Square Enix Has Remained Profitable Despite Post-Avengers Losses
Square Enix has reported year-on-year growth in its latest earnings reports, despite operating at a loss on its gaming side for two consecutive quarters.
During the nine months ending December 2020, Square reports that it saw an increase in net sales of 33.7% over the same period in 2019. Additionally, the company’s operating income rose by 47.7% to 41,022 million yen. This kept the company profitable, but not quite as healthy as 2019; profits were 4.3% less than the same period last year. Despite this, Square forecasts the full year will eventually result in a more profitable year overall by 12.4%.
Factors relating to these figures can be seen in Square Enix’s presentation slides detailing the sales of HD Games across the nine months. In Q1, when the highly successful Final Fantasy 7 Remake launched, net sales were more than double Square’s best period in 2019, at 34.1 billion yen. Operating income also rose in tandem, creating an impressive spike of almost 15 billion yen. But Q2 saw a decline in net sales and a steep drop in operating income, with the company operating at a loss of approximately -6 billion yen. Net sales continued to fall in Q3, amassing 18.8 billion yen, while operating income managed to increase, but still remained at a loss. This decline correlates with the launch of Marvel’s Avengers in Q2, which received mixed reviews and struggled to maintain a healthy player base through Q3.
Q3 saw a decline in MMO sales, too, with no major expansions for Final Fantasy 14 or Dragon Quest X, but the division remained in profit thanks to continued revenue generated by players.
On the amusements side, Square has managed to recover from a dismal Q1, in which its arcade business was significantly dented by the impact of COVID. Q3 has seen it operate at a profit, and return net sales to similar levels previously seen in 2019.
While Marvel’s Avengers was September 2020’s best selling game, Square Enix had yet to recoup its development costs by the end of November. A next-gen version of the game will be released this year, although it remains to be seen if that will turn around its fate. Developer Crystal Dynamics is “confident” that players will return to the game when new modes are added, though.
Matt Purslow is IGN’s UK News and Entertainment Writer.