Square Enix president Yoichi Wada who is leaving the company spoke in a financial briefing which was reported by Siliconera. He revealed how far below expectations sales were for its latest games.
Sleeping Dogs was expected to sell between 2 million and 2.5 million units, while the game ended up selling 1.75 million units. Hitman: Absolution was expected to sell between 4.5 million and 5 million units. However the game fell short selling 3.6 million units.
Despite having the best launch in franchise history, Tomb Raider, fell far below expectations. The game ended up selling 3.4 million units, while it was expected to sell between 5 million and 6 million units.
"Let’s talk about Sleeping Dogs: we were looking at selling roughly 2-2.5 million units in the EUR/NA market based on its game content, genre and Metacritic scores," said Wada. "In the same way, game quality and Metacritic scores led us to believe that Hitman had potential to sell 4.5-5 million units and 5~6 million units for Tomb Raider in EUR/NA and Japanese markets combined."
"Of course, we want to hedge risk in budgeting these units directly into the forecast, therefore we base the forecast on 80-90% of the total sales potential of each title," Wada added. "However, it is disappointing that our results fell below these marks."
Wada did admit that Square Enix's revenue model is outdated and the publisher's ability to sell games in North America and Europe are "far weaker than we ever imagined." Due to this the company is being hit hard and has canceled several games being developed in Japan. Square Enix also had to close its newly opened casual games division in the US.
Wada is stepping down as President due to the huge losses. Yosuke Matsuda will be the new president.
Square Enix is expected to lose 10 billion Yen ($101 million) due to the closures and lower than expected game sales. 1 billion Yen ($10 million) of those losses is due to the closure of the new US division. A loss of 3.5 billion Yen ($35 million) is due to the "Loss on Evaluation of Content." A 2 billion Yen ($20 million) loss is also expected to come from Japan, and a 1.5 billion Yen ($15 million) loss from North America and Europe. Also a loss of 2 billion Yen ($20 million) is expected to come from the restructuring.