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Square-Enix Sees Profits Sink
Gamespot reports that RPG maker Square-Enix reported an almost 70% decline in net profit for most of last year. From the article: "Square Enix attributed most of its financial difficulties to its primary business--games. The company had a profitable nine months, releasing a number of hits: Kingdom Hearts II, which shipped 1.1 million units in Japan since its release in December; Romancing SaGa for the PS2, which shipped 500,000 units (Japan: 450,000, USA: 50,000); and Dragon Quest VIII, which shipped 430,000 units in North America. However, the numbers couldn't match those of the previous year, when Dragon Quest VIII shipped 3 million units in its first three days of release in Japan. The segment's sales fell 43.3 percent to 21.2 billion yen ($180 million), and its operating income plunged 95.1 percent to 974 million yen ($8.28 million)."
Very wrong. Dragon Quest 1-4 were put out over here on the NES under the Dragon Warrior brand. We also got Dragon Quest 7 for the Playstation. The only ones that really got skipped were the SNES ones(5 and 6).
Fun Fact, IIRC Dragon Warrior 4 holds the distinction of being the largest NES ROM.
Shrug, it didn't sell well here because most PS2 gamers are nooblets.
The key to the enjoyment of pop music is to replace any instance of "love" with "C.H.U.D."
from Wikipedia
The series is extremely popular in Japan. Following the release of Dragon Quest III in 1988, the Japanese Diet requested that Enix only release new installments of the Dragon Quest series on Sundays or holidays, to prevent children from skipping school to wait in line for the latest Dragon Quest title.
Dragon Quest is such a cultural phenomenon in Japan that there are live-action ballets, musical concerts, and audio CDs based on the Dragon Quest universe.[3] The London Philharmonic Orchestra has performed for several Dragon Quest music albums.[4]
Still seem ridiculous for one game to have that big of an effect on profits? If it does badly, that represents a significant cultural shift for the country of Japan
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This is because the ideal value of an equity is the value of the company's future cash flows. The dividend-discount valuation models that are used assume a given rate of growth for a certain amount of time before stagnation, and those future cash flows are discounted by a standard 'cost of capital'. A decline in profit indicates that the company may be near the stagnation point, and the value of those future dividends is called greatly into question.
A profitable year isn't enough. Capital markets demand of a growth stock ever-more profitable years. There is room for companies that are stable and not growing much, but they tend to not be valued at a very high multiple over their yearly earnings.