Square Enix Reports Extraordinary Losses of 22.1 Billion Yen - News
by William D'Angelo , posted on 01 May 2024 / 2,959 Views
Square Enix announced it has recognized extraordinary losses of approximately ¥22.1 billion ($140.4 million USD) due to "content abandonment losses on its books for the fiscal year ended March 2024."
The Square Enix Board of Directors voted to revise the company's "approach to the development of high-definition (HD) games with the intention of being more selective and focused in the allocation of development resources." This is what resulted in the losses.
The gaming company said it is "carefully reviewing its consolidated forecasts for the fiscal year ended March 2024 to assess the potential for impact from the above or other factors. Should revisions to its forecasts prove necessary, the Company will promptly disclose the same."
A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can contact the author on Twitter @TrunksWD.
More Articles
"Content abandonment losses on its books for the fiscal year ended March 2024" I read that as the losses are from deep in development projects that have now been cancelled.
I was about to ask what people thought that meant, because initially that made me think of ending service for things like mobile games, but that should probably have a minimal, if not possitive impact on the books.
Then again, I'm assuming the game had a profitable run for a while before it reached the point where it wasn't worth maintaining.
Babylon's Fall never even had that, and was shut down only a year after launch, so perhaps that falls under the category.
What you said sounds likely though.
Extraordinary means it's not something that is common place in a business. A rare occurence. For example, when Nintendo sold their HQ a while back, that was extraordinary income, because they don't usually sell buildings.
My intuition is that a product being cancelled would be ordinary loss. My reading of content abandonment is that they're essentially saying certain intangible property they have, IP rights or whatever, are now worthless, so they are writing them down. And when assets lose value, that is considered a loss, even if there is no money actually leaving the company.
Just to clarify, extraordinary loss I think is a specific accounting term. It refers to a type of loss due to some unexpected or one time occurence. This doesn't mean they necessarily have an overall loss for the year/quarter.
That's the thing. I don't think those sorts of things would be considered part of an extraordinary loss.
The point of extraordinary losses/gains, is to reflect them separately on your financial statements. So, that when an investor or creditor looks at it they know "ok, I'm not going to factor this into what I think the company is going to do long term". For a game company, a game underperforming probably wouldn't qualify as extraordinary, nor would cancelling a project.
Even though this may not be a result of the sales of their latest games but seriously as much as Sony offers for exclusivity on the FF remakes and everyone who’s played them knows it most cost a pretty penny am sure a release on Xbox as much as people say wouldn’t hardly sell I bet even gamepass check would have been a nice little earner and maybe boosted sales as as sure there are a few million Xbox gamers who maybe not into FF so much but the remake is a different kettle of fish
Having played through a big chunk of FFVII Remake (not Rebirth), it’s clear these games are becoming extraordinarily expensive. The production quality is through-the-roof, but sales are nowhere near sufficient to meet the quality…this is the Triple AAA bubble, and it’s looking to pop if the industry doesn’t adjust soon.
While that may be true, I'm not sure the big FF games fall under the "content abandonment losses" category.
fair enough. Square’s just having a rough time for the moment.
Please, give us more PS5 exclusives.
What do you think caused this situation to begin with? Square gave Sony and Nintendo too many exclusives in recent years when they should have been aiming for multiplat releases.
Heard some buzz that Octopath 1 sold better marketed as a Nintendo exclusive than 2 did as a multi-plat.
...Not a hundred percent sure of that of course, but there are benefits beyond upfront costs. For one thing you have the marketing department of Nintendo behind you. You can also moderate your budget by not having to work with multiple systems and focusing on what works with each platform.
That could be the case for Octopath, I don't know. Most of the exclusives they have given Sony in recent years seem to have underperformed though.
-
FF7 Remake started strong with 5m sold in the first 3 months, but legs fell off big time, with the game moving just 2 million units from August 2020-September 2023, a period where it got late ports to PS5 and PC
-
Babylon's Fall flopped hard, with content development for the game ending 6 months after release and the servers closing a year after release
-
Forspoken seemed to flop nearly as hard as Babylon's Fall, Square never released numbers, but stated that sales were lackluster, and Luminous Productions ended up being folded back into Square Enix's development divisions instead of continuing to exist as a separate developer.
-
FF16 was said to have sold under Square's expectations for it, and notably moved 1.5m less copies in the launch period than FF15
-
FF7 Rebirth sales reportedly fell short of FF16, despite PS5's install base being larger when it released than when FF16 released.
Square's new President Takashi Kiryu has suggested they will release multiplatform as much as possible moving forward, with only pre-existing exclusivity deals made under previous Square President Yosuke Matsuda releasing into the future.
