Square Enix Suffers ¥2 Billion Net Loss

Square Enix released a report yesterday stating that it recorded a net loss of ¥2 billion (approx. $25.52 million USD) for the three-month period ending on June 30, 2012. This number is down from the ¥690 million (approx. $8.81 million) of net income that Square Enix recorded for the same period last year.

As far as video games go, Square Enix owes its disappointing performance to weak console sales. Although sales of Dragon Quest Monsters: Terry no Wonderland 3D and several social networking and browser games like Final Fantasy Brigade were successful, the Digital Entertainment segment of Square Enix ultimately recorded a 3.9% decrease in net sales from last year and a ¥111 million (approx. $1.42 million) net loss.

In its report, Square Enix said that its strategy going forward would be to capture new profit sources that are arising from several key factors.

The advancement of networking and digitalization, and the diffusion of smartphones have triggered a fundamental change in the business environment surrounding the Group, where content delivery measures to customers and business models are increasingly diversified. The Group views this change as an opportunity to capture new profit sources, and is making every effort to establish its profit base through expansion of content and services that conform to emerging customer needs, and launch of full-scale commercial services for major MMO titles.

Despite the company’s poor performance for the quarter, the Japanese entertainment firm said that it would not be changing its business forcasts for the fiscal year and that it is now “focusing all efforts on a substantial earnings recovery[.]”

Analysis: Square Enix doesn’t really look to be in much trouble. Despite the net loss, its net sales actually went up 1.6% from the comparable period from last year, and its big-name titles are still selling as they ought, with Dragon Quest Monsters: Terry no Wonderland 3D earning just as much money as you’d imagine a Dragon Quest title to earn. As such, an undaunted Square Enix still feels confident that it can earn a net income of ¥9 billion by the end of the fiscal year. So despite the rough spot, the Japanese gaming company feels certain that it can shake off this sickly spell and continue being profitable in the near future.

Sleeping Dogs, the next big-name title from Square Enix to hit shelves, launches August 14 for Windows, PS3, and Xbox 360, and it will be interesting to see how the unique IP will do. Still, Square Enix has a lot of safe bets hedged into this fiscal year, with various Final Fantasy and Dragon Quest games littering the company’s release schedule, so their coming future doesn’t look exceptionally grim.

Square Enix Earnings

Connor Horn

About Connor Horn

Connor is a laid-back long-haired California hipster who listens to music "you'll never find on the radio" and who voted for Ron Paul to "make a difference." His favorite kind of games are MOBAs and rogue-likes, and he is a huge fan of PC gaming and the future of digital distribution.