Square Enix: Game industry undergoing "major changes"

The game industry is currently undergoing "major changes" due to the proliferation of smart-devices and the "increasingly competitive" console market, Tomb Raider and Final Fantasy publisher Square Enix said today as part of its latest financial report.

"The business environment surrounding [Square Enix] is in the midst of major changes, where smart devices such as smartphones and tablet PCs are spreading rapidly, while the console game markets in North America and Europe are increasingly competitive and concentrative."

Square Enix's comments follow those from Just Cause creator Avalanche Studios founder Christofer Sundberg, who told GameSpot this week that AAA development--in its current form--is unhealthy and unprofitable. Avalanche is currently making a AAA game for Square Enix that is believed to be Just Cause 3.

In light of these "environmental changes," Square Enix said it plans to reform its business structure and organizations in an effort to reestablish revenue bases for "substantial earnings improvement."

Part of this effort is releasing more mobile games. To that end, Square Enix Montreal is "fully focused" on making mobile games based on the Hitman series, Square Enix said last month. On the console front, Square Enix explained last summer that it had "walked away" too early from past games like Sleeping Dogs, and in the future it will invest in games with more persistent online worlds to keep players engaged.

Overall, Square Enix posted revenue of ¥102 billion ($1 billion) for the nine-month period ended December 31 and a profit of ¥5.2 billion yen ($49 million). Sales were down just .3 percent, while profit showed major improvement, rising from a loss of $56.7 million last year.

However, Square Enix's game group--Digital Entertainment--saw revenue fall 2.2 percent to ¥56.5 billion ($558 million), but many titles performed well during the period, the company said.

Square Enix said console titles in North America were "strong" during the period, while Final Fantasy XIV: A Realm Reborn is currently making "favorable progress." On top of that, Square Enix said content for smart devices and PC "continued to build upon its already solid growth" during the quarter.