Publisher plots review of development policy as major titles underperform

Square Enix posts £88m in ‘extraordinary’ losses

Square Enix has posted an expected "extraordinary" net loss of £88m for the year ending March 31st.

The anticipated financial results come as the publisher reveals that net sales actually rose more than 15 per cent year-on-year to £946 million.

Operating income however fell to £39 million, while recurring income more than halved to £28 million.

In an effort to combat falling revenues, the publisher said it would be changing its development policy, as well as redesigning some of its business models and some organisational reforms after its major titles had underperformed in North America and Europe.

Specifically, Square Enix said it plans to overhaul its large-scale and long-term development plans by improving the turnover of development, as well as putting a bigger focus on smartphones and tablets.

The publisher previously revealed that its recent reboot of the Tomb Raider franchise had sold 3.4 million units, while its other major releases Hitman: Absolution sold 3.6 million and Sleeping Dogs 1.75 million.

Despite seemingly impressive sales figures, Square Enix described the sales as “weak” as they missed company forecasts, with Tomb Raider expected to sell as many as six million copies.

Despite underperforming in the console market, the company said its browser and smartphone releases were continuously contributing profits in the digital sector.

It said titles such as Kaku-San-Sei Million Arthur were “expanding satisfactorily”, while MMO Dragon Quest X had been showing a steady performance since its release in August last year.

In a forward looking presentation graph, Square Enix suggested it had hoped to improve investment efficient, with a table showing a targeted decrease in investment while also bringing in a higher return, which could further hint at the company’s larger focus on mobile and web platforms.

The financial report comes as incoming Square Enix president Yosuke Matsuda, who is replacing Yoichi Wada at the helm, promised a “fundamental review” of the publisher’s operations. He added that the company would “cast all of our resources towards extending what makes us successful and thoroughly squeezing our what doesn’t”.

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