Square Enix Forecasts Massive Loss As President Departs

[Karloff]

Square Enix Forecasts Massive Loss As President Departs

Yoichi Wada, former President and Representative Director, will be replaced by Yosuke Matsuda.

Square Enix, maker of Tomb Raider and Deus Ex among many other titles, has announced that it expects to make a significant loss for the fiscal year ending March 31, 2013. Its Digital Entertainment Segment is to blame; slow sales of major console titles in North America and Europe are the main reason why the loss - more than ¥10 billion ($106 million) in ordinary income before expenses and deductions - is expected to occur. Moreover there is an extraordinary loss on top of the projected profit bombshell: what Square describes as a "loss on disposal of content" and "loss on evaluation of content" will account for a further ¥10 million loss. The extraordinary loss is part of a general restructuring at Square, which it describes as "major reforms" needed to revamp its business, in light of the rapidly changing games market.

Yoichi Wada is no longer President and Representative Director of Square Enix, though this board change awaits formal confirmation at the 33rd annual general meeting of shareholders. His replacement is Yosuke Matsuda, who currently holds the title Representative Director, and has in the past acted as Square's Director and CFO.

Back in 2011 [http://www.escapistmagazine.com/news/view/110058-CEO-Square-Enix-Has-Become-Weaker-Than-Expected], Wada claimed that "our game development has become weaker than expected," and predicted that revamping it would take one or two years. Poor internal communication and inefficient work practices were said, at the time, to be the root causes of Square's problems.

In 2012, Square posted a ¥6 billion ($63.6 million) profit, thanks in no small part to Deus Ex. While Tomb Raider [http://www.escapistmagazine.com/news/view/122580-Tomb-Raider-Reaches-One-Million-Players-in-Two-Days] sales have been doing very well, it evidently wasn't enough to salvage Square Enix's bottom line.

Source: Square Enix's Wada Announcement [http://www.prnewswire.com/news-releases/announcement-of-revisions-to-consolidated-results-forecasts-and-expected-extraordinary-loss-199985561.html]


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[MadBlueWinnie]

Square Enix did not "make" Tomb Raider or Deus Ex. Credit to where credit is due.

 

[Legion]

Bah, that's all we need. The publisher of two of the best games in recent years with financial issues.

Although at least the losses are down to a shift in the business model, rather than the games themselves. Hopefully it won't affect potential sequels to Deus Ex and Tomb Raider.

 

[FloodOne]

Square Enix did not "make" Tomb Raider or Deus Ex. Credit to where credit is due.

True, but they published them, and they assumed the risks/claim the rewards.

 

[Roxas1359]

Square Enix did not "make" Tomb Raider or Deus Ex. Credit to where credit is due.

I think he's referring to the reboots.

OT: I guarantee they will make back a huge portion of the sales once Kingdom Hearts HD 1.5 ReMix is finished being localized in Q4 of this year. I already have a copy, hooray for imports, and it is pretty good. They'd also make more sales if they'd release KH3 already. >.<

 

[Roxas1359]

Square Enix did not "make" Tomb Raider or Deus Ex. Credit to where credit is due.

I think he's referring to the reboots.

Which they did not make either. Crystal Dynamics and Eidos did.

Square-Enix ponied up the cash for those games, but that doesn't mean they should get the credit for making them.

But Square Enix owns them and published the games so they get most of the credit. It shouldn't be that way but that's usually how it is.

 

[Eclipse Dragon]

So March is officially "Fire your CEO Month" for the game industry?

Talk about spring cleaning.

 

[Ukomba]

If only they'd spent more money on the graphics this wouldn't have happened.

 

[Weaver]

Wada mistake he made.

 

[Baresark]

Square Enix did not "make" Tomb Raider or Deus Ex. Credit to where credit is due.

I think he's referring to the reboots.

Which they did not make either. Crystal Dynamics and Eidos did.

Square-Enix ponied up the cash for those games, but that doesn't mean they should get the credit for making them.

I'm all about giving credit where credit is due and obviously the developers made them and not the publisher. But the publisher deserves credit for green lighting and paying for those games to be made. Neither was cheap or quick, they were the result of hard work by a lot of people and also the result of a big risk by the publisher.

OT: That is a darn shame. Lacking the discussion of any of their internal studios or Japanese based studios is a strange thing. It's not like those games were the only ones taking money from the publisher, but it does look like they were the only ones making money.

 

[Colt47]

Yoichi Wada was actually a pretty good CEO and I'm kind of sad to see him go. The weak game development and poor communication aren't necessarily his doing, and it's thanks in part to him that Final Fantasy XIV ARR is actually happening (heck, most of the western development world would have scrapped FFXIV or made it a free to play game.) On the upside, the restructuring will likely mean they will more efficiently get out the games they have promised over the last few years, including Kingdom Hearts 3 and Final Fantasy XIII Vs. Let's just hope this doesn't turn into another Electronic Arts situation.

 

[Adam Jensen_v1legacy]

Square Enix is a good publisher. I hope that doesn't change.

 

[Callate]

I'm actually kind of sorry to hear this. Aside from some bumbling with the Final Fantasy franchise (which doesn't really affect me one way or another), it seems like S-E has been one of the more admirable publishers of late.

 

[Mortuorum]

So crapping out halfassed Final Fantasy titles has nothing to do with it?

 

[gigastar]

Square Enix did not "make" Tomb Raider or Deus Ex. Credit to where credit is due.

No, but they funded, marketed and distributed it. Credit to where credit is due.

 

[Epona]

First John Riccitiello, now Yoichi Wada and next Saturu Iwata.

 

[faefrost]

Square Enix is a good publisher. I hope that doesn't change.

Yoichi Wada was actually a pretty good CEO and I'm kind of sad to see him go. The weak game development and poor communication aren't necessarily his doing, and it's thanks in part to him that Final Fantasy XIV ARR is actually happening (heck, most of the western development world would have scrapped FFXIV or made it a free to play game.) On the upside, the restructuring will likely mean they will more efficiently get out the games they have promised over the last few years, including Kingdom Hearts 3 and Final Fantasy XIII Vs. Let's just hope this doesn't turn into another Electronic Arts situation.

Well yes. But I am willing to bet that FF XIV is one of the huge bleeding wounds that make up that $106 million loss. From a business standpoint they should have really killed it.