Square Enix is dying…?

Some friends of mine have been debating whether to get FFXIV, and somehow that conversation curved towards the financial well-being of Square Enix, the company behind FFXIV. The conversation seemed to be going nowhere and came to an abrupt end when one of us pulled out an old copy of Warcraft 3. Don’t ask me how or why!

But for the sake of today’s discussion, let us stay focused on Square Enix’s survivability.

Opinions we are all too familiar with:

Final Fantasy is getting bland and is not selling – Square Enix has nothing else to offer.

Square Enix is suffering from bad sales from all of its games. The last game that did well was Final Fantasy 7.

FF7: Advent Children and Final Fantasy 14 has been a financial disaster, resulting in catastrophic losses.

So how much of this is true?

Square Enix’s stock information:

Square Enix Stock Levels
From early 1999 to 2013.

It looks like the stock prices have drastically fallen in the past decade. So how about the recent years?
Enhance!

Fig 1.2, still pretty depressing.
Fig 1.2, still pretty depressing.

Hmm. Could this explain the monthly sales from Square Enix, where they cut prices down to 50% even for their latest hit games?
Enhance!

Fig1.3. Welp.
Fig1.3. Welp.

Wait.
Something’s amiss here.
After I compared the game release dates to the spikes and dips of the chart, I found:

  • Whilst Deus Ex’s Mac version found its way into retail stores during late April, the stock prices kept plummeting.
  1. CoD: Black Ops II came out during November 2012, Square Enix was the sole publisher for Japan. On PS3 alone, Black Ops 2 topped the charts with a 200k sales record , beating even Monster Hunter Ultimate. We all know how popular Monster Hunter is in Japan, and what did the stock chart show? Nothing.
  2. To make things worst, Hitman: Absolution launched in November as well, setting a sales record of 3.6million. And what did the stock chart show?

Very strange, indeed.
And we haven’t even gotten to Tomb Raider yet!

Well, to start, we have to understand the basics of these stock prices:

When a company goes public though an initial public offering (IPO), an investment bank evaluates the company’s current and projected performance and health to determine the value of the IPO for the business. Once trading starts, share prices are largely determined by the forces of supply and demand. A company that demonstrates long-term earnings potential may attract more buyers, thereby enjoying an increase in share prices. A company with a poor outlook, on the other hand, may attract more sellers than buyers, which can result in lower prices. In general, prices rise during periods of increased demand – when there are more buyers than sellers.

Other factors can affect prices and cause sudden or temporary changes in price. Some examples of this include earnings reports, political events, financial reports and economic news.

So why is it that the spectacular sale figures do naught to the stock prices? I sourced through some of the older news concerning SE from about a year ago, and found various articles that denoted that SE is not doing so well. And sadly, we have to give some credit to FFXIV’s failure. It does not help when you go underselling yourself at press conferences. That article is not the only one – quick google search and you’d find much more.

With that, now we know that stock buyers are afraid to invest on Square Enix. We may have millions of gamers rushing to grab that newest copy of Hitman: Absolution and Tomb Raider, but if you stand on the podium announcing to the world that you are failing; people would “buy” it – stock buyers are hardly gamers.

Now, about Tomb Raider.
SE only recently bought over Eidos and its various IPs in the previous few years, and “Lara Croft and the Guardian of Light” is the first Tomb Raider game made under Square Enix. It was received very well by critics and generally received positive reviews over the board.

  • Daemon Hatfield of IGN gave the Xbox 360 version of the game a rating of 8.5 whilst saying “Guardian of Light is the best Tomb Raider game in a long time.” Though he said the story and dialogue are “definitely the weakest parts of this game.”
  • Chris Watters of GameSpot also gave the Xbox 360 version a 8.5 rating, and said “Punctuated by clever puzzles and lush visuals, each level begs to be replayed thanks to the varied and enticing challenges that promise substantial rewards.” They did however, criticise the “cheesy and forgettable plot.”
  • Tom Hoggins from telegraph.co.uk stated “Lara Croft and the Guardian of Light restores the queen of adventure to her former glory.”

