Square Enix goes multiplatform, focus on quality then quantity

[Dabaus]

Few thoughts:

-This Decision seems extremely knee jerk and desperate. Xbox is collapsing and they want to port games to it now?

-This also seems like SE is getting bad advice from PR and marketers. "Hey it worked for capcom, it can work for you too." Its not an apples to apples comparison because SE's games dont have the same mainstream appeal as capcom games. JRPG's are a niche genre, capcoms arent.

-Sony has no first party RPG studio and their last partner that filled that void just bailed on them.

-Who does or can sony rely on for rpgs now? Why even make third party marketing deals anymore?

-Sony is horrendous at retaining talent and partners. Fromsoft, atlus, Square all got big off of and because of playstation but sony doesnt own any of them. The entire souls genre couldve been a PS exclusive, same with atlus styled games and of course square if sony had ANY foresight. Of course these companies are going to get scooped up, they make unique quality games.

-I now fully expect SE to either get scooped up by MS out of Spite or the Saudis on the cheap. Sony wants to play Hollywood movie star spending all their money on paramount. They will cut PS first party even more to help fund it, mark my words.

-In the meantime IDK what sony can do, if they even care anymore, maybe tell these companies that got big off their platforms they wont get anymore marketing and front page PS store treatment?

 

[Entropi]

The HD Segment posted double loses than last FY.
8 billion yen in loses... up from 4 billion from previous year.

That is around $50 million in loses.

The increase in sales are because they released more titles (well there is two FFs in FY23).

~26% increase in revenue (remember they had two FFs)
~100% increase in operational loses.

Do you understand the issue and why they are doing drastic changes?
The sales of two FFs titles where solid but not enough to put the HD Games segment in the blue... they needed more sales.

They need to lower their operational cost first.

 

[ethomaz]

They need to lower their operational cost first.

How you do that when the costs to develop games are rising?

At least I give the proper praise to Square Enix... they are saying they will focus in quality over quantity and for that they need more help from publishers with the Marketing side to increase overall sales to pay for that quality.

BTW just to remember something here.
Square Enix is one of the few companies that only post the costs of the game development after the game released.
So they don't hide in previous FYs while the game is being developed like most companies.

So they released two FFs FY2023 so all costs to developed these two FFs are posted in FY23.
If they don't have enough sales to cover that it will lead to Operation Loss.

In simple terms they had to increase revenue for HD Games at least near the proportion of increase in costs.
100% increase in costs? Then I need to be more close possible to 100% increase in revenue.
The issue is not that drastic I guess... if they had increase the revenue in 40-50% instead 26% they probably had Operational Profit instead Loss.
But the HD Games released could not reach that increase in revenue.

 

[Dabaus]

They are not forgoing anything.
They want to use both Sony, Microsoft, Nintendo, etc to market their games.

Like they said the Microsoft marketing can lead to PlayStation sales of the game.
They don't even believe the Xbox sales will resolve the issue... but they believe the bigger push of marketing in all fronts can lead to more sales including in PlayStation.
I should says at least it a bold strategy

So its worth forgoing sonys marketing, sonys money, an established relationship, and sonys developers helping with development for xbox ads at the mall?

 

[Entropi]

How you do that when the costs to develop games are rising?

At least I give the proper praise to Square Enix... they are saying they will focus in quality over quantity and for that they need more help from publishers with the Marketing side to increase overall sales to pay for that quality.

If you want to fix a business you don’t go out there begging for more sales before lowering your expenses, it won't work. They’re already canceling smaller projects, and I bet there are more cost cutting changes coming.

 

[ethomaz]

So its worth forgoing sonys marketing, sonys money, an established relationship, and sonys developers helping with development for xbox ads at the mall?

No they are not forgoing anything... they are using Sony's marketing, money, established relationship, Sony's help, etc plus others platform holder too.

 

[Dabaus]

No they are not forgoing anything... they are using Sony's marketing, money, established relationship, Sony's help, etc plus others platform holder too.

So thats just guaranteed no matter what? Whats in it for sony? Why should they continue the relationship as is?

 

[ethomaz]

If you want to fix a business you don’t go out there begging for more sales before lowering your expenses, it won't work. They’re already canceling smaller projects, and I bet there are more cost cutting changes coming.

And drop quality / investment in HD Games.
But they choose not to do that.

Instead they are trying to increase marketing offsetting the costs to the platforms expecting a increase in sales overall.
That is what they are doing.

 

[ethomaz]

So thats just guaranteed no matter what? Whats in it for sony? Why should they continue the relationship as is?

Not sure... that is what they are trying to do if you read the documents.
Like I said I think it is a bold strategy.

They probably expect the Sony's relationship to continue the same.
And to be fair I don't see how it will change... Sony won't loss anything... the opposite they expect PlayStation sales of the games increase.

I don't see how Microsoft will accept that for a long period... because they will be the weak part of the strategy.

 

[Luffy123]

honestly if this showcase this year doesn't hit, Sony going to be following in the exact same road as Xbox. Console gaming is finished for the quick revenue generated from PC which will lead to reduction in game quality in the long run. Sad times

 

[ethomaz]

We don't have a thread so I will use that one.

While they are facing issues with HD Games.... MMO is where they are very happy.

~40% of the revenue become Profit... that is a huge split for games.

 

[CHILEANPLAYER]

Well Square, if you are going to be even more multiplatform, the first thing you should do is port the first Octopath Traveler game to Playstation.

