The lights are on
In its recently issued 2013 annual report, Square Enix has shone the spotlight on the home console market as a primary reason for its financial failure. The report calls out Tomb Raider, Sleeping Dogs, and Hitman: Absolution as both game development successes, but commercial failures.
The report states, "In the HD games category, we delivered three major titles in the fiscal year under review, primarily in Europe and North America. These titles—Sleeping Dogs, Hitman: Absolution, and Tomb Raider—failed to reach their respective targets, and resulted in financially unsatisfactory consequences, whereas the HD business in Japan remained strong through sales of the Nintendo 3DS version of Dragon Quest VII: Eden no Senshitachi” (Warriors of Eden) and others."
The report continues to pin the blame for financial failure partially on incentive programs for retailers, including "price protection, back-end rebates, and promotional cooperation costs." The document also identifies competition on store shelves, but seems to attribute that phenomenon to physical media exclusively, because of competition and the related, aforementioned retailer incentives.
One proposed solution in the report is to find ways to monetize and deliver content prior to a game's release. No examples are provided.
2013 saw a precipitous drop in Square Enix revenue. The company finished the period with ¥6,081 million ($61.08 million) operating loss as compared to ¥10,713 million ($107.6 million) operating income in 2012. The financial results led to the resignation of former president and CEO Yoichi Wada, who has been replaced by Yosuke Matsuda.
[Source: Square Enix]
Our TakeThat Square Enix recognizes the critical success of the three titles in question is a step in the right direction (before they just labeled the titles as commercial failures). We already know we're getting a next-generation Tomb Raider sequel, and my fingers are crossed that the other two series get additional entries.
What is surprising here is that Square Enix seems to have been caught off guard by the competition at retail, which has ramped up significantly at the end of the generation. Rapid retail price drops have been a reality for years now, and co-marketing isn't a new phenomenon this generation, let alone this year.
The remainder of the report hints at an increase in free-to-play titles and exploration of other business models. How those might affect franchises that are traditionally an up-front purchase remains to be seen. Let's just hope this doesn't mark the introduction of microtransactions into all of Square Enix's traditional offerings.
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Every Final Fantasy going forward is going to be like ATB. I think they're also letting EA handle all their marketing decisions too.
Maybe they should cut back on how much cash they use to fund their games. The expectations of some companies (Square Enix chief among them) are just ludicrous at best.
yeah i hope the true crime/sleeping dogs games continue , it was my GOTY last year and i'd like to see them do more ... then again i'm a sucker for 3d brawlers
Sad to see that those games were commercial failures. I never played Absolution, but I absolutely loved Sleeping Dogs and Tomb Raider. They were both solid games.
I'm still extremely excited for Lightning Returns.
Tomb Raider was an amazing game and can hardly be considered a failure...I think they had lofty goals
Such a shame because most of them were really awesome games.
This makes me even more curious what GTA V is going to do. It has the biggest budget ever for a game and the hype is really set.
Tomb Raider is my GotY right now.
I still don't understand how a game that sells 4 million copies (Tomb Raider) is a commercial failure. At $60 per sale, that's $240,000,000 in sales. Even if the game cost $140,000,000 to make, which I highly doubt, they're still looking at a gross take of $100,000,000. What the hell?
These titles didn't have horrible sales numbers. It sounds like they just suffered from over-expectations. Tomb Raider did pretty good numbers, while Hitman should have performed better. However, what did they expect from Sleeping Dogs. An enjoyable game, but a reboot of a series that was always a "poor man's GTA" to begin with. Whatever the issue, you can't blame the problems on game development. All three of these titles were quality games. Tomb Raider should be considered for top 5 games of the year (Probably top 20 games of this console generation).
Disillusion at its finest.
Lower your expectations not every gamer is rich. There's always sacrifices gamers have to make to not buy the game now or buy only one game trust me I have a lot of games I wanted to play but they keep being on the wait list.
Yeah, this whole report seems a little...frivolous. See is the way of the titans of the industry.