Square Enix limps through fiscal '07

Final Fantasy publisher sees revenue fall 9.8 percent to $1.4 billion, profit sinks 20.9 percent to $89 million.

Earlier this week, Square Enix president Yoichi Wada recognized a need for change within his company, saying to Reuters, "We need to go beyond traditional Square Enix." After a look at the game maker's fiscal year 2007 performance, it's easy to see where he was coming from.

Reporting today on its fiscal year ended March 31, 2008, Square Enix said that both revenues and earnings had dropped off significantly from the year before. Sales dropped 9.8 percent on the year to ¥147.5 billion ($1.4 billion)--a sharp contrast to last year's 31.3 percent gains, which grew revenue to ¥163.4 billion ($1.6 billion). Although Square Enix was able to curtail a precipitous slump in net income from a year ago, the publisher still posted net income down 20.9 percent to ¥9.2 billion ($89 million).

Square Enix was hit hardest in overseas markets, where sales had slipped 45.7 percent in North America, 41.1 percent in Asia, and 35.3 percent in Europe during the year. That's in sharp opposition to Wada's professed desire to expand its overseas presence to account for 80 percent of the company's sales. As part of this end, Square Enix said last year that it was actively looking for US publishing partners. In addition to confirming Dragon Quest IV, V, and VI for North America earlier this week, Square Enix dated its Xbox 360 role-playing game Infinite Undiscovery for September 2.

The usual suspects dominated Square Enix's list of games that performed well for the year. A handful of games released during its fiscal year 2007 broached the 1 million unit mark, including Dragon Quest IV for the Nintendo DS and Crisis Core - Final Fantasy VII for the PlayStation Portable. Also measuring out respectable sales were Final Fantasy IV (DS) with 590,000 units in Japan, Final Fantasy XII: Revenant Wings (DS) with 760,000 units in Japan and North America, and Dragon Quest Swords: The Masked Queen and the Tower of Mirrors (Wii) with 490,000 units in Japan and 110,000 more in North America. All said, sales of Square Enix's offline ventures were down 19 percent year over year, amounting to yen 41.6 billion ($402 million).

As for the publisher's online games, the publisher said that Final Fantasy XI had hit 500,000 paid subscribers. Online-games revenue was down 11.4 percent to ¥12 billion ($116 million), whereas mobile-phone content saw a similar drop of 15.3 percent to ¥6.6 billion ($64 million). The downturn in the arcade business dragging on Sega Sammy, Namco Bandai, and Capcom is apparently affecting Square Enix as well, with the publisher reporting a revenue fall of 8.7 percent to ¥69.1 billion ($668 million). One of the game maker's other big businesses, publications, held fairly steady for the year, dropping a mere 0.4 percent to ¥11.1 billion ($107 million), whereas the miscellaneous and sundry category rocketed skyward 126 percent to ¥9 billion ($87 million), thanks to the collectible-card game Dragon Quest Monster Battle Road, which launched in July.

Calling 2007 a "period of transition," Square Enix projected that revenues and profits will do an about-face in its 2008 financial year, which ends March 31, 2009. Laying out its future outlook today, the company expects that net sales will rebound 8.5 percent to ¥160 billion ($1.5 billion), with net income seeing a far healthier uptick of 30.5 percent to ¥12 billion ($116 million). To pull off this turnaround, the publisher said it was investing heavily into research and development, with an eye toward amping up "advanced information technologies, which are crucial to promote network-related businesses."

308 Comments

  • Ted_Zanarukando

    Posted Nov 15, 2008 7:48 pm PT

    Square Enix, stop focusing on the Nintendo DS. We have had enough disappointment. We do not want more of the same negative reviews Final Fantasy X-2 got. We want high-end new titles and some HD remakes. Embrace the Crystal tools.

  • ff_medo_lp

    Posted Jun 8, 2008 1:01 pm PT

    SE stop remark every single game u made before and focus on the new games like FF XIII & vsXIII and for god sake show us some trailers for them don't but it in E3 only ...
    you disappoint your fans so WAKE UP !!! and don't mess up all u have done before ......
    and for how think that FF will be on 360 too i don't think that 360 can even handle it lol

  • moh2in

    Posted Jun 1, 2008 9:21 am PT

    100 years later...


    "Final Fantasy XXVII"
    lmao.


    Anyway, agreed, SE isn't what they used to be when games like Chrono Cross, KH 1 came out. but they are not doing bad with new ideas like the World Ends With you

    I still like Final Fantasy 12, it is an amazing game and i spent a lot of time playing it, but high end graphics, to be honest, aren't going to help this series out. They need ideas, fresh ideas, and fresh storylines, just like vagrant story, and ff7 , games that made you cry and laugh

  • lostinseganet

    Posted May 31, 2008 2:59 pm PT

    Weeelll RaiKageRyu I am glad you do not make the decisions.

