Square Enix Q12024 Finalcial Results: Net Sales: -18.4%, Operating income: +250.1%

[John Elden Ring]

​

Sales of Square Enix games have dropped compared to last year, despite the high profile release of Final Fantasy 7 Rebirth. According to its latest earnings report, the company's overall net sales dropped by 18.4 percent year-on-year for the most recent quarter.

This is driven in part due to a decline in sales of new games. By comparison, the same quarter in 2023 saw the release of Final Fantasy 16 and the Final Fantasy Pixel Remasters.

• Net Sales: -18.4%
• Operating income: +250.1%
• HD Games net sales down due to decline in sales of new titles compared to last year which had FF16 & FF Pixel Remaster
• But HD Games turned profitable due lower development and advertising

Mobile games, meanwhile, have also seen sales decline "due to weak sales of existing titles", presumably including last year's release of free-to-play gacha game Final Fantasy 7 Ever Crisis. However, profits have increased due to "optimisation of operational expenses".

 

[ethomaz]

That hints to Rebirth having sold less than FFXVI that we already know due most trackers.
And the higher profit is due Rebirth being a sequel using the Remake's base so it is not a game from scrap.

Let's hope they give more info in the QA.

 

[Yurinka]

Nice to see them improving their profitability.

Regarding comparisions:

• Final Fantasy 7 Rebirth was released February 29, so the first month sales (the month with traditionally the highest sales by far) were made in Q4, not this Q1. Months 2-4 always have lower sales than in the first one.
• FFXVI was released in June 22 (late Q1), so in Q1 barely tracked a bit more than launch week sales. Shorter period, but the one were more sales are made.
• Both are new entries on a super popular IPs, but one of them is a brand new chapter whose narrative doesn't depend on having played a previous title. The other one is the second part of a remake that requires to have played the first part, or at least the original game.
• To release a brand new game is more expensive than the second part of another one since it doesn't require to make a lot of work already done in part 1 (specially being a remake and not a brand new game). So with the same sales Rebirth should be more profitable.
• There are more games being sold both this and previous year
• Considering everything posted above, to to look at SE's whole revenue or profit, or even the one from their Digital Entertainment / HD games isn't very fair. But yes, makes sense that Rebirth would have made more profit than FFXVI even if it would have sold less.

 

[On Demand]

Here come the Nintendo, PC, and Xbox trolls trying to blame FF being on exclusive to PS5 is the reason.

All while ignoring the money SE made.

 

[saltyashell]

Predictable seeing all the Bots gloat about multi platform as if any of them would buy FF7 Rebirth. I bet SE wouldn't even be able to recoup Xbox porting costs through Xbox sales

 

[BillyZ]

Predictable seeing all the Bots gloat about multi platform as if any of them would buy FF7 Rebirth. I bet SE wouldn't even be able to recoup Xbox porting costs through Xbox sales

Doesn't matter it's still another L for Sony. In the past they were able to get several Square exclusives and now it seems unlikely in the future.

 

[Fenton]

@On Demand @ethomaz

 

[On Demand]

Doesn't matter it's still another L for Sony. In the past they were able to get several Square exclusives and now it seems unlikely in the future.

Of course they will. Business is business and Sony is paying for these and helping with development and marketing.

 

[Say1nMan]

Predictable seeing all the Bots gloat about multi platform as if any of them would buy FF7 Rebirth. I bet SE wouldn't even be able to recoup Xbox porting costs through Xbox sales

Meanwhile we’re coming off a Nintendo direct where Square showed off a couple of games that are slated for both Switch and PS5 and skipping Xbox. Lol.

 

[anonpuffs]

That hints to Rebirth having sold less than FFXVI that we already know due most trackers.
And the higher profit is due Rebirth being a sequel using the Remake's base so it is a game from scrap.

Let's hope they give more info in the QA.

It's because they had a massive advertising campaign for FF16. It was very expensive.

 

[TrishaCat]

Wild that people see news on Square Enix and turn it into console war shit.
Square will be fine. They just need to keep releasing peak gaming like they've been doing.

 

[On Demand]

@On Demand @ethomaz

That Eurogamer article is misleading. This report is not from that quarter.

 

[Yurinka]

@On Demand @ethomaz

This is a dumb take from Daniel.

SE posts the costs of each HD game only in the quarter/year when they get released, instead of spreading them across the different other quarters/years when they were really spent, when they were under development and being promoted.

