Profits from Final Fantasy VII Rebirth and Final Fantasy XVI did not meet Square Enix's expectations

As a devoted fan who has journeyed through countless worlds and battles within the captivating realm of Final Fantasy, I can’t help but feel a pang of concern upon reading Square Enix’s recent financial report. The HD Games segment, home to some of my most cherished gaming experiences, has fallen short of expectations, with Final Fantasy VII Rebirth and Final Fantasy XVI being the key releases during this period.

On May 13, 2024, Square Enix unveiled a summary of their financial report covering the period from April 2023 to March 2024 [PDF version]. This report compiles the results achieved during this fiscal year.

During the discussion about the financial summary, Square Enix mentioned that the earnings from their High Definition Games division fell short of their predictions. Notably, the two major titles launched in this sector during the fiscal year were the eagerly awaited “Final Fantasy VII Rebirth” and “Final Fantasy XVI”.

In the HD Games division, we launched several fresh games, among them “FINAL FANTASY XVI” and “FINAL FANTASY VII REBIRTH.” Regrettably, the revenues fell short of what we had anticipated.

For a moment, let me be upfront. If you’re thinking “This information is already known,” then you’re partly right. Here’s a brief explanation for those not in the know: Japanese fiscal years often span from April to the following March. After the fiscal year ends on March 31st, companies usually disclose their financial results approximately six weeks later, like Square Enix did here in May. Unlike some other Japanese firms such as Capcom and Koei Tecmo who swiftly release transcripts after presentations, Square Enix has always taken more time. This delay has even grown during the current fiscal year. As it happens, Square Enix released the transcript of the May 13th meeting on September 18th.

Previously, you might have come across reports about this game’s predictions on sites like Bloomberg or IGN, which were shared months ago following the meeting. However, it’s important to note that these reports were essentially passed along by someone who attended the briefing. The unique aspect of today’s update is that the information comes directly from Square Enix. Now, anyone with an internet connection can easily access Square Enix’s recent statements, which have been made public in the last 24 hours.

A significant portion of the recently shared blueprint delves deep into Square Enix’s upcoming strategic roadmap (spanning 2025 to 2027), a plan that was previously disclosed in detail (as a PDF document). It is important to note that within the Japanese gaming industry, fiscal years are often organized into groups of three and referred to as medium-term plans. The current 3-year medium-term plan initiated this April by Square Enix is titled “Square Enix: Reboot and Awakening”.

Another nugget found in the report confirms a larger “issue” concerning Square Enix’s “HD Games” sub-segment.

digital entertainment (primarily video games), amusement (arcades), publication (manga and magazines), and merchandising (merchandise). The Digital Entertainment sector has three sub-categories: High Definition (HD) Games, Massively Multiplayer Online (MMO), and Smart Devices/PC Browser. HD Games encompass all console and PC games that are neither mobile, browser-based nor MMOs. Therefore, the majority of Square Enix games featured on this site fall under the HD Games category, with exceptions like Final Fantasy XIV, which belongs to the MMO sub-category, not HD Games.

In simpler terms, this report marks the first instance where it’s been explicitly stated that Square Enix’s HD Games sub-segment has incurred an operating loss for the past three years. Before this, the results from these sub-segments were only presented as part of the overall Digital Entertainment segment’s figures. Essentially, what we can gather is that Square Enix has been spending more on their console games than they’ve been making over the last three years.

As a gamer and someone deeply invested in the digital entertainment world, it’s clear that there are challenges we’re facing, particularly within the HD Games sub-segment. Unfortunately, over the past few years, this part of our business has been operating at a loss instead of turning a profit as planned. Additionally, I believe we could have done better in managing our game titles across the company, leading to potential missed opportunities due to cannibalization between our own games.

Moving ahead, let me share with you Square Enix’s declarations regarding the HD Games segment in their latest or current long-term strategy.

In the High Definition (HD) gaming sector, we aim to create a development framework that routinely and frequently delivers games that surpass our customers’ expectations.
In the HD Game sub-segment, we will focus on releasing titles capable of delivering consistent fun.
For high-definition (HD) video games, let’s establish a universal platform where more players can experience our popular game series and AAA releases, both the current ones and those from our previous collections.

Absolutely! The report I’m referring to delves deep into all aspects of Square Enix’s operations, last year’s outcomes, and their strategic plans for the upcoming three years. If you’re a fan like me who enjoys keeping up with their business ventures, definitely give it a read!

For this financial year, Square Enix is offering games like “SaGa Scarlet Grace“, “Visions of Mana“, “Romancing SaGa 2: Revenge of the Seven“, “Fantasian: Neo Dimension“, and “Life is Strange: Double Exposure“. Additionally, there are several ports. Although these titles may not be as prominent as mainline Final Fantasy games, it will be intriguing to observe how the initial phase of Square Enix’s new medium-term strategy unfolds.

2024-09-19 07:56

Profits from Final Fantasy VII Rebirth and Final Fantasy XVI did not meet Square Enix’s expectations

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