Square Enix's Final Fantasy XIV Saves Its Profit Margin

[Karloff]

Square Enix's Final Fantasy XIV Saves Its Profit Margin

Losses? Never! We're in profit country now, my friend.

Square Enix, whose financial outlook up to now has been bleak [http://www.escapistmagazine.com/news/view/121907-Console-Troubles-Wreck-Square-Enixs-Profits], revised its financial predictions after a much better than expected quarter. Where previously it had expected a loss of ¥2 billion, it's now looking forward to a profit of ¥4.7 billion ($47.6 million), and while "uncertainties in the second half of the fiscal year" cause Square Enix to tread cautiously, nevertheless it's good news for a company that, up to now, was looking financially unsteady.

It's thanks in no small part to the success of Final Fantasy XIV: A Realm Reborn, its MMORPG for PC, current and next generation PlayStation consoles. The game did so well definitely come true [http://www.escapistmagazine.com/news/view/127242-Final-Fantasy-XIV-Digital-Sales-Halt-Servers-Melting-Under-Strain].

It also helps that console sales in North America - the factor Square previously blamed for its financial failures - seem to have been doing better than expected, and company-wide cost cutting efforts are bearing fruit. But all that said, the more than 1.5 million Final Fantasy player base - and the subscription fees that each one of them contributes - did more than save a realm; they might have saved the company too.

Source: Square Enix [http://www.hd.square-enix.com/eng/news/pdf/131105.pdf]


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[FloodOne]

You might want to fix the headline.

Unless, of course, SE releases FF16 before 15. Which might happen at this point.

 

[CriticalMiss]

Square Enix's Final Fantasy XVI Saves Its Profit Margin

I know that FF14 was pretty much rebuilt from scratch but it's still not FFXVI. That's a silly mistake to make in a headline.

I'm suprised to hear they are in profit though, surely having to redevelop the game would have cost them a lot?

 

[MCerberus]

Squeenix, turns out the western markets are keeping you afloat instead of being your death.
So this is awkward... must be the mobile and FF spinoff machine divisions causing the issues... The ones you claimed were great successes.

edit- WAIT A SECOND
"uncertainties in the second half of the fiscal year". This is a giant red flag here. They may have used some accounting tricks to increase their recorded profit.

 

[ckam]

So FFX?Wait, never mind. Everyone else made the comment. I was almost interested for a second there, too.

 

[Trishbot]

So... consoles aren't the devil after all, Square? That's fantastic... Making a quality game ensures people will support it? That's wonderful...

... now let's see if you learn the right lessons.

 

[Atmos Duality]

Well, looks like one of the "Old Guard" Japanese publishers will remain afloat for a little longer.
(things don't look so rosy for the others, save Nintendo)

edit- WAIT A SECOND
"uncertainties in the second half of the fiscal year". This is a giant red flag here. They may have used some accounting tricks to increase their recorded profit.

Tricks like..?
(Not being snide, I'm genuinely interested.)

 

[CrazyCapnMorgan]

So... consoles aren't the devil after all, Square? That's fantastic... Making a quality game ensures people will support it? That's wonderful...

... now let's see if you learn the right lessons.

I wholeheartedly agree with this post. It's not, and never will be, the consoles that make or break anything. It's the games and how well they are made. Although, if the industry track record is anything to go by, they probably won't learn that lesson until just before they release the new generation of consoles.

 

[MCerberus]

edit- WAIT A SECOND
"uncertainties in the second half of the fiscal year". This is a giant red flag here. They may have used some accounting tricks to increase their recorded profit.

Tricks like..?
(Not being snide, I'm genuinely interested.)

First one is playing with balance sheets. You can move assets from capitol to cash. The income is then stated as profit, and you don't account for degradation of your capitol on your books. Not only does it make it look like the company is worth more, but it eliminates a cost, like they described. In reality it's 'cannibalizing yourself'.

Then there are various ways you report your ROIs and outstanding debts that, without going into too much detail, can be described as 'Enron-ing'. Oh, and not using your operating income to upgrade your business.

It's a red flag because a company makes nearly $70 million turnaround a year after describing its painful cultural and systemic issues.

 

[Atmos Duality]

First one is playing with balance sheets. You can move assets from capitol to cash. The income is then stated as profit, and you don't account for degradation of your capitol on your books. Not only does it make it look like the company is worth more, but it eliminates a cost, like they described. In reality it's 'cannibalizing yourself'.

