Square Enix Profits Fall Despite an Increase in Revenue

Fiscal year 2019 was a big one for Square Enix, with the release of plenty of high-profile new games, including highly anticipated sequels like Shadow of the Tomb RaiderDragon Quest XI, and Kingdom Hearts III, as well as original releases like Octopath Traveler. However, due to the costs of launching such games, Square Enix saw a 28.5% drop in profits from the previous fiscal year. That is despite an increase in net sales of 8.2%.

Square’s profits for the past fiscal year ended up at around $169 million, with the digital entertainment profits coming in at $266 million. While net sales were at $1.87 billion, which is actually around 7% higher than the year prior, profits took a steep hit of 33.1%. According to the publisher, this is mostly attributed to “higher costs associated with the release of the new titles.”

The fact that profits took such a hit is relatively surprising. While Shadow of The Tomb Raider had a fairly weak start, developer Eidos Montreal was ultimately happy with its performance. Dragon Quest XI: Echoes of an Elusive Age, the first mainline Dragon Quest game to release in the West in almost ten years, shipped an impressive 4 million units. There’s Kingdom Hearts III, which was released after more than a decade of waiting. However, the hype appears to be justified, as it currently remains the best-selling game of 2019 so far. While it released back in 2017, NieR: Automata continues to be a big success for Square Enix, as it also just passed the 4 million mark.

Unfortunately, not all of Square’s releases hit the mark. Left Alive, a spin-off of Front Mission with an Armored Core and Metal Gear lineage, had “very disappointing” sales. In addition, both Square’s mobile and MMORPG divisions did disappoint somewhat, though the release of the Shadowbringers expansion for Final Fantasy XIV should have some positive impact.

However, despite a relatively disappointing year, Square is in a position to turn things around. Kingdom Hearts III will be getting DLC by the end of 2019, which will more thank likely bring fans back to the game. The publisher just re-revealed the long-gestating Final Fantasy VII Remake, with more information to follow at E3 2019. It’s also planning on investing “aggressively” into new IP in the future. Expect to see more information on Square’s plans for the future, perhaps including the mysterious Avengers project, at its E3 conference.

[Source: GameDaily.biz]