Square Enix Announces Weaker Financial Results due to Lack of Releases and Under-Performing Mobile

Square Enix announced its quarterly financial results, reporting weaker performance due to the lack of new release and underperformance of mobile games.

By Giuseppe Nelva

August 7, 2018

Today Square Enix announced its financial results for the first quarter of the current fiscal year, related to the period between April 1st and June 30th.

As you can see in the table below, all relevant income numbers are in the black, but showing a sizable decrease year-on-year.

The press release also included a handy summary of the performance of the Digital Entertainment business, which includes video games. Since there was no relevant new release, sales were weaker year-on-year. The same can be said about operating income due to marketing costs of major titles coming in the next quarter. Yet, download sales of games released in the last quarter remain strong.

Smartphone and browser games were also weak, with the performance of most titles launched in the previous fiscal year falling below expectations.

As for MMORPGs, since no expansions were launched in this quarter, both sales and profit decreased year-on-year, but average revenue per user remains strong.

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“During the three-month period ended June 30, 2018, having no new game release, net sales decreased in the area of console games compared to the same period of the prior fiscal year. The posting of advertising costs in advance of the release of major new titles in Q2 and beyond resulted in an operating loss, but download sales of previously released titles remained brisk.

In the smart devices and PC browser area, performance of most of our titles launched in the prior fiscal year fell below our expectations and failed to generate additional revenue on top of that from existing established games. Furthermore, partially due to the lack of the lump-sum payment of a license fee that we had received in the same period of the previous fiscal year, both net sales and operating profit decreased compared to the same period of the prior fiscal year.

In the area of massively multiplayer online role playing games, net sales and operating profit decreased compared to the same period of the prior fiscal year, which had seen the launch of a “FINAL FANTASY XIV” expansion disk, but average revenue per user (ARPU) remained strong.”

Net sales and operating income in the Digital Entertainment segment totaled ¥32,403 million (a decrease of 26.6% from the same period of the prior fiscal year), and ¥6,061 million (a decrease of 55.8% from the same period of the prior fiscal year), respectively.”

Below you can check out graphs related to console games, MMOs, and mobile/browser games.

For MMOs, the publisher aims to focus on user retention via major updates and other operational measures. For smartphone and browser games, the goal is to create new hit titles by carefully selecting new launches and to expand outside of Japan.

Incidentally, if you’re wondering, Kingdom Hearts III is still coming at the previously announced dates.

If you’d like to compare with the results of the past quarter, you can check out our dedicated article from May.

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Giuseppe Nelva

Hailing from sunny (not as much as people think) Italy and long standing gamer since the age of Mattel Intellivision and Sinclair ZX Spectrum. Definitely a multi-platform gamer, he still holds the old dear PC nearest to his heart, while not disregarding any console on the market. RPGs (of any nationality) and MMORPGs are his daily bread, but he enjoys almost every other genre, prominently racing simulators, action and sandbox games. He is also one of the few surviving fans of the flight simulator genre on Earth.

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