Today Square Enix posted its financial results for the fiscal year ended on March 31st 2017.
As you can see in the table below, all results are in the black, showing a considerable increase year-on-year, defined “record-high” in the accompanying press release.
The publisher also posted its forecast for the current fiscal year, predicting results between a considerable decrease year-on-year and a slight increase in sales.
We also get a breakdown of the results of the Digital Entertainment business (which includes games). Final Fantasy XV and the PS4 version of Rise of the Tomb Raider are mentioned among the drivers for the growth mentioned above (update: the follow-up presentation also named Deus Ex: Mankind Divided).
MMORPGs (Final Fantasy XIV and Dragon Quest X) shown a decline in net sales and operating income (even if revenues from operation were steady), as they wait respectively from a the major Stormblood expansion and the update to current platforms (PS4 and Switch for Dragon Quest X).
“The Digital Entertainment segment consists of planning, development, distribution, and operation of digital entertainment content primarily in the form of game. Digital entertainment content is offered to meet customer lifestyles across a variety of usage environments such as consumer game consoles (including handheld game machines), personal computers and smart devices.
In the consolidated fiscal year under review, During the fiscal year ended March 31, 2017, major launches of blockbuster series titles such as “FINAL FANTASY XV” and the PlayStation®4 version of “RISE OF THE TOMB RAIDER”, on top of strong download sales of previously released catalogue titles, have led to a material increase of net sales and operating income in the area of console games, compared to the prior fiscal year.
In the area of massively multiplayer online role playing games, revenues from operation has been showing steady performance while net sales and operating income declined significantly compared to the prior fiscal year mainly due to the absence of expansion disk releases during the fiscal year ended March 31, 2017.
Net sales and operating income, in the area of content for platforms such as smart devices and PC browser, increased significantly compared to the prior fiscal year primarily thanks to the strong performance of existing major titles of native application games on smartphones such as “FINAL FANTASY BRAVE EXVIUS,” “HOSHI NO DRAGON QUEST” and “DRAGON QUEST MONSTERS SUPER LIGHT,” coupled with successful overseas expansion of “FINAL FANTASY BRAVE EXVIUS” and “KINGDOM HEARTS Union χ.””
A major piece of news comes from the western development front, with Square Enix deciding to withdraw from the business of Hitman developer IO interactive which is currently a fully owned subsidiary. This created an extraordinary loss (which, we should remember, in economic lingo means a one-time loss) of 4.9 billion yen.
The decision has been taken to focus resources on key franchise and studios, and Square Enix is currently negotiating with potential new investors for the studio. At the moment, the publisher can’t guarantee that such negotiations will be successful.
“To maximize player satisfaction as well as market potential going forward, we are focusing our resources and energies on key franchises and studios. As a result, the Company has regrettably decided to withdraw from the business of IO INTERACTIVE A/S, a wholly‐owned subsidiary and a Danish corporation, as of March 31, 2017.
This decision has resulted in booking of the extraordinary loss amounting to 4,898 million yen, including disposition of the content production account related to the business and impairment loss of intangible assets, in the financial results for the fiscal year ended March 31, 2017.
As a result of this the Company started discussions with potential new investors and is currently in negotiations to secure this investment. Whilst there can be no guarantees that the negotiations will be concluded successfully, they are being explored since this is in the best interests of our shareholders, the studio and the industry as a whole.”