With a turnover of 2.3 billion euros and a net profit of 335 million euros, Square Enix is not doing as well as last year but still remains at a very solid level and higher than the years pre-pandemic. Square Enix distributed 22.4 million games between April 2022 and March 2023, down sharply from 39.1 million games the previous year. Sales have notably been halved in the West (14.5 million games against 30 million a year earlier).
For this exercise, Square Enix was able to count on the releases of games such as Live A Live, Star Ocean The Divine Force, Crisis Core Final Fantasy VII Reunion, Forspoken or even Octopath Traveler II, but these novelties did not generate as many money than titles like Outriders, NieR Replicant, and Marvel’s Guardians of the Galaxy the previous year. The MMO segment has logically declined compared to the previous year which saw the release of Final Fantasy XIV: Endwalker. Despite the release of a few new titles, including Fullmetal Alchemist Mobile, Square Enix’s mobile catalog also disappointed and recorded less good results than last year. However, iOS and Android games remain the biggest source of income.
Square Enix’s other business sectors had mixed fortunes with earnings up 164% for the arcade machines and entertainment centers sector, down 5% for the manga publishing sector and guides and still down 6.5% for the derivatives sector. The combined operating profit of these three activities represents 139 million euros, against 280 million euros for video games.
Unlike most publishers whose headcount is only growing, Square Enix lost 925 employees between March 2022 and March 2023, with the group’s workforce shrinking from 5,637 to 4,712 employees. No need to look far for the reasons: it is indeed the consequence of the sale of the Eidos Montreal, Crystal Dynamics and Square Enix Montreal studios to the Embracer group.
Growth will come through more great games (and maybe Web3)
In the medium term, Square Enix hopes to take the next step by aiming for an annual turnover of between 2.7 and 3.4 billion euros as well as an operating profit of between 408 and 510 million euros. To achieve this, Square Enix is still betting on the Web3 / Blockchain / NFT nebula and has already made a number of investments to this effect in specialized companies around the world, including the French Blacknut and Cross the Ages.
Fortunately, Square Enix also intends to improve its ability to release major titles more frequently and intends to revisit its development process to improve the quality of games, which is always good to read after the release of a disappointment like Forspoken. The merger of the Luminous Productions subsidiary is also part of a consolidation of resources dedicated to large AAA projects. Square Enix also plans to strengthen itself through acquisitions, the creation of new studios or equity participation, if only to compensate for the loss of Eidos studios.
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