap. 

Bottom line:  My story isn't special, but it is just one example of gamers' opinion towards the company's recent output:  we're disappointed in the effort (or lack thereof) and so we're not as willing to buy games from you as we once were.  Why waste my cash on some shallow FF13 sequel when there are other companies producing much better games?

bstaaden
bstaaden

What I find irritating about this is that from the perspective of number of copies sold, each of these games has been very successful. The whole thing feels like a kid who gets a toy for his birthday and throws a tantrum because the toy wasn't bigger. 

I know that part of this is that the publishers are held to a certain (potentially unreasonable) expectation from their share holders and that the market is extremely volatile in that any hint that a company might not be as profitable as they'd like means millions or billions of dollars. Combine that with gamers demanding better and better graphics, fewer bugs despite greater complexity, and greater anger at "profit recovery" measures such as microtransactions, low-effort-high-profit DLC, online passes, etc. and publishers aren't in a good place. However, something's gotta give.

Indie devs and crowd funding have hopefully shown that there is a desire for games that aren't controlled by huge corporations putting out cookie cutter crap and don't demand the latest and greatest in graphics technology but instead are focused on actual gameplay. I love big games like Mass Effect, and little ones like Braid. Hopefully there's room somewhere in the middle without big publishers wildly overreacting and spewing out nothing but the latest mobile junk supported by in app transactions.

matthova
matthova

Tomb Raider is amazing, but FF13 sucks a**

CrouchingWeasel
CrouchingWeasel

I'd like to know how in the fuck it is possible to lose money on a game Tomb Raider when it sold over $200m in 3 weeks. Did they shave a monkey & put a suit on it the last time they promoted someone/something to be Square's CEO? Maybe if they stopped charging such criminally outrageous prices for their Final Fantasy mobile ports they'd be a bit less hard up than they are now.

moonlightwolf01
moonlightwolf01

There's a failure to understand their franchises at the heart of all this. tomb raider and hitman both sold more than they ever have before yet they failed to meet expectations, well what were the expectations doing being so high in the first place.

rpaulino1
rpaulino1

I dont know but asian games are too linear, its boring.  Farewell Square Enix you did ok

paparolo
paparolo

Well, if they cling to microtransaction based browser games, and FFs "HD remakes" (which i hate because they are the same game upscaled to 720p, no extra value on it) you can think of what kind of a future they have...

I mean, there are lots of asians out there, but THAT much to return to profit?

I do wish Square the best of luck though, i would very much like to see TRs story unfold, Lightning Returns - FF XIII... not interested too much really, i enjoyed FF XIII but XIII-2 seemed taking a ewird direction regarding Pulse's story and LR seems going even farther off...

CecilChups
CecilChups

I bought Final Fantasy 13 at 18 dollars. I bought 13-2 for 20 dollars. 

If they expect me to buy Lightning Returns for 60 dollars, all that I have to say to that is.....

Yeah no.

Oh yeah, BTW those games are still in my backlog. I can wait for a long, long time for price drops on video games.

But, after reading the comments about how good Tomb Raider is, I will wait until its 20-25 to pick up that as well.

naruto0187
naruto0187

Great. Another FFXIII sequel. Just great. I honestly disliked the first game, so I abandoned all plans of ever getting the second game when it was announced. Just, please, get on with Versus XIII already.

lordingus
lordingus

go ahead square, keep charging 16 bucks for an iphone game and see how that strategy will help your bottom line...

xepha537
xepha537

I am disappointed. There was nothing in this article about Square Enix blowing up an Oligopoly... :(

JRLennis
JRLennis

@Shaoran_Li I'm pretty sure what you describe just isn't possible.  It's one thing to give FF X the high-def treatment, quite another to do the same to a title that's two generations old.

And you have to consider that most gamers would regard a mere remaster of a beloved title with disdain.  They would, and should, expect more.  It's important for Square-Enix to appreciate its roots, but they have to be careful not to look stagnant or be perpetually living in the past.  A NEW Final Fantasy VII would be taking a bold step into the future.  Simply putting a new gloss on a 16-year-old engine would make them look ridiculous.

JRLennis
JRLennis

@istuffedsunny Be careful what you wish for.  Square-Enix is losing faith in the American market.  They just might decide to take your "Japanese games for Japanese people" philosophy to heart and keep those games in Japan.

Corrupted_Wolf
Corrupted_Wolf

@jesusismyhomie 

It doesn't work that way. For starters, lowering prices doesn't fix their issues if the profit per sale doesn't cover the cost.

MrNWatson
MrNWatson

@PinchySkree It's not too few sellers of individual games, it's too few publishers of games in general.  And because there are so few, what one does has a tangible effect on the others.  Now, imagine if you will what would happen to EA and Activision and Square Enix sales if, say, Valve suddenly released Half Life 3....  

parrot_of_adun
parrot_of_adun

@PinchySkree Funny. But there's a reason people usually don't appreciate facetious comments.

