SQUARE ENIX Expecting “Extraordinary” Loss Due To Bad Sales, Surprising No-one

Square Enix have had a tough time of it recently, by which I mean over the last couple of years. It’s now come out that they are expecting to post “extraordinary losses” for this quarter, primarily due to costly restructuring as well as “due to slow sales of major console game titles in North American and European markets.”

The news first started coming in that these losses were due to a restructuring effort, the break down of which was stated as:

” The extraordinary loss are composed of loss on disposal of content (approximately ¥4 billion), and loss on evaluation of content (approximately ¥4 billion),and the other(approximately ¥2 billion)

It’s important to note that extraordinary loss means that the loss is out of the ordinary and will not be repeated in subsequent quarters, at least Square Enix hopes, it doesn’t mean they’ve lost so much money they’re forced to prostitute Cloud for any spare gil they can get their hands on.

On the back of this news, president and representative of Square Enix, Yoichi Wada, is stepping down from his role in the company. His replacement will be Yosuke Matsuda will assume the role in June. Wada first started working for Square in 2000 and became the CEO in the same year. He became the president when Square merged with Enix.

After all of this, another part of their financial report  was flagged as blaming Sleeping Dogs, Hitman: Absolution and Tomb Raider as not performing adequately at retail to keep Square Enix in the black.

The above image shows that each game was received very well by critics but couldn’t meet their targets. Considering these numbers are only for disc based sales (discounting downloads on services such as Steam) that seems pretty harsh as these no doubt lowered figures show each game performing admirably. SE sold about 8.75 million units of their games, but were expecting to sell about 15 million in the 6 months leading up to the end of March 2013. These expectations seem remarkably high. It seems that the games have been performing worse in North American markets than the EU, a disparity that might be costing them quite heavily.

Fans have been screaming at Square Enix to pull their heads from under the sand and re-evaluate for years now. Their future looks very Final Fantasy heavy, with Final Fantasy 13: Lightning Returns, Final Fantasy Versus 13, Final Fantasy X and X-2 HD remake and the relaunch of Final Fantasy 14. Perhaps we are seeing the detrimental effects of a very long console life span, or market saturation as speculation suggests there can only be 10 or so massive AAA games each year.

Do SE need to stop trying to make these games into huge blockbusters, loading unreachable expectations on them? How about a return to roots and classic RPG’s? Some have suggested new IP’s are the answer to their woes but we can only hope that their promise at the Playstation 4 Announcement event to stay tuned for E3 will be worth while.

Source: Forbes, IGN