Square Enix discloses future plans

Opens kimono on relationship with Mistwalker, pegs sales target for Final Fantasy XII, says it's ready for the online battlefield.

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In its general shareholders meeting held over the weekend, Square Enix officials disclosed a number of specifics concerning the company's business practices and strategy for the future. Immediately after the meeting, a number of investor and business sites addressed topics covered in the meeting.

Among the most significant were the following:

-- On the topic of the relationship the company still maintained with former executive producer Hironobu Sakaguchi, officials said they remained "in contact with him," but had no "capital relationship" with his studio, Mistwalker. The company was supportive of his decision to blaze his own trail in the relatively young game industry, saying that it's important for game developers to create their own path and realize their own goals.

-- When asked how long it would take for the next Dragon Quest title to be released, officials skirted the question. One of the ways it could continue to attract fans of the series would be to create spin-offs, officials said. Spin-offs based on the franchise are, of course, nothing new. Square Enix has already released such spin-off games as Dragon Quest Monsters and Fushigi no Dungeon.

-- To realize certain financial goals, the company said it was targeting sales of 3 to 4 million copies of Final Fantasy XII for the PS2 (due next year).

-- Square Enix said the current fiscal year, ending March 31, 2006, would be a "difficult period." The company attributed the challenges to the fact that it's a transition year for consoles.

-- When it was pointed out that Square Enix could be bought out by any investor that could raise 200 billion yen ($1.83 billion), the company commented that while this might be so, its biggest and most valuable capital resources are its talent, and that talent cannot be bought. Officials said the company could remain profitable on net revenues of 30 billion to 40 billion yen ($276 million to $368 million).

-- By Square Enix's assumptions, the game market in Japan is getting larger, not smaller. This, according to officials, is due in part to revenues generated by used games (which add nothing to the coffers of publishing companies). The company explained that things were different back in the NES and SNES days, when saved data was stored on the game cartridge rather than a separate memory card.

-- Square Enix disclosed that it expects online games to become the mainstream revenue stream for it and other game companies, explaining further that all next-generation handhelds and consoles will be online-enabled. The company also said that its online operation is growing faster than the market's demand, assuring investors that it will not fall behind in the online gaming sector. "We have 50 percent share in Japan, and we've beaten EverQuest in America. We're doing well in Europe as well."

-- In terms of business in China, Square Enix vice president Keiji Honda (based in Beijing) explained that Square Enix broke off an earlier relationship with its Chinese partner in order to give it "more freedom." Honda explained, however, that China is a difficult market to penetrate, with its many governmental restrictions.

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