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Square-Enix Sees Profits Sink

Posted by Zonk on from the out-of-mana dept.

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)."

5 of 73 comments (clear)

  1. Normal Year is a Headline? by Larkvi · · Score: 5, Insightful

    I have never really understood why it is news that a company that has had a profitable year wasn't as profitable as a previous blockbuster year. Last year, with greater profits, was news; this year just seems normal. Would anyone have a headline saying "Square-Enix has nice, but unexceptional, year"?

    1. Re:Normal Year is a Headline? by mlyle · · Score: 4, Informative

      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.

  2. Did you play final fantasy x2? by queen+of+everything · · Score: 3, Insightful

    I haven't bought a square game since Final Fantasy X2, so I have contributed to their decline I guess. But did you play it? I have played Final Fantasy games for as long as I can remember and I loved FFX. FFX2 was SO lame! Dance fighting with different outfits? I'm a girl and I don't even think that is fun. Hopefully their newer games are better, I haven't gotten into an RPG in a while (I tend to play them a little too much once I start) so I don't know. But if any of them are like FFX2, then I understand why they aren't making as much money!

    --
    "Wisdom is not a product of schooling but of the life-long attempt to acquire it." -Albert Einstein
  3. Hopefully not pinning hopes on FFXII by the_demiurge · · Score: 3, Interesting

    My brother got a copy of Dragon Warrior VIII for Christmas, and I had the opportunity to try out the FFXII demo.

    I'm glad I did. The battle system was one of the most boring I've ever played in an RPG. The game practically plays itself. In the 'Boss Battle' in the second mission, I won without giving any orders to my characters at all except for using one ether when I ran out of magic points. Your allies heal themselves and you and there seemed to be little point in casting magic spells yourself except to heal.
    I realize that Final Fantasy has always been a game with changing mechanics and battle systems, but making the battle system as simple as possible is not a step in the right direction.

    So maybe the high distribution of DW VIII will contribute to the downturn in sales in more ways than one...

  4. No surprise by discoalucardx · · Score: 3, Insightful

    They haven't had any really good titles for awhile. Radiata Stories wasn't that great, Musashi wasn't that hot either, and I'm at a loss to remember anything else they did. They haven't had any Final Fantasies for awhile, and Dragon Quest isn't exactly a household name in the US, although apparently it did fairly well for itself. I'm guessing their portable offerings made them money though. (like Final Fantasy IV). With Kingdom Hearts II out in America this year, the upcoming Final Fantasy XII (hopefully out here before the end of 2006), and a bigger portable lineup (Children of Mana, FF3 DS, FF5 and 6 GBA remakes), they should probably see a better year.