Square Enix: Game industry undergoing "major changes"

Tomb Raider publisher says business environment surrounding gaming today is significantly changed due to smartphones and tablets.

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.

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Eddie Makuch

Eddie Makuch is a news editor at GameSpot, and would like to see the Whalers return to Hartford.
156 comments
Vrygar777
Vrygar777

I think the biggest point Square-Enix is missing is people pay money for Good games, and for social games. Sure you can criticize CoD all you want, and yes it is basically the same thing every year, but the reason its so successful is because its so easy to play together. Minecraft's PC version has been outstandingly successful and its not a AAA title. People want games that are either A) Really fun to play with others or B) Good in its own way.

We all know FF XIII wasn't the greatest, because it tried to imitate CoD, but in the wrong way. 

Square Enix has been developing FF XV for, what 8 years? I'm sure that has to eat at the profits a little bit.

SpicaAntares
SpicaAntares

On a more interesting note: Thief is coming. Those interested in the PC version will be somewhat pleased to learn that, independently from whom you're buying the game, it will end up in the Steam servers. On the other hand if you're looking for the boxed version you'll be out of luck. From what I see it's only available as a digital download, and only through Steam.

On a liter note you can shop around for the best price. Nothing is forcing you buying from Steam. You will find prices vary, and some sell for less than Steam. If you pre-order you will get some extra, a mission or something. Expect reductions up to 25% of MSRP.

pddrumheller
pddrumheller

When I'm out and about I don't see people playing mobile games unless they are little kids, and that's not all of them either, and I live in a big city.

SpicaAntares
SpicaAntares

The day they'll stop doing AAA games will be their death knell. Although they're attracted by the money in the smartphone business, anyone can do inexpensive games and sell them for pennies. Don't have to be big for any of that and people won't pay more because it comes from Square Enix, EA or whatever. On top of that they can't control the distribution of those small games, while only them end up on retailers shelves because of their sheer size.

pddrumheller
pddrumheller

Who cares.  I am not a fan loyalist.  I just want good game-play, good story driven narrative that's above a 9th grade reading level, and can care about the characters, become emotionally invested,  a good graphical presentation, and an input device using what I like to call buttons, not touching a screen.  I like to watch the screen.  No thouchy.  I don't spend money on kiddie games.  Heck even kids today don't play kiddie games.  People, kids are more intelligent and intuitive then given credit.  I don't care who makes Final Fantasy as long as it goes with what was good, just like Silent Hill used to do but doesn't anymore, though Hideo Kojima might be making a Silent Hill so we will see.  I like RPG's of all kinds, but one reason why I liked older Final Fantasy's is because it was a tactical RPG...I had to use my brain.....what a concept.  Western RPG's incorporate tactical combat but it's more basic and not as involved.  I understand people don't like to grind for hours on end  and there is a simple remedy for that.  Don't make the game where your grinding all the time.  I also firmly believe Final Fantasy just needs a reboot.  New developers need to own the rights to Final Fantasy.  Square should sell Final Fantasy to a smaller developer that cares more about Final Fantasy than Square cares about making money.  Square makes enough money.  My favorite developer is Naughty Dog.  You don't see them screwing with a formula that works.  The game industry hasn't changed.  Games are games pure and simple.  What changes is the company who makes them.  A good book is a good book.  A good movie is a good movie.  A good game is a good game.  Cut and Print.

lustrate
lustrate

Forget FF i stopped at X. There's also no need for 15. Just make Kingdom Hearts III and start focusing on newer projects.

gaijingamer7
gaijingamer7

why try to make AAA games then? Just make an AA game, an old school FF, a bravely default with better looking sprites and a better story, call it FF resurrection and sell it on the PSN store as a digital download.

SiLenTWarrior29
SiLenTWarrior29

*sigh it's been a slow news week. No juicy troll baits so far. Meh.

Dieknochenblume
Dieknochenblume

I wonder what the industry will look like in 10 years from now...

*Looks into the future* 

- AAA games are scarce, if non-existent, and only GTA / COD clones exist. 

- All game genres are funneled into action/shooter styles. Final Fantasy XVIII is a FPS.

