Square Enix, the Japanese video game giant, has reported its latest yearly earnings, revealing a challenging environment for the gaming market. While their sales were strong, profits fell short of expectations, particularly in the HD Games segment. This segment includes major titles like Final Fantasy XVI and Final Fantasy VII Rebirth. The report indicates that these games, while selling well, didn’t quite meet the publisher’s financial targets.
Square Enix’s CEO, Takashi Kiryu, attributed the shortfall to a combination of factors. One major contributing factor was the high development costs associated with Final Fantasy XVI. Square Enix chose to recognize these costs upfront rather than spreading them out over time, which negatively impacted the game’s initial profitability. Additionally, the sales of Final Fantasy VII Rebirth, released towards the end of the fiscal year, were lower than anticipated. These factors, coupled with a write-down in the value of a game project, led to a significant impairment charge that further reduced profits.
Despite the challenges, Square Enix reported a substantial increase in overall game sales, selling 26.32 million games in FY24 compared to 22.44 million in the previous year. This indicates that the company’s games are still popular, but the high development costs and lower-than-expected sales of some key titles impacted the bottom line.
Looking ahead, Square Enix has committed to making its games more widely available. Final Fantasy XVI recently launched on PC, and the company plans to bring more titles to Xbox consoles, starting with Final Fantasy XIV. This shift in strategy suggests a desire to reach a wider audience, potentially offsetting the impact of future releases on Playstation platforms, though exclusive deals with Playstation won’t end completely. While the financial results may not be entirely positive, Square Enix remains a major player in the gaming industry. Their commitment to expanding their reach and producing high-quality games, combined with the continued popularity of franchises like Final Fantasy, suggests that the company is well-positioned for future success in the ever-evolving gaming landscape.