It was reported that Lara Croft and the Guardian of Light sold more than a million copies worldwide.

Square Enix is failing?
Respectable.

And what did Square Enix do?
They took the Tomb Raider franchise, rebooted it. They attempted to give the audience what they wanted – a proper, fleshed out storyline, and they indeed delivered. They also redesigned the old Lara Croft(and thankfully – personally I felt that Square Enix did well scratching the old, over-sexualized Lara). Tomb Raider received critical acclaim upon release, with critics praising the graphics, the gameplay, Camilla Luddington’s performance as Lara and Lara’s characterization and development with many agreeing that the game is a solid and much needed reboot of the franchise. Tomb Raider went on to sell one million copies within forty-eight hours of its release.

That’s great!

But what did Square Enix say?
“Tomb Raider, Sleeping Dogs and Hitman: Absolution did not meet our expectations.” And also, they reported a lost of 3.5billion.

Wat.

Want to guess what else sold 3.5million copies in the first month of release?

Square Enix vs The Last of Us
The Last of Us.

Some of the content being scrapped was in development at studios in Japan. A loss of more than 2 billion yen originates from Japanese studios, where certain productions have already been halted and work scrapped. Additionally, Square Enix say that they recently launched a new division in the U.S. to develop casual games for phones, but were forced to close it down after things didn’t go well. The company expects a 1 billion yen loss as a result of its closure. Total losses resulting from this “Loss on Disposal of Content” at Square Enix amount to 4 billion yen.

A further loss of 3.5 billion yen is expected from “Loss on Evaluation of Content,” where Square will make downward revisions to their prospective yields for every game title and overhaul their business models. A 2 billion yen loss in this regard will come from Japan and 1.5 billion yen from Europe and North America.

Additionally, a company-wide loss of 2 billion yen is expected in relation to re-structuring Square Enix. In total, all of these losses amount to 10 billion yen.

Read more at http://www.siliconera.com/2013/04/08/square-enix-detail-where-their-losses-are-coming-from/#HcvfzjEW6qtjLZvw.99

For all three of their games, Square Enix projected almost twice the number of sales. And when they did not meet their expected number, they kick and punch at themselves. Doesn’t all this kind of reminds you of that kid in class that has to get 95/100 for every single test, and gets all teary-eyed and slightly self-destructive when the scores turn out to be 80/100?

August 25th, 2012 @ 06:04:36

To be honest, Square Enix is not rolling in bricks of money everyday, but they are doing fine. It is rather unlikely that they will crash in the next few years. “But what about the sales?” You might ask, pointing to the fact the Square Enix regularly throws sales for games that run for weeks with inane discounts even for games like Hitman:Absolution and Tomb Raider. Well, aside from the “10billion lost report thingamajig”, remember that Tomb Raider has been included in the AMD Promo. And soon enough, we could find Tomb Raider steam keys all over the web for sales of $20 – $30, and soon it dropped to about $13 on trading forums and key-reseller websites. I would love to believe that the people over at Square Enix actually caught wind of the whole situation (they must have seen it coming) and went on to adjust Tomb Raider’s price in relation to the average trade price.

Then again, Square Enix has gotten some petty punches due to their own over-project and them throwing mud on themselves on press conferences. But after referring to their financial reports, they have been doing fine. For reference, these are some of the financial reports that I found illuminating:

Whilst Square Enix is definitely not in its Golden Ages anymore, it is highly unlikely that Square Enix will drop like THQ did.
And to be honest, if Square Enix really wanted to get rich, all they have to do is to remake FF7. Its a cheap move, but it’s going to print money. But neither I nor Square Enix wants a FF7 remake – I would talk about it more, but that is another story, for another day 😉

————
This article is written by PP1MT.
The author blogs at PP1MT.COM and is not affiliated with Square Enix Holdings
or any company in any way.
This article is free for reblog, shares and reuses as long as due credit is given.
————–

2 thoughts on “Square Enix is dying…?

    1. You are absolutely correct! Thanks for pointing that out 😉 I think I failed to make it a clear point in my post. Thank you for reading!

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