- Mobile gaming is self-aware, with all games coming out as F2P with artificially intelligent MTs.

- Only a few indie developer warriors prevail in open-source OS that are hunted down. They are known as "the Resistance".

- A soldier from the future travels back to 2010's to stop greedy companies from destroying gaming... and Nintendo from releasing the Wii U.

- The sole business conglomerate of game companies send cyber-CEO assassins that appear human to speed up the game catastrophe. They are known as... Financial Advisors.


AyatollaofRnR
AyatollaofRnR

The AAA market is dominated by big releases like GTA, COD etc. But I think there's a pretty healthy middle ground. Square's own game Tombraider is a good example (Even though they said it underperformed) it did quite well.


Smart phones and tablets are there own market. Square can go after that market if they like, but don't blame failure of their console games on it. The market still supports good games,

Brakkyn
Brakkyn

If only the money factor wasn't just that--a factor.

SphinxDemon
SphinxDemon

Lol its a shame square feels mobile is where the money's at. They complain about the lack of AAA 60$ game profit, but seeing gta v just blows this excuse away. They need to get it together.

I'm glad they understand FFXIV is doing well. For anyone not have played yet, now is the time! About to introduce Leviathan into the scene, and everything's getting juicy lol

JimmeyBurrows
JimmeyBurrows

Sooooo, when is ff15 coming out? Remember you were pulling a nice profit back when you spammed out a 'new' FF title every year or two... Try doing that again and it might cause a few good games to pop out and sell well.

If they stick with spamming random sequels, it isn't going to end well... And by FF15-5 will Noctis have anything on apart from budgy smugglers?

eva02langley
eva02langley

What a genius... of course you can create games for almost anything now... but you cannot play everything on anything.

RossRichard
RossRichard

What is funny is all these has-been publishers and second-rate devs are the ones crying about the current gaming market. Get Bethesda or Rockstar to start crying about not being able to make money and I will listen.

M3o5nster
M3o5nster

SE... Just give me my FFXV and we'll call it even. Have fun with your mobile market, and leave me out of it.

neowarrior121
neowarrior121

square enix make a decent final fantasy game without all the bullcrap you put into 13 games and you'll make a killing, why can't you see that?

xsonicchaos
xsonicchaos

These casual tendencies aren't gonna last extremely long. You can go all casual if you like, take money from unsupervised children and retarded pricks with too much time on their hands, but once this is over, you'll be crawling back to real gamers, you shameful beggars. And of course we'll take you, but you'll be taking it all from us, oh you will.

Hurvl
Hurvl

I've heard this exact statement from Square Enix before and my response is "oh yeah, then what are you gonna do about that, except state the obvious and whine about these changes?".

Jedilink109
Jedilink109

SquareEnix: "So since the market is moving to smartphones and tablets, we aren't allowed to charge people as much for these games.  Eh, we'll just make sure we charge twice as much as all the other companies and claim our brands are "premium brands" that are more worth it.  Oh and we can make sure players are nickle and dimed like crazy, that'll bring in more money.  And let's not forget these freemium games!  We'll make games "free", hehe, and then in order to play the game, we force players to be connected to the internet CONSTANTLY or else shut the game down on them.  And we'll only make the first  "chapter" free.  Let's make sure they buy all the other levels that make the game a complete game.  This money making is so going to work."

immortality20
immortality20

Make good games like Tomb Raider 2, Hitman and Sleeping Dogs 2 and I'll buy them no problem. Post bull about these games not making money when you put way too money into Final Fantasy, that's the real issue.

blackothh
blackothh

I would love to see a back to roots final fantasy game in the pipeline. But im glad they are profiting and not producing garbage across the board like some other company.

gamevixxen
gamevixxen

I personally think that mobile gaming and console/PC gaming can coexist if it's done right. Developers can use mobile platforms to introduce new titles and gain access to casual gamers that they can convert into console/PC game buyers. The strategy for developing games in the mobile world should be developing fun, addictive, high quality games that help promote the brand of the company without breaking the bank. Then use that money they attain from mobile to help plan for bigger budget games, preferably new IPs, on consoles/PCs. Not to say that some developers aren't doing this already, but there are certainly developers that are just using it as a means to pay their CEOs more and increase their overall bottom line than using it strategically to finance future projects.


