SquareEnix returns to profits and heads west

Big relief at SquareEnix : the company’s profits reached 6 billion yens in 2011-2012, following a 12 billion loss last year. This 18 billion increase surely brought some joy given the dire situation SquareEnix was in last year. The report doesn’t give much detail about how the various games performed : it simply states that Deus Ex Human Revolution and Final Fantasy XIII-2 sold as planned. Not a word on Final Fantasy Type-0, which sold more than 800’000 copies in Japan alone. SquareEnix probably wants to skip the subject, so as not to have fans asking for explanations about why it isn’t being localized.

On a closer look, it turns out that turnover doesn’t vary that much compared to the previous fiscal year. On the other hand, operating and reccuring income jump respectively by 46% and 91%. SquareEnix overhauled its cost structures, benefited from a more stable yen, and was free from the costly amortizations it had perform last year. The firm did clean its books in a very effective way and shows excellent management skills.

The problem is the way in which they intend to perform. The 2012/2013 briefing clearly demonstrates that SquareEnix intends a U-turn in its business model, even if it means leaving its most devoted fans behind. The Japanese (?) company expect to sell 7’600’000 games in the US, 7’300’000 in Europe and a mere 3’900’000 in its home market (which would be the lowest figure in years, if not ever). With objectives like these, no wonder SquareEnix keeps talking about Tomb Raider, Hitman Absolution, Sleeping Dogs or other western bullshit when the entire world asks them for VersusXIII. Their E3 line-up would be laughable if it didn’t mean that SquareEnix had ceased to be a Japanese games developer. SquareEnix is very like this Irishman who embarks to the New World to search for gold, leaving family and friends behind.

The company forecasts a sales increase of 20 to 30% for the upcoming year. But can they achieve that when they ditch their home market and their long-lasting fans? SquareEnix takes a big risk by steering away from which is basically an oligopoly (the JRPG market) where it has a prominent position, to barge into an action/adventure games market that suffers from severe overcapacity. Hitman Absolution releases shortly after Black Ops II, Medal of Honor Warfighter, Halo 4 and Assassin’s Creed III, while Tomb Raider will collide with Bioshock Infinite and The Last of Us. Spleeping Dogs is going to be in the shadows of Far Cry 3, and I would be delighted to see Tales of Graces F fare better. SquareEnix might very well return empty-handed from the West, with nobody to welcome them back at home. One thing remains sure : if things stay that way, they won’t get any more money from me.


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