Square Enix makes big profit off flat sales

Square Enix’s lack of big releases led to flat sales in the nine month period ended December 2017, while the firm’s back catalogue performed strongly, according to its financial results released today.

Overall sales at the firm for that period were slightly down one per cent, totalling ¥188bn (£1.23bn), while income was up 57.2 per cent to reach ¥33.7bn (£0.22bn). Taking a closer look at game sales specifically, the segment reached ¥143.5bn (£0.94bn), a 1.8 per cent decrease compared to the same period in 2016, while income was up 66.9 per cent to hit ¥36.3 (£0.23bn).

The slight decline in game sales was attributed to a “decrease in the number of blockbuster titles” launched during the period compared to the previous year, with only Dragon Quest XI: Echoes of an Elusive Age and Final Fantasy XII: The Zodiac Age mentioned. However, the increase in income was due to “strong high-margin download sales of previously released catalogue titles such as Nier: Automata” (which released worldwide in March 2017), the report said.

Mobile and online PC games “continued to show strong performances globally” the report added, mentioning the success of F2P mobile titles Final Fantasy: Brave Exvius, Hoshi no Dragon Quest, Dragon Quest Monsters: Super Light and Kingdom Hearts Union χ. The latest expansions of MMORPG Final Fantasy XIV and Dragon Quest X “led to an increase in the number of paying subscribers and disk sales,” the report added.

Meanwhile, sales for Square Enix’s merchandise were up, increasing 23.1 per cent compared to the same period in 2016. The firm’s amusement segment (which includes arcade machines) was down 4.5 per cent in sales year-on-year, while its publication segment was up 14.1 per cent.

Square Enix’s financial report pointed out that “the business environment surrounding the group is in the midst of major changes.” It explained: “The console game markets in North America and Europe are increasingly getting competitive and oligopolistic. On the other hand, the game content market for smart devices such as smartphones and tablet PCs centering in Japan, North America, Europe and China has been growing to surpass the console software market. Digital sales of fullgame download and premium downloadable content are rapidly increasing mainly in North America and Europe on top of the conventional package distribution. In addition, consumers’ demand for new experiences such as online multi-play and live entertainment are increasing.”