Square Enix on Friday said poor video game sales and a costly delay in billing for a key subscription-based MMORPG sent sales and profits spiraling downward.
Sales for the Tokyo-based publisher fell 34.8 percent to ¥125.27 billion ($1.55 billion) for the fiscal year ended March 31. Losses hit ¥12.04 billion ($149.32 million), down from profits of ¥9.51 billion ($117.9 million) for the prior year.
Square Enix warned of the substantial losses
yesterday. In February this year before the forecast revision, the company was expecting a ¥1 billion ($12.4 million) profit.
The publisher's president Yoichi Wada said in a statement, "Our group experienced significantly lower sales and profit during the fiscal year mainly due to weak performance of console game titles released during the year as well as the impact of a continued delay in billing for a key online title, which was newly launched during the year."
That "key online title" is Final Fantasy XIV Online
, a subscription-based MMORPG that launched on PC in September last year, with a PlayStation 3 version planned for later launch.
But despite spending millions on the title, Square Enix has yet to charge a monthly subscription for the game following a poor reception from players. The publisher has said it wants to deliver a good game before charging fees for it, and continues to work on fixes. The PS3 version has yet to launch.
Creating online games is one of the main strategies for Square Enix going forward, Wada said. "In the fiscal year ending March 31, 2012, we are very focused on the group's key strategic initiatives of globalization, becoming 'network centric,' and strengthening our own-IPs as we work to generate a substantial earnings recovery from the fiscal year ending March 31, 2013 and beyond."
While the company cited "weak" console game sales, April's Dragon Quest Monsters: Joker 2
and August's IO Interactive-developed Kane & Lynch: Dog Days
both were million-sellers, Square Enix said.
Total software unit sales for the year were 16.85 million units, down from last year's 26.66 million. The publisher estimates that the current fiscal year will see a further drop in unit sales to 14.5 million units.
Across its global network of studios, Square Enix plans to add five new original IPs: two from Tokyo, and one each from Eidos Montreal, IO Interactive and Wimbledon.
The company expects the current year to see a year-on-year 4.7 percent rise in sales to ¥130 billion ($1.61 billion), and a swing to profits of ¥5 billion ($61.98 million).