I'm not an accountant, so forgive me if my guesses in understanding are just that: wrong, uneducated guesses.
But, by "cannibalizing yourself", I'm guessing that you would have to pay out any swapped assets as dividends to investors because they're listed as profits?

Then there are various ways you report your ROIs and outstanding debts that, without going into too much detail, can be described as 'Enron-ing'. Oh, and not using your operating income to upgrade your business.

It's a red flag because a company makes nearly $70 million turnaround a year after describing its painful cultural and systemic issues.

I'm not familiar with the Enron fallout apart from "they did bad shit, so bad shit happened".
So it'll bear more investigation on my part.

Still, that sounds more interesting "than it should".
So, thanks!

 

[MCerberus]

Cannibalizing yourself is essentially taking parts of the company and selling it off for short-term profit while abandoning potential for long-term. Think someone selling of a factory when they own two.

That is actually the tl;dr of Enron. A lot of what they did was illegal. Not all of it.

 

[Fox12]

It's almost like... if you make good games then people will buy them.

 

[RandV80]

So I guess with subscription fee's kicking in FFXIV is still going strong? I gave it a try because I found a copy in a Radio Shack bargain bin last Christmas for $10, so decided to grab it to try out the beta. I enjoyed it at first and between the beta's and the first free month I probably spent anywhere between 60-100 hours playing, but at the end of the day I guess MMORPG's just aren't for me and it started to get tiresome at about the point where you're no longer finding new places in the main story quest but are just constantly backtracking. By that point I felt my time would be better spent just going back and giving FFXII another play through.

Though of course I still want the game to succeed for Square's financial well being, so they can get back to making a proper single player FF and other RPG's.

 

[Saltyk]

So, does this mean FFXIV has done far better than Square anticipated? I've been hearing that it's probably the best MMO available right now, but has it really done that well?

So I guess with subscription fee's kicking in FFXIV is still going strong? I gave it a try because I found a copy in a Radio Shack bargain bin last Christmas for $10, so decided to grab it to try out the beta. I enjoyed it at first and between the beta's and the first free month I probably spent anywhere between 60-100 hours playing, but at the end of the day I guess MMORPG's just aren't for me and it started to get tiresome at about the point where you're no longer finding new places in the main story quest but are just constantly backtracking. By that point I felt my time would be better spent just going back and giving FFXII another play through.

Though of course I still want the game to succeed for Square's financial well being, so they can get back to making a proper single player FF and other RPG's.

They basically rebuilt FFXIV from the ground up. It relaunched recently. And I've been hearing good things.

And currently they should be releasing FFXV and Kingdom Hearts 3 in the not too distant future. Which, if they do well, should help things considerably.

 

[AldUK]

I fell out of love with Square after FFIX, sure 10 was 'good' but it was so different from the games that came before I couldn't help but worry a little about the direction they were headed. 12 confirmed for me that Final Fantasy was no longer an instant, sure purchase. 13 sealed the deal and I now have no interest in their games outside of observing from the outside.

The way they are headed, it feels like we're losing more and more of the RPG element and rebranding as 'Action.' I still enjoy the older style and can't see that changing.

 

[Elvis Starburst]

Squeenix, turns out the western markets are keeping you afloat instead of being your death.
So this is awkward... must be the mobile and FF spinoff machine divisions causing the issues... The ones you claimed were great successes.

edit- WAIT A SECOND
"uncertainties in the second half of the fiscal year". This is a giant red flag here. They may have used some accounting tricks to increase their recorded profit.

Ahhh... Hm... How awkward indeed >.>

OT: Well done Squeenix. You managed to pull something off rather nicely. Keep it up. Maybe make a good FF game next year, please?

 

[thebobmaster_v1legacy]

I fell out of love with Square after FFIX, sure 10 was 'good' but it was so different from the games that came before I couldn't help but worry a little about the direction they were headed. 12 confirmed for me that Final Fantasy was no longer an instant, sure purchase. 13 sealed the deal and I now have no interest in their games outside of observing from the outside.

The way they are headed, it feels like we're losing more and more of the RPG element and rebranding as 'Action.' I still enjoy the older style and can't see that changing.

See, I don't get people who complain about Final Fantasy games being different from the games that came before, simply because that has been the case for almost every Final Fantasy game after V. We went from V (standard fantasy setting), to VI (magic+technology), then VII (full-on techno-fantasy), then VIII (a more "realistic" setting), then IX (an intentional throwback to the pre-VI era), then X (technology vs. religion), then XI (MMO), then XII (medieval politics), and finally XIII (throwback to Final Fantasy VII's techno-fantasy). Final Fantasy has always bounced around genres, so complaining about it doing so after IX seems a bit unfair, especially when you say that X was still a good game.