 

[ethomaz]

We have the splits from physical / digital.
Even Japan is showing a 30/70 split in digital favor... that means people using 30% digital to tell PS5 games sales are bad where really blind because digital split grew from 60% to 70% YoY.

 

[AllBizness]

I just hope thoer games will continue to be built from the ground up on PlayStation, the latest RE games and MGS5 got away from that and graphical quality is not as good because of it.

 

[arvfab]

I just hope thoer games will continue to be built from the ground up on PlayStation, the latest RE games and MGS5 got away from that and graphical quality is not as good because of it.

That train is long gone. FF7 Rebirth has a lot of visual inconsistencies, primarily caused by the usage of Unreal Engine.

 

[ghostwriter74]

There's a bit of context missing there, in my opinion. Most of the SE console exclusives were not released for Playstation but for Switch. It makes sense to choose a new strategy now and possibly port some of the Switch titles, even if nobody is interested in them anymore. The third FF7 part will certainly be released exclusively for PS5, that's it.

The question is whether SE is making the decision voluntarily or whether Sony is simply not interested in paying money for exclusivity at the moment. Jim Ryan already announced a change in strategy in an interview two years ago. According to him, Sony wants to rely more on first party rather than third party, which means fewer deals like with Square Enix, more deals like with Shift Up, Koei Tecmo, From Software, Kojima or Arrowhead. Since the Xbox is basically dead and the PS5 will continue to dominate the market for the next few years, in my opinion it makes little sense to do time-exclusive deals. In my opinion, SE has also benefited more from this than Sony. It's cheaper to develop for one platform and SE has less risk thanks to the money from Sony. That will change now. That's why I think that Nintendo and Sony, for different reasons, are currently not interested in exclusive titles from SE.

When I look at how successful Stellar Blade is compared to FF7 Rebirth, Square Enix's appeal doesn't seem to be that great anyway. Maybe they'll get back to their old strength now. That's why I don't understand some of the statements that Sony should have bought SE. That was certainly up for debate, with both of them, but one of the two apparently backed out. The question is always what Sony would have gotten for all those billions. The only successful thing that SE has developed recently was FF14. 3 new IPs that were developed as console exclusives for Sony were flops: that service thing from Platinum, Forspoken and obviously Foamstars. FF16 did OK, but not nearly as well as FF15 (which was worse than 16 in my opinion) or other Sony titles, FF7 Rebirth was a critics' favorite, fans (I hate it) don't seem to be that enthusiastic otherwise sales would be higher. Other SE IPs aren't games that sell millions of copies either.

In my opinion it would have made more sense if MS had bought SE instead of ABK. Let's see if we hear anything new about Kingdom Hearts soon and if that will lead to better sales figures, but somehow I doubt that too.

 

[voke]

As I & many been saying PlayStation days are counting

 

[Gediminas]

 

[ethomaz]

There's a bit of context missing there, in my opinion. Most of the SE console exclusives were not released for Playstation but for Switch. It makes sense to choose a new strategy now and possibly port some of the Switch titles, even if nobody is interested in them anymore. The third FF7 part will certainly be released exclusively for PS5, that's it.

The question is whether SE is making the decision voluntarily or whether Sony is simply not interested in paying money for exclusivity at the moment. Jim Ryan already announced a change in strategy in an interview two years ago. According to him, Sony wants to rely more on first party rather than third party, which means fewer deals like with Square Enix, more deals like with Shift Up, Koei Tecmo, From Software, Kojima or Arrowhead. Since the Xbox is basically dead and the PS5 will continue to dominate the market for the next few years, in my opinion it makes little sense to do time-exclusive deals. In my opinion, SE has also benefited more from this than Sony. It's cheaper to develop for one platform and SE has less risk thanks to the money from Sony. That will change now. That's why I think that Nintendo and Sony, for different reasons, are currently not interested in exclusive titles from SE.

When I look at how successful Stellar Blade is compared to FF7 Rebirth, Square Enix's appeal doesn't seem to be that great anyway. Maybe they'll get back to their old strength now. That's why I don't understand some of the statements that Sony should have bought SE. That was certainly up for debate, with both of them, but one of the two apparently backed out. The question is always what Sony would have gotten for all those billions. The only successful thing that SE has developed recently was FF14. 3 new IPs that were developed as console exclusives for Sony were flops: that service thing from Platinum, Forspoken and obviously Foamstars. FF16 did OK, but not nearly as well as FF15 (which was worse than 16 in my opinion) or other Sony titles, FF7 Rebirth was a critics' favorite, fans (I hate it) don't seem to be that enthusiastic otherwise sales would be higher. Other SE IPs aren't games that sell millions of copies either.

In my opinion it would have made more sense if MS had bought SE instead of ABK. Let's see if we hear anything new about Kingdom Hearts soon and if that will lead to better sales figures, but somehow I doubt that too.

I kinda agree with that.

3rd-party deals where the IP is not owned by Sony is not ideal imo.
Helldivers 2 case is what they need... Sony's IP being developed by 3rd-party studio.

And of course they need to output more 1st-party games from 1st-party studios... that gap in release of near a year is not acceptable.

Sony needs to focus in their own Studios in first place and in second as alternative in their own IP (being developed by 3rd-parties)... or in the last option 3rd-party IPs developed by 1st-party studio (Spider-man case).
Investing in 3rd-partie IPs developed by 3rd-party developers was never a good thing imo.

Sony needs to focus in what they own...
1st-party IP developed by 1st-party studios or 3rd-party studios.
1st-party studios developing 1st-party or 3rd-party IP.

 

[Luffy123]

Their whole strategy is bizzare tbh