That helps the profitability in the quarters where they aren't released and the same time temporally hurts the profitability in the quarter/year they get released.

 

[Entropi]

Man, people love gangbanging Square

 

[Danja]

So FF7: Rebirth underperformed as I thought.

 

[2spooky5me]

@saltyashell

I wonder how they will explain Pixel Remaster & Octopath Traveler II under performing, despite being on much more devices?
In any case, I hope Visions of Mana and DQ III HD-2D do well, or they can kiss that narrative good-bye, too (and I'm speaking about the Bots).

 

[ToTTenTranz]

@On Demand @ethomaz

This is brutal. No wonder they keep doubling down on NFT and GAAS crap.

 

[Al Catone]

So FF7: Rebirth underperformed as I thought.

There were murmurs of it 'underperforming' but I don't believe here were any official numbers or comments from Square regarding that.
Have to remember too that FF7 Remake released on PS4/during the pandemic too.

Rebirth didn't, so there might be some impact there along with the player base not wanting to upgrade yet.

 

[Evilnemesis8]

Not surprised SE generated almost no revenue from HD games, they've released almost nothing this quarter.

I'm also curious about the revenue/profit from FFXIV. The game was buyable in early access in June, but the actual launch was in July(the 2nd). We'll probably see a stronger spillover into the next quarter from that segment since parts of the sales for the game would have not counted, I think?

There were murmurs of it 'underperforming' but I don't believe here were any official numbers or comments from Square regarding that.

Have to remember too that FF7 Remake released on PS4/during the pandemic too.

Rebirth didn't, so there might be some impact there along with the player base not wanting to upgrade yet.

The real issue isn't really the sales of Rebirth, it's what the sales of the last part will possibly look like.
Square Enix will never do three part and possibly never a two part with the same cast.
Even FF7 and its very strong fanbase and nostalgia is just "good" in terms of sales.
I think Square Enix probably thinks there is better opportunity cost options to do as far as project goes.

Historically, both FFX-2 and FF13 sequels have done much less than their first par but one could say that the it's not what the players wanted(X-2) and FF13 was not received the best which would stifle the potential sales of its sequels.
But even if you look at other JRPG franchises, it's the same story as well. People want the newest entry with the newest cast of character.

Unlike other genres, JRPGs don't seem like they can equal and better yet, exceeded the sales of its predecessors.
Stuff like God of War/Witcher 3, etc...

Perhaps the FF7R trilogy will have some longer than usual sales legs when all the games are combined at an affordable price down the line, but in the here and now, I'm sure it's not what SE would want for the amount of effort that was put in.


Anyhow, the FF brand is in a curious position. We're not going to get a new mainline game in who knows how long, probably one of the weaknesses is that there isn't enough internal teams to have a better cadence for their biggest franchise.
Maybe the shuffling at the company and being more choosy about projects might have SE release the FFs at a better cadence with more manpower tied to mainline FFs?

 

[Vertigo]

There were murmurs of it 'underperforming' but I don't believe here were any official numbers or comments from Square regarding that.
Have to remember too that FF7 Remake released on PS4/during the pandemic too.

Rebirth didn't, so there might be some impact there along with the player base not wanting to upgrade yet.

Final Fantasy 7 Rebirth Falls Short of Sales Expectations

Popular RPG title Final Fantasy 7 Rebirth seems to be struggling to make money for Square Enix despite a successful launch.

gamerant.com

“According to Bloomberg, Square Enix President Takashi Kiryu revealed that the publisher's recent games, such as Final Fantasy 7 Rebirth, Final Fantasy 16, and Foamstars, have poorer sales than expected. Seemingly, these games underperformed in collecting revenue as well as generating profits. The source states that, as a consequence, the Japan-based company is currently targeting an operating income of 40 billion yen this year, which is significantly lower than the average of analyst estimates at 57 billion. Post Kiryu's investor call, Square Enix's shares also reportedly dipped by 16%, marking a new low for the company in the past 13 years.”


I believe the source is hated here but I don’t think Square’s exec was misquoted.

I’ve played FF16 not Part 2 but FF72 always looked like way, way bigger in scope of a project with better presentation and bigger budget. I’m sure this was a factor.

Square’s fault by releasing THREE major Ff releases so close to each other. And at the end of the day it was FF14 that was the big winner for them anyway.