I don't know...maybe it's easier said than done but what I don't want is the Gaming industry overall thinking that mobile games is the answer to their financial problems and lose focus that it's the console and PC games that are pushing the technology and creativity of game development, not mobile. It's just another platform to make money, that's all.

SingletreeAve
SingletreeAve

Perhaps the name Titanfall is prophetic of the gaming industry's future.  Conventional gaming on consoles and PCs will survive due to smaller and Indie developers.  The big guys are too cumbersome and will topple.

Barighm
Barighm

Translation: It's easier to make money on a game with a $100k budget than one with a $30 million budget.

ACMC85
ACMC85

PS4 definitely looks better. I hate when they shade visuals to hide imperfections.

Grenadeh
Grenadeh

They keep saying this yet show no sign of doing anything to improve their standing. Hint: It isn't by making mobile games.

digishah
digishah

If you wanna make more money from the mobile market, do 3D remakes of FF1,2,5,6 and Chrono Trigger and release them on iOS, Android and 3DS. Who wouldn't buy that?

pddrumheller
pddrumheller

@SpicaAntares  Yeah isn't Japan supposed to be smart.  Plus I thought the mobile market is different.  It shouldn't necessarily make more money it's just cheaper to develop mobile games

hystavito
hystavito

@AyatollaofRnR  I agree, mobile is a totally different market.  People don't go hmm, should  get a console for Tomb Raider or a tablet for Plants vs Zombies?? :)


What they really should be saying is not that mobile is hurting their traditional games business, but rather that mobile offers lower risks per game, higher margins, and explosive growth, etc., and they are going where the money is so to speak.

gamevixxen
gamevixxen

@immortality20 Yeah, it's BS and it's about time people started calling out companies like SquareEnix on their BS. There's no reason for them to make another Final Fantasy and when they do, they do a remake using the same lead character no one really cares for too much. I would kill to have another FF7 or even FF8 sequel rather than one that features Lightning in it. 

Even another Chrono Cross or Star Ocean would get me excited but SquareEnix is doing what every big developer is doing when they have one "cash cow" title to their name: Milk it until everyone gets sick of it. Honestly, I don't think SquareEnix cares about producing new content and quality content at that anymore....

shingui5
shingui5

@blackothh  "I would love to see a back to roots final fantasy game in the pipeline"

I'd like to point you towards Bravely Default. 

DAOWAce
DAOWAce

@Barighm It's also easier to make money by not spending $200 million on marketing.

Grenadeh
Grenadeh

@digishah  I wouldn't because A) They'll ruin Chrono Trigger and B) I'm not buying a 3DS ever unless its like 50 dollars.

gaijingamer7
gaijingamer7

You still sucking on that old school 'old school pacifier' comment you have replied with to more than one poster already

gaijingamer7
gaijingamer7

@Albelnox0 You still sucking on that old school 'old school pacifier' comment you have replied with to more than one poster already

SingletreeAve
SingletreeAve

@PlatinumPaladin @SingletreeAveI was talking about game publishers not console manufacturers.  I don't see Microsoft, Sony, or Nintendo going away anytime soon.  Big publishers like EA and Square Enix are really struggling and might tip over if they don't find solid ground.  I don't think the saturated casual mobile market is really what they are looking for.  It's just greener grass on the other side of the fence due to the number of potential customers and lower development costs.

Dark_Mits
Dark_Mits

@PlatinumPaladin @SingletreeAve  Some other big guys. In 1983 Atari toppled and Nintendo with Sega appeared. In 1995 Atari toppled again and Sony appeared. In 2001 Sega toppled and Microsoft appeared. If a hardware company topples again, there will be a new one taking its place.

Grenadeh
Grenadeh

@digishah @Grenadeh  I do. You know in your heart they will do nothing good - they will ruin it. A 3D remake would be a 100% redo of the game.

Grenadeh
Grenadeh

@digishah @Grenadeh  Why would I buy a shitty iPhone when I have an actual tablet that destroys iOS? I already own 3 copies of CT, there's nothing they could possibly do to remake that game so well that I'd even play it.