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Square Enix president steps down following terrible year for the company
Square Enix president steps down following terrible year for the company
March 26, 2013 | By Mike Rose

March 26, 2013 | By Mike Rose
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    20 comments
More: Console/PC, Business/Marketing



As Square Enix revises its full fiscal year forecasts, now predicting a swing to losses from the previously estimated profits, the company's president Yoichi Wada has resigned.

The Japanese publisher admitted last month that it is "struggling" to recover from the huge losses that it posted earlier in the current fiscal year, due in part of slow sales of Sleeping Dogs.

Now, where Square Enix had previously forecast profits of 3.5 billion yen ($37.1 million) for the fiscal year ended March 31, it is now estimating "extraordinary loss" of 13.0 billion yen ($137.9 million), a change of 16.5 billion yen ($175.1 million).

This was due to the company's digital entertainment division seeing "substantially" slower results in major console games than it had predicted. Its arcade machine business was also sluggish.

As a result, Square Enix is now implementing major reform and restructuring within the company, while taking a good hard look at its business models. These restructuring efforts will cost the company around 10 billion yen ($106.1 million), hence the switch from profits to losses for this fiscal year.

This includes disposal of content, which the company says will cost it 4 billion yen ($42.4 million), and the evaluation of all other content (another 4 billion yen).

Yoichi Wada stepping down as president is just one part of this restructuring effort. Wada originally joined Square at the start of 2000, and quickly rose up the ranks to become president and CEO by the end of the year.

The company noted that Yosuke Matsuda, previously representative director, will now take up the president role at Square Enix. However, a general meeting of shareholders will be held in late June to determine exactly who will take up each role fully.

Update: Square Enix has released extra information regarding its forecasted end-of-year results, including predictions of sales figures for its console titles.

The company estimated that it will have sold approximately 1.75 million copies of Sleeping Dogs worldwide for the fiscal year ended March 31, 2013.

Meanwhile, it is estimated to have sold 3.4 million copies of Tomb Raider, and 3.6 million units of Hitman: Absolution. It called these figures "weak sales," adding that "despite the high critical acclaim, [each has] failed to meet each target."

"In particular, NA sales force was ineffective," the company continued, "ending up with two-thirds of number of units sold in Europe. Moreover, price pressure was strong, which forced spending additional channel costs such as price protection."


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Comments


Pablo Simbana
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The only game I've been looking forward from squareenix in the last generation has been final fantasy type-0 and everything leads that they are not going to release it in the west for the time being u_u'
Why would they develop such a huge game and then refuse to localize it, I don't need voice acting, just traduce the text and I'll buy the game X3

Duvelle Jones
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You might have something there. I am not sure if company like Square would be able to restrain themselves from a completely blockbuster localization, but the cruel fact is that not every game from Japan (or else where) warrants the time and money spent to do so.

If they act accordingly with marketing, that would surely see something more in line to a profit... right?

Michael Pianta
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Absolutely. I'll go one further and say that the english voice acting is almost always the worst thing about the game. In every way the games would be better if left in Japanese with subtitles. But apparently this is not a widely held opinion - I have read that games without the english voice acting sell significantly worse.

But I do firmly believe that in 'edge cases' companies should feel more free to do simple translations and forego full localization.

Pablo Simbana
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I understand why it would be difficult to fully localize this game, it has a huge cast (they even had mizuki nana as a character if I'm not wrong) so I think they had big hopes for it, still they refuse to do it... it is a bad PR move, seen some people refusing to buy squareenix games because of their attitude (announcing games and then forgeting about it [versus])
I don't think that english voices are a bad point I mean i love the voice acting in persona 4 golden, its great and feel very close to the characters, but maybe they would give us the option to have the japanese audio as well, I know soul sacrifice will give the japanese audio as DLC and I think it will be free for preorders, I wouldn't mind to pay extra for original audio as long as it is not expensive but i'm pretty sure developing and licensing costs will increase.

Gonzalo Daniel
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Deus Ex Human Revolution and the new Tomb Raider have been amazing games, and I am glad that they have seen light thanks to Square. The huge problem the company has to deal with right now is Final Fantasy. They have been looking to compete on the MMO market forgetting the hardcore base of fans that have played their single player content for decades, when there was no need to change track at all.

Craig Dolphin
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I would have bought Tomb Raider for my gaming pc but I am unable to because they decided not to release a retail copy in north america, and I live in rural usa where there's no broadband other than satellite: and the monthly caps on my isp are smaller than the file size for the game.

Perhaps if Square made it possible for gamers like me to buy their games again they might have slightly better sales numbers.

Alex Boccia
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Yeah I couldn't believe there was no retail boxed copy with the exception of the CE, pretty crazy.

Mathieu MarquisBolduc
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What I find amazing in Japan is that when the compagny underperforms, top executives often cut their own salaries. The concept seems so alien to my north-american mind.

Ramin Shokrizade
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It is an excellent time to be introspecting and considering changes in business models. The business environment for games has changed radically in the last few years, and it is understandable that this can create numerous challenges for the older companies. Those large companies that fail to adapt will have their empires come to an end. Square Enix has many fans worldwide that grew up with their games, so it would be a shame if they were one of the ones that failed to bend.