  • CTBradums

    Posted May 30, 2008 3:37 pm PT

    "Haha! They deserve it for releasing just old games that weren't released outside of Japan and just milking existing franquises. I hope that when Yoichi Wada said "We need to go beyond traditional Square Enix." he meant concentrating on making good, new and interesting new games. They should concentrate on the hardcore gamer. It's like the plague that now so many companies want to have a "broader audience"." - Louis_Armstrong

    I was going to post the exact same thing.

    They don't need to look past "Square-Enix", they need to friggin' DROP Enix. Ever since the merger, we've seen our favorite RPG titan turn from a "masterpiece every year or so" into a crap-churning "fifty games a month with hardly any effort or original thought".

    I love Square for all they've done, and the heart-and-soul games they've given us that proves games are more than button-mashing toys, they're pieces of art. However, if they're going to continue looking like idiots and feeding us dozens of mass-produced spin-offs and horrible excuses for games, I'd rather the company save us the trouble and die.

    I've been waiting for a Chrono sequel to Cross for years, but if their Enix work is any indication, I think I'd just end up killing myself at what a huge disappointment it would likely end up being.

  • thenephariouson

    Posted May 30, 2008 7:05 am PT

    SE can go under for me as FF seems to be all they do, rather than try and squeeze every last 'Yen' out of an archaic game they should try something refreshing and new. The term "Flogging a dead horse" springs to mind!

  • AceCometh

    Posted May 29, 2008 2:52 pm PT

    They'll pull through. Watch for this to put more pressure on Square-Enix to release more Final Fantasy titles onto the Xbox 360. It's best, sure fire way to increase profit. Sony fanboys will hate it, and Microsoft fanboys will love it. Regardless of opinions, it would be a money maker and I'd rather see them make money and stay around than to fold over the touchy issue of the exlusivity of titles.

  • jmig556

    Posted May 29, 2008 9:31 am PT

    I still cant believe they have no high profile releases out for the ps3 yet....whats up with that? maybe they will make some money when they start releasing games for the people who have traditionally been interested in japanese rpg's..........playstation owners.

  • nate1222

    Posted May 28, 2008 7:15 pm PT

    I'm a fan of Square-Enix (more so Squre before the merger). So I hope they can pull through. I like that some of their FF games are coming to the DS. I loved the FF series on SNES and PS1. I still own FF Anthology (PS1). Beat and loved FF7 (PS1). Played FF8 & 9 (PS1) - loved'em. FFX (PS2) was awesome. FFX2....I'll try not to say anything 'bad'. Kingdom Hearts 1? Great! Kingdom Hearts 2? Meh! I think that releasing the older FF games on handhelds (paricularly the DS) would help Square-Enix greatly. Simply because those games are already developed, have fan bases and have low hardware requirements (they're 3 generations ago). So they could turn a profit with very moderate sales.

  • SalarianChemist

    Posted May 28, 2008 3:03 pm PT

    Infinite Undiscovery for the Xbox 360 is going to be a great game, and it should help Square Enix out.

    Final Fantasy 13 and Final Fantasy 13 Versus won't be available until either late 2009 or sometime in 2010...Thankfully, the same people who said that Devil May Cry 4, Virtua Fighter 5, Assassins Creed, Unreal Tournament 3, and many others would not be Playstation 3 exclusive and would end up being released on the Xbox 360, too, are now saying that Final Fantasy 13 and Final Fantasy 13 Versus will be released simultaneously on both systems.

    Personally, I don't care about Final Fantasy 13. It is two years away, and there are newer and better games like Lost Odyssey, Infinite Undiscover, Elder Scrolls 4, and so many others.

  • eckolocke

    Posted May 28, 2008 10:57 am PT

    @not_dryad : Finally! someone that knows KH2 was a total dissappointment. KH1 had platforming etc etc. KH2 makes your thumb hurt and may break your X button on your controller b/c its all you need to use. But anyways...

    It all comes down to this: Square Enix has allowed a fad to govern their business decisions and now they are paying for it. Handhelds and cell phones are not the meat and potatoes of their financial empire but they tried hard to make it so. Unfortunately , rererereleasing old classics is not what we want (as shown by sales). But really instead of beating a dead horse....