Although my personal belief is that IX was the best Final Fantasy game, but that has more to do with having fun characters than anything. Hate the super-serious broody protagonists.

 

[AldUK]

See, I don't get people who complain about Final Fantasy games being different from the games that came before, simply because that has been the case for almost every Final Fantasy game after V. We went from V (standard fantasy setting), to VI (magic+technology), then VII (full-on techno-fantasy), then VIII (a more "realistic" setting), then IX (an intentional throwback to the pre-VI era), then X (technology vs. religion), then XI (MMO), then XII (medieval politics), and finally XIII (throwback to Final Fantasy VII's techno-fantasy). Final Fantasy has always bounced around genres, so complaining about it doing so after IX seems a bit unfair, especially when you say that X was still a good game.

Although my personal belief is that IX was the best Final Fantasy game, but that has more to do with having fun characters than anything. Hate the super-serious broody protagonists.

Sorry, but I wasn't talking about the settings. It's the gameplay that has stagnated in my view. You must of heard of the complaints around 13 being one long tunnel and how the combat was simply pressing one button over and over. It was the last game I bought for my 360 before I sold it because I didn't feel as though I was playing a RPG anymore.

 

[thebobmaster_v1legacy]

See, I don't get people who complain about Final Fantasy games being different from the games that came before, simply because that has been the case for almost every Final Fantasy game after V. We went from V (standard fantasy setting), to VI (magic+technology), then VII (full-on techno-fantasy), then VIII (a more "realistic" setting), then IX (an intentional throwback to the pre-VI era), then X (technology vs. religion), then XI (MMO), then XII (medieval politics), and finally XIII (throwback to Final Fantasy VII's techno-fantasy). Final Fantasy has always bounced around genres, so complaining about it doing so after IX seems a bit unfair, especially when you say that X was still a good game.

Although my personal belief is that IX was the best Final Fantasy game, but that has more to do with having fun characters than anything. Hate the super-serious broody protagonists.

Sorry, but I wasn't talking about the settings. It's the gameplay that has stagnated in my view. You must of heard of the complaints around 13 being one long tunnel and how the combat was simply pressing one button over and over. It was the last game I bought for my 360 before I sold it because I didn't feel as though I was playing a RPG anymore.

Fair enough. The gameplay stagnating is a legitimate issue, and I have heard complaints about XIII's battle system. I thought you were talking about settings, based on how you were saying X was "good", but too different from IX. My mistake.

 

[havoc33]

I fell out of love with Square after FFIX, sure 10 was 'good' but it was so different from the games that came before I couldn't help but worry a little about the direction they were headed. 12 confirmed for me that Final Fantasy was no longer an instant, sure purchase. 13 sealed the deal and I now have no interest in their games outside of observing from the outside.

The way they are headed, it feels like we're losing more and more of the RPG element and rebranding as 'Action.' I still enjoy the older style and can't see that changing.

See, I don't get people who complain about Final Fantasy games being different from the games that came before, simply because that has been the case for almost every Final Fantasy game after V. We went from V (standard fantasy setting), to VI (magic+technology), then VII (full-on techno-fantasy), then VIII (a more "realistic" setting), then IX (an intentional throwback to the pre-VI era), then X (technology vs. religion), then XI (MMO), then XII (medieval politics), and finally XIII (throwback to Final Fantasy VII's techno-fantasy). Final Fantasy has always bounced around genres, so complaining about it doing so after IX seems a bit unfair, especially when you say that X was still a good game.

Although my personal belief is that IX was the best Final Fantasy game, but that has more to do with having fun characters than anything. Hate the super-serious broody protagonists.

FFIX was fantastic, and I agree, the characters had a lot to do with it. It was light hearted and FUN. Steiner has to be the most hilarious character ever created in the FF universe.

To me though, the most important improvement the FF series can do is to get rid of the random battle system completely. With all the advancements in gameplay the last few generations, it feels so wrong to not being able to fight in real time. This is why I loved FFXII; no more random encounters, all in real time and it was fast. Grinding was no longer such a pain in the arse.

Although Midgar is probably my favourite setting in all the FF games, I also think it would be wise for the series to return to its roots, much like FFIX. Get rid of the melodrama, popculture influence, emo characters and random battles. As a matter of fact, FFXIV commercial success is further proof that this type of setting and gameplay is the right way forward.