Things aren’t going well for Square-Enix: the Japanese mega-publisher behind Final Fantasy, Deus Ex: Human Revolution, and Tomb Raider announced today that they expect to close the fiscal year with record losses.
Square-Enix describes their financial short-fall as an “extraordinary loss” for the company, and blamed their poor performance on “substantially” slower than expected sales of their “major console titles” in North America and Europe. Square didn’t specify which titles were under-performing in terms of sales, but the timing of this announcement seems to suggest that the company’s more recent releases, such as Hitman: Absolution and the recent Tomb Raider reboot, haven’t sold as well as Square needed them to. Square also blamed declining arcade machine sales in Japan for the decrease in sales.
The company expects to post losses of at least $42 million for the fiscal year. In the wake of these losses, Square-Enix has announced plans to restructure the entire company and re-evaluate their entire business plan. Taking the blame for his company’s failures, CEO Yoichi Wada (who has worked at Square since 2000,) announced his resignation from the company. He will be replaced by Yosuke Matsuda, who previously served as the company’s representative director.
It’s currently unknown if this restructuring will result in any lay-offs or if it will effect titles that are already in development, such as Thief 4 or the upcoming relaunch of Final Fantasy XIV.
While I’ve been an outspoken critic of some of Square-Enix’s recent decisions (especially how they’ve handled the Final Fantasy franchise over the last few years,) it’s still hard to see one of the industry’s biggest companies struggle so badly. The new Tomb Raider reboot that Square published at the beginning of the month is actually a very,very good game, so it’s surprising and sad to hear that the game might not be selling as well as it should be. Square has already announced that the next Final Fantasy game will be shown at this year’s E3, so hopefully the company will be able to get things back on track in the next few months.
UPDATE – As I guessed earlier, Square is indeed blaming Tomb Raider, Hitman: Absolution, and last year’s Sleeping Dogs for their financial problems. Strangely, the sales numbers that Square has released for each game are actually pretty good — in the three or so weeks since it was released, Tomb Raider has sold 3.5 million copies, while Hitman: Absolution has sold 3.6 million copies since it was released, and Sleeping Dogs has managed a respectable 1.5 million in sales. Either Square is simply trying to scapegoat their financial shortcomings onto these titles, or perhaps developing these triple A, big budget releases was more expensive than they seemed, and the company needs to sell more than 3.5 million copies of each to turn a profit. Either way, it looks like the future of all three franchises might be up in the air.