    MSG-Deathscythe said it all. VAGRANT STORY! FINAL FANTASY TACTICS PROPERLY MADE!
    CHRONO TRIGGER/CROSS/HARPOON/LOLLIPOP for all i care!
    Just make it happen SE! FFXIII looks interesting but... havent heard a peep about it in months. What's up with that?

  • not_dryad

    Posted May 28, 2008 9:46 am PT

    GameDemon88

    "Kingdom Hearts 2" "great"

    Ahahaha, no. KH1 was great; KH2 was a huge disappointment. I gave up on that game by the time they wanted me to backtrack through every single world.

  • FLEEBS

    Posted May 28, 2008 8:56 am PT

    Oh, and grafkhun, Lost Odyssey is NOT made by Square Enix, it is made my Mistwalker Studios, which employs the most important Final Fantasy people involved in the company. Sakaguchi and Uematsu to name the most important.

    Final Fantasy has never been the same since these guys (and others) left.

  • FLEEBS

    Posted May 28, 2008 8:49 am PT

    If they would just release Final Fantasy: Marketing Tactics everything would turn around for the company.

  • Louis_Armstrong

    Posted May 28, 2008 3:52 am PT

    Haha! They deserve it for releasing just old games that weren't released outside of Japan and just milking existing franquises. I hope that when Yoichi Wada said "We need to go beyond traditional Square Enix." he meant concentrating on making good, new and interesting new games. They should concentrate on the hardcore gamer. It's like the plague that now so many companies want to have a "broader audience".

  • MSG-Deathscythe

    Posted May 28, 2008 1:54 am PT

    SqEnix, you deserve to lose money for making poor decisions. remake or sequel to (not just FF and DQ series) but to Chrono Trigger/Cross, Front Mission, Kingdom Hearts, Star Ocean, Vagrant Story, Einhander and Mana Seires. Enough of the stupd dumbed down DQ and FF series like DQ Swords and FF My Life As A King and sorry sequels like Dirge of Cerberus and FF X-II. you are just wasting time and money on these so-so versions. the Last Remnant looks like a step in the right direction and i hope Infinite Undiscovery will go to PS3 too.

  • StillWingless

    Posted May 27, 2008 11:03 pm PT

    A profit is a profit, no matter the decrease. I would hardly call that "limping". Barely getting out of the red? That's a little more limp-worthy.

  • Daishi512

    Posted May 27, 2008 8:32 pm PT

    Seems like Wada's calling for something besides the usual RPG they've always put out. It'll be interesting to see what kind of marketing tactics or even new games SqEnx will put out.

  • PixyMisao

    Posted May 27, 2008 3:40 pm PT

    Just remake the old Mana & Chrono games since remakes are the only thing that they seem to be good at doing anymore. Bring back the Actraiser & Soulblazer series and if Japanese love Front Mission & SaGa games so much they can keep them... in Japan. Oh and fire Koichi Ishi.

  • VirtuaCast

    Posted May 27, 2008 1:24 pm PT

    Who care if a SE can make more money by going multiplat? With a bigger base and budget they can make a better games. Dang fanboys are crazy.

  • GameDemon88

    Posted May 27, 2008 12:20 pm PT

    Rafinator
    I haven't seen anything good from square-enix since final fantasy X and kingdom hearts 1 came out...

    well wat about dragon quest 8, the world ends with you, kingdom hearts 2 all of these games were great

  • Rhubarb9

    Posted May 27, 2008 12:13 pm PT

    final fantasy 7 remake god damnit!

  • Rafinator

    Posted May 27, 2008 12:07 pm PT

    I haven't seen anything good from square-enix since final fantasy X and kingdom hearts 1 came out...

  • Homerj

    Posted May 27, 2008 10:26 am PT

    @Dahaka-UK

    I hate to break it to you, but SE has already gone multiplatform, including the FF franchise. When was the last time SE released something to a Sony platform other than the one just released for PSP?....2 yrs...3 yrs? Nintendo, specifically the DS platform has been keeping SE in business the last year. The rest of this year hinges on Infinite Undiscovery (360 exclusive) and Last Remnant (multiplatform). Your statement is another case of "I dont think that means what you think it means": platform exclusive titles may indeed be the best route for SE, but it appears that Sony may not be a part of that equation.

  • Guts5

    Posted May 27, 2008 8:57 am PT

    "Dahaka-UK It has nothing to do with not going multiplatform most of there bigger hitter games haven't came out yet. They can still make tons of cash and stay exclusive. Multiplatform games have always been lesser quality games than exclusive so I beg square not to go multiplat with it's FF franchise."