This is especially true in products with long development times. The design for Final Fantasy XIV was obsolete from the start, so by the time it came to market is was little more than a curiosity to consumers. Throwing more money at it to save face was admirable, but was it wise?

The future of AAA games for the next several years hinges on how these large companies react to the new business environment. I for one will be greatly saddened if, given all the advances in technology, the trend just continues towards ever inferior products.

Alan Boody
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Let me guess: F2P, with all kinds of pay walls? Perhaps, people just want a great game (Minecraft, World of Goo, and so forth) and are no longer entranced by bland products that are coated with extra shine?

Perhaps, these games are not selling as well or making enough of a profit (or even contributing to a loss) because companies continue with the same mentality that graphics are first, gameplay is second. I really don't think it's the business model, to be honest. I'd gladly pay $60 - $80 for another STALKER game even if the graphics are the same quality from the previous game. People played the original Starcraft a decade after its release.

Maybe if the industry started to realize that you don't need bleeding edge technology and graphics anymore then they wouldn't need all these additional nickel & dime schemes to make their money. I mean, think about Minecraft for a moment. This game has been out for years and is still one of the most popular and most played games available. It had virtually no budget, and thus, poor graphics compared to today's games. Yet, it's one of the most popular.

Chris Clogg
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To Alan: I think the perfect combo is getting something like Half-Life 2. Great graphics and a great experience... plus all of the mods and so forth. But I guess that's the exception, since it's Valve.

On the other hand though, imagine playing a game that looked this real: http://www.youtube.com/watch?v=pXZ33YoKu9w

Anyway, in the end I do agree with you though, gameplay = tres important!

Alan Boody
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@Chris: No doubt, an ultra-realistic experience would be truly engaging. I just think that the development tools aren't there yet, in terms of the project being feasible in the end. This is more true for MMO's than single-player games since MMO's need a ton of content. Imagine if EA cut back on the cutscenes/voice over and invested that into more playable content in SWTOR. Not only would have players been engaged longer, but EA could have released more content much sooner.

Cutscenes and voice overs are all neat. But, at the end of the day, it's like watching a movie. Been there, done that. They add no real replayability or longevity. In fact,they work against it.

I think another problem comes from game developers wanting to control how the game players play their game too much. In today's game development environment, rocket jumps would have been cut out as soon as they were known. They're not part of the 'vision'. Sometimes, I think scope and vision get mixed up too much.

Christian Nutt
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WELP

Jonathan Murphy
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I thought EA would be the last major shift until next gen. Industry is changing fast. I hope they choose someone good to replace him.

Marc Audouy
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It is sad that more than 3M copies of a game is considered "weak" sales...

Alan Boody
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Companies are investing too much into graphics. I've seen this coming for years. I've argued with other developers about it. You don't need cutting edge graphics, you need engaging games. I think these companies would sell more DLC or even 'cash shop' stuff if their games were more engaging. Plus, they wouldn't have to take drastic measures to try and recoup investment into games.

Jonathan Murphy
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I shared your view Alan. But I came to realize that's not the problem. It's the -standard-. If your art doesn't look like the standard you are considered a bad artist. It creates a scenario where they care only about the big fish in the pond. The rest are ignored. Graphics aren't the problem. It's the mentality of what game art should look like.

There are similar rules for business, and gameplay. All are poison in the creative field. If you only follow trends you are doomed. You must create your own trends.

Alan Boody
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Companies are investing too much into graphics. I've seen this coming for years. I've argued with other developers about it. You don't need cutting edge graphics, you need engaging games. I think these companies would sell more DLC or even 'cash shop' stuff if their games were more engaging. Plus, they wouldn't have to take drastic measures to try and recoup investment into games.

Michael O'Hair
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Over 3 million units sold, and still considered "weak sales". That's a three and six zeros. Astounding.

This changing of the guard is similar to an addict's moment of clarity, a sudden realization that was previously ignored.

Big development houses and publishers are addicted to big budgets and expect even bigger profits, bigger highs. But for all the money injected into their projects, the profits are no longer generating the same "high". The payoffs are curving downward. Maybe Square-Enix's social and mobile games will be an effective placebo that gets them off the sauce. But perhaps not.

The company will need to make an assessments of what is making them money, what is not making them money, do what is making them money better than everyone else, and cut loose whatever it is that is not making them money.

Everyone will be watching where the company that once made such great games goes from here, since the fate of one can easily be the same fate for the others.

Randen Dunlap
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I can’t deny that I mirror many of your comments in here with a “wow!” of my own when 3.4 Million copies of Tomb Raider sold is considered a huge disappointment by the publisher. However, I can’t agree full heartily with the “anti-high graphics” sentiment. I believe they still have their place within our industry.

For me, (and I’m willing to bet others) the high fidelity graphics and absolutely stunning environments of the newest Tomb Raider HELPED created an immersive experience that I thoroughly enjoyed. While certainly not the only ingredient to a successful recipe, still an effective one nonetheless when used properly. I would wager that inefficient business models and methodologies are just as guilty of inflating the costs to where 3.4 Million units sold is not profitable for the publisher.

Lastly, that statement is somewhat misleading to me. Did they at least recoup their development costs? (On Tomb Raider and Hitman) Or did they just not “sell as well as they were hoping”, in other words, bringing the company as a whole out of the red.


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