You know exactly what he was trying to say, and unless you've been living under a rock, you know he's right. To what degree this effected sales of SE games is debatable, but it's become painfully obvious that most of the growth in the industry over the last decade has been largely through the giants like EA or Activision or Ubisoft. As such, they control it far too easily.

Xristophoros
Xristophoros

@travadinho One additional game you can add to the library of good "Square-Enix" games is Dragon Quest 8. I am not a DQ fan by any means either (that is the one and only game I have played in the series) but it was a solid game all around and one of the last great JRPGS in my opinion.

travadinho
travadinho

Oh and for the record, I've NEVER posted on these forums (and may never again).  I created an account JUST to respond to this article.  My friends and I have held a negative view of SquareEnix for a long time now. 

SipahSalar
SipahSalar

@bstaaden Indie games also means low production values. Theres only so much of Braid-like games with little eye-candy one can take.

theend3r
theend3r

@matthova Tomb Raider is crap but DE3 and Sleeping Dogs were quite good.

greater_bird
greater_bird

@CrouchingWeasel   I don't think anyone's said any of those 3 games lost money. They just didn't meet sales expectations (ie. didn't make as much profit as expected). Companies base their yearly budgets on estimating how much income they'll make from that year's game releases. That decides how much they can spend on development of future projects, moving into different markets, paying for staff or infrastructure, etc. In this case, sales in the NA and European markets were much lower than anticipated, so they've spent money that hasn't been made up by game profits, causing the company a loss.

Since they intend to increase the number of mobile games in their lineup as part of their recovery strategy, that's clearly an area that *did* meet expectations, so sadly I wouldn't hold my breath for price drops there.

Bayonetta2013
Bayonetta2013

@naruto0187 Versus has a separate development team. If you want to blame anyone, blame the countless Kingdom Hearts spin-offs. Birth By Sleep, 3D, and I think there's one other I'm missing...either way, Versus XIII and LR:FFXIII don't really interfere with one another. 

Coren_Larken
Coren_Larken

@naruto0187 Serious. I'm not entirely sure who is demanding all of the XIIIs. I haven't met anyone who owned either that said "this deserves multiple sequels."

Dieofnv
Dieofnv

@Corrupted_Wolf @jesusismyhomie yes it does !!!

we saw it happend once with NFL 2k 

did you forgot about it or you where to young to remember 

when madden and 2k had the rivalry 

In 2004, Sega signed a deal with Take-Two Interactive in which Global Star Software (Take-Two's low-price unit) distributed and co-published all titles in Sega's ESPN franchise.ESPN NFL 2K5 was priced at $19.99 the day it shipped, versus the typical new-release price of $49.99 for Madden NFL. This earned it a wide audience among more casual football fans on the PlayStation 2 and Xbox, and for the first time the series obtained a significant market share compared to Madden NFL. One EA developer recalled that Sega's aggressive pricing "scared the hell out of us"

jesusismyhomie
jesusismyhomie

@Corrupted_Wolf @jesusismyhomie No, but people would definitely think about buying more if it were cheaper. not everyone can afford $60 games. Here's the comparison: Would you rather have 1 person buy 1 $60 game or 4 people buy 1 $30 game. It adds up. 

travadinho
travadinho

@Xristophoros @travadinho  

Besides playing the NES versions when I was a kid, DQ 8 is also the only game I've played in the series.  And I agree that it is a solid game.  I've tried 6 and 7 and couldn't get into them.  The series is just a little outdated for my tastes (and I generally prefer old school games). 

bstaaden
bstaaden

@SipahSalar Absolutely right, which is why I said I hope the answer is somewhere in the middle. There's only so much eye candy but no substance one can take as well. The problem is that publishers are very slow to react to a changing market. They've been going bigger and bigger but still demanding (or their shareholders are demanding) the same level of profits they've always had - or more. There are some different ways to do that.

1) Increase the price of games to counter the rising cost of development, marketing, etc

2) Lower the production values so that profit is sustainable (such as with mobile games)

3) Find more streams of revenue such as DLC, in game purchases, etc

4) Compromise on the profit vs production to find the sweet spot where you're not scaring off your customers with the cost but still making money (or some derivative of this, such as kickstarter 'tiers')

Right now, publishers are going after #2 and 3#, though it would not surprise me if #1 happens with the new generation consoles. And heck, there are probably a lot of other options out there, but corporations are not known for being nimble or risk takers. They like to play it safe, which is why you're seeing so many games with tacked on MP with passes, in game purchases, and mobile games. These are all ways to increase profits without much additional effort.

Bayonetta2013
Bayonetta2013

@theend3r @matthova Am I the only one here who liked Tomb Raider, Sleeping Dogs, AND Final Fantasy XIII? 

Seriously, just finished Sleeping Dogs, and thank the lord for SE reviving that one! 

M3o5nster
M3o5nster

@bstaaden They could just stop focusing on graphics so much, and go back to making great stories and gameplay, like the old Final Fantasies.

Who am I kidding?.. That won't happen.