    Always eh? Really? So, playstation sports games are better than lets say 2K's sports titles and EA's sports titles, like Madden? And Haze is better than COD4? Shoot I'll go one step further and say COD4 is even better than Halo 3, when you take out vehicle combat. And Rock Bnd and Guitar Hero suck for being multiple platform compared to some of the exclusive Karaoke Revolution titles? Lego Stars Wars sucks too because it was multi-platform? Come on now. I see no evidence supporting your theory of multi-platform games always being lesser than exclusive platform games.

  • grafkhun

    Posted May 27, 2008 8:55 am PT

    infinite undiscorvery, the world ends with you, lost oddysey... its good to see SE getting some new franchises started. hopefully they stop rehashing old FF games (while they are phenomanol, we don't need 38957203 versions of it) and silly spin-offs like crystal chronicles and revenant wings are doing surprisingly well, so i guess they can beat that horse for a hwile longer.

    overall though, no worries, SE will always be around.

  • Ahiru-San

    Posted May 27, 2008 8:48 am PT

    square after sakaguchi and uematsu left = squarezero o_O

    enough with FF VII fanboys, it's my favorite game also, but, they should drop the FF franchise and start making some original games with those fresh minds in their staff (most people from the good ol'square FF days left the company after they merged with Enix...)

  • Sithlord

    Posted May 27, 2008 7:01 am PT

    I think the main issue here is SQ/EN has nothing really "new". Its all FF rehashes. I used to love the FF series from 1-7. After that the stories were all to "Eastern" and lost me (being an American). FF13 I am sure looks good, but it seems like most of the gameplay vids are just cinematics. Dragon Quest was always fun, but just not as well known here as FF. I am interested in Infinite Undiscovery, but I am worried that, again, it will translate poorly with American audiences. I hope I am wrong, as SQ/EN needs to find a new IP to concentrate on.

    Now, a FF7 remake would be great, but it's not the entire answer to thier company. What about a next gen remake of CHRONO TRIGGER. Come on, THAT would be great!

  • R1ncew1nd16

    Posted May 27, 2008 6:55 am PT

    Obviously they didn't make as much money last year, they didn't release any high profile/decent games. I haven't even heard of most of the games in that list, they need to just get something big out, even some rubbish like kingdom hearts because loads of ididots always buy those games.

  • spidey008

    Posted May 27, 2008 6:53 am PT

    Square just can't compete with Western developers. They do in fact need a change of strategy.

  • Dahaka-UK

    Posted May 27, 2008 6:07 am PT

    It has nothing to do with not going multiplatform most of there bigger hitter games haven't came out yet. They can still make tons of cash and stay exclusive. Multiplatform games have always been lesser quality games than exclusive so I beg square not to go multiplat with it's FF franchise.

  • pikastar

    Posted May 27, 2008 5:59 am PT

    Their main titles for this year were all handheld games. Not that thats bad, they sold very well and were great games. But once they get Last Remnant, Infinite Undiscovery, and the 2 FFXIII titles they will bounce back. Not to mention the slew of handheld games scheduled for release: Both Star Oceans, Kingdom Hearts: BbS, FF Dissidia for the PSP and Kingdom Hearts 358/2 Days, FFIV, FFTA2, Sigma harmonics, the 3 DQ games for the DS. Just to name a few. SE still has the best games. Way better then any of the western RPGs.

  • jmartin1016

    Posted May 27, 2008 5:38 am PT

    Square is awesome. Most talented CGI artsists in the world. This is the year directly between FF releases, whne 13 comes out they will be making bank again. Also they are making games for all systems now, ut takes a year or two to really get the hang of that.

  • IceDefenseGod

    Posted May 27, 2008 5:22 am PT

    Their sales are going down because they're releasing less quality games.

  • zhevox

    Posted May 27, 2008 4:46 am PT

    thats what you get when you release games on only 1 platform....go multiplaftorm enix...trust me u'll earn millions

  • Mauller

    Posted May 27, 2008 4:42 am PT

    The market is changing. Western RPG's such as Oblivion, Mass Effect, and NWN are changing what we expect from an RPG. These games are going in new directions, offering up new possibilities and offering up great stories told in new ways. JRPG's just seem to rehash the same gameplay mechanics and the same generic anime styled art and characters. After playing through Mass Effect and feel like i'm watching a movie with it's amazingly delivered dialogue I had to return Lost Odyssey to the store. Having to sit there and hit a button after every single voice acted sentence just to hear the rest drove me nuts. And I refuse to hit a button just to progress past a dialogue box that says nothing more than "...."

  • lightwarrior179

    Posted May 27, 2008 4:14 am PT

    Square will have a much better next year, with many anticipated console titles like Last Remnant and Infinite Undiscovery next year.

  • thekey

    Posted May 27, 2008 3:32 am PT

    All they seem to have is Final Fantasy, andnothing else. Start publishing or mking other games Squenix!

  • thenephariouson

    Posted May 27, 2008 2:58 am PT

    Seems very simple to me:

    No FF series, No Square Enix!!

  • blackace

    Posted May 27, 2008 2:29 am PT

    Just hurry up and get Infinite Undiscovery, The Last Remnant and White Knight out. Start making more quality games for the XBox 360. Infinite Undiscovery should sell better then Lost Odyssey.

  • Foxhound_spy

    Posted May 27, 2008 12:26 am PT

    Why everybody here make abig deal with this news.....It`s a normal situation for big company like SE.....

    Once all their big hitters comes out ( FF13, New DQ.... ) they will be fine again. I can`t see multiplat as their only solution to face this problem....

    Look at Crisis core for PSP. Only for PSP and it sky rocket in sales. Even beating some of DS popular games....

    I see FF13 has no problem to repeat that success......Same goes to new DQ for Wii....

  • Foxhound_spy

    Posted May 27, 2008 12:21 am PT

    Why everybody here make abig deal with this news.....It`s a normal situation for big company like SE.....

    Once all their big hitters comes out ( FF13, New DQ.... ) they will be fine again. I can`t see multiplat as their only solution to face this problem....

    Look at Crisis core for PSP. Only for PSP and it sky rocket in sales. Even beating some of DS popular games....

    I see FF13 has no problem to repeat that success......Same goes to new DQ for Wii....

  • Foxhound_spy

    Posted May 27, 2008 12:20 am PT

    Why everybody here make abig deal with this news.....It`s a normal situation for big company like SE.....

    Once all their big hitters comes out ( FF13, New DQ.... ) they will be fine again. I can`t see multiplat as their only solution to face this problem....

    Look at Crisis core for PSP. Only for PS3 and it sky rocket in sales. Even beating some of DS popular games....

    I see FF13 has no problem to repeat that success......Same goes to new DQ for Wii....

  • chrono_wind

    Posted May 26, 2008 11:03 pm PT

    azntok

    "do not remake ff7, ff7 is already a good game as it is, if it gets remade, the people who have already played it will play it and not find it entertaining because theres nothing new and people who haven't played it will just find it to be like another ff game. i mean yes the game was amazing but why redo it up just to make it look better when everything else is the same? its like cars, they get redone every 5 years, looks, effeciency, options and its more expensive. only difference is cars bring us places for what 10-XXXk amount of dollars while as ff7 for $60 will give us the same stuff that looks better."

    As much as I don't want to see a FFVII remake, there's a chance... :/ I mean..Their popular titles always manage to pop up at a later time.FF1-6 have seen remakes so far and if it'll occur, FF7 will follow in the same footsteps. Perhaps, SE is waiting for the perfect opportunity in technology to push the limits of FF7 to the max. Not saying it'll happen, but instead, just a possibility.

  • Humikimi

    Posted May 26, 2008 9:38 pm PT

    I hope this doesn't mean they are going to desperately pump out mediocre games. We need more good, original games on the market like The World Ends With You, and I hope they take this as a cue to create even MORE awesome games like that.

  • azntok

    Posted May 26, 2008 9:38 pm PT

    do not remake ff7, ff7 is already a good game as it is, if it gets remade, the people who have already played it will play it and not find it entertaining because theres nothing new and people who haven't played it will just find it to be like another ff game. i mean yes the game was amazing but why redo it up just to make it look better when everything else is the same? its like cars, they get redone every 5 years, looks, effeciency, options and its more expensive. only difference is cars bring us places for what 10-XXXk amount of dollars while as ff7 for $60 will give us the same stuff that looks better.

  • ShadowBass989

    Posted May 26, 2008 8:58 pm PT

    remake ff7. that will get u money, then use that money to make new games. if they use lil money and rush them to the market, they will fail. tengen23

  • tengen23

    Posted May 26, 2008 8:39 pm PT

    do NOT remake FF7 that is a waste of time, make new games and get them to market faster.

  • Homerj

    Posted May 26, 2008 8:23 pm PT

    Square has publishing rights for Infinite Undiscovery (X360...releases 8-2-0 and has Last Remnant (X360 and PS3) most likely releasing by the holidays, so not to worry. Their revenues will rebound nicely once they release some new IPs in a more "western market friendly" way. Fanboy squawking aside, Nintendo has been keeping them afloat, but its the 360 releases that will move enough units to put them back into the black.

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