Yesterday, we learned that Square Enix president and CEO Yoichi Wada was resigning his post . Many applauded.

This is amid predictions of "extraordinary losses," which are expected to come to light when the company releases its latest quarterly and annual results. Unfortunately, three darn good games haven't lived up to initial sales expectations.

The first is the recently released Tomb Raider , which was the best game of 2013 until Bioshock Infinite arrived this past week. Lara's latest adventure is excellent and it sold 3.4 million units worldwide, which is below what Square Enix expected. The second under-performing game is last year's Hitman: Absolution , which sold 3.6 million copies, but is still below internal predictions. Lastly, there's Sleeping Dogs , another really solid and entertaining game. It sold only 1.75 million units since its launch last summer.

The numbers don't account for digital sales but even so, Square Enix obviously isn't happy. They said that despite "high critical acclaim" for the trio of titles, they just fell short. They also called their North America sales force "ineffective," as sales in this region only made up one third of the number of total units sold in Europe. Well, that's too bad. They deserve much suffering for what they've done to Final Fantasy , but all these games were great, Tomb Raider especially.

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WorldEndsWithMe
WorldEndsWithMe
8 years ago

Found out why Wada was a failure, he was a financial officer of some sort at Square first so of course he would go where he thought the money was with the software: flashy and thoughtless.

Their projections for these games were way off base to begin with no matter how good they reviewed, Sleeping Dogs is basically a new IP, Hitman has been off the radar a long time so, like Max Payne, it needs to basically re-establish itself as a franchise. And Tomb Raider sounds like it is selling very well for a reboot with many changes (DmC will be lucky to sit around 1 million) so TR needs to start adding numbers to its name to command sales of 5 million.

SE just has too much faith in a newly minted branch of western game publishing. I'd lay the smaller share of blame on the sales force.

Heartless Angel
Heartless Angel
8 years ago

They blame great titles like HItman, Tomb Raider and Sleeping Dogs but didn't blamed anything on Final Fantasy XIII? They expecting COD like numbers for these acquired western titles? The even blamed the US sales team, compared to European team. Seems like a lot of finger pointing to me.

daus26
daus26
8 years ago

Yeah, that's what I'm thinking. I don't think you have to be a first class analyst to NOT expect COD numbers with these games, especially when one is a completely new IP.

Although it probably does have some effect, I think this is just a small cover-up and they definitely don't want to admit their poor decisions regarding the FF franchise. For one, FFXIII-2 should be blamed as well because to me, sales aren't too stellar either if you're going to regard 3M as poor. Then there's Final Fantasy XIV and we all know how bad that thing became in terms of development and reputation. Last but not least, who knows how much they've already funded into Vs. XIII, and to this day, it hasn't yet released and pretty much vaporware.

Their core should be from the Final Fantasy, Kingdom Hearts, and other RPG franchises they're known for. Having these Western developers/games as their main dependency on the outcome of their fiscal year is a mistake. If anything, they should be the supporter, not the anchor.

Had they stuck with FFXIII and released FFvsXIII short after, they probably would have time for Kingdom Hearts this generation. FF Vs. XIII and Kingdom Hearts would probably give them plenty of income. If you add that to perhaps a better "FFXIII" in terms of gameplay and mechanics, surely I don't think they would be in this bad of a position. Don't get me started on the possibility of FFVIII remake even.

There's a lot of things they could've done better and it just seems to revolve around the Final Fantasy franchise.

maxpontiac
maxpontiac
8 years ago

Ben said – "They deserve much suffering for what they've done to Final Fantasy"

Surely in jest.

Ben Dutka PSXE
Ben Dutka PSXE
8 years ago

Oh, but not.

maxpontiac
maxpontiac
8 years ago

I know they messed up your franchise and left you and others frustrated. I understand that, believe me I do, but in all honestly, I can't see SE sitting back and making an INTENTIONAL decision to anger long time FF fans.

WorldEndsWithMe
WorldEndsWithMe
8 years ago

The road to hell is paved with the best of intentions.

Ben Dutka PSXE
Ben Dutka PSXE
8 years ago

I didn't say they meant to do it. I said they did it…and as everyone knows, intent is irrelevant.

daus26
daus26
8 years ago

It's tough to say personally, but it just seems like everything they've done to the Final Fantasy franchise this generation is against or opposite to what the fans demand. I mean if we look at the upcoming Lightning Returns, how many of us FF fans asked for that? It looks nothing like an FF game we've loved. It's like PD turning Gran Turismo into a Ridge Racer. Sure they want to try something new, but in the least they should first give us one FF game that meets what we want or at least FFvsXII, especially if we're already this late into the generation.

If they wanted to try something new, it'd be a lot safer to first stick with what the fans have always loved from a franchise that's considered legendary, then release that new direction after… not the other way around.

maxpontiac
maxpontiac
8 years ago

As I stated earlier, I get what happened to FF and how it angered you. With that said my point I am trying to convey is that the "crime" they committed wasn't done on purpose nor does anyone deserve suffering over a video game.


Last edited by maxpontiac on 3/27/2013 10:13:25 AM

Ben Dutka PSXE
Ben Dutka PSXE
8 years ago

I just mean financial suffering, of course. I don't want Square Enix employees to be stricken with plague, or anything.

And yes, I do believe companies should suffer for not delivering the goods for their most loyal customers. Again, financially.

maxpontiac
maxpontiac
8 years ago

The only problem with a company suffering financial issues is it usually translates into some family experiencing hardship as well. I just have soft spot for situations like this but I do understand what you are saying.

Temjin001
Temjin001
8 years ago

I definitely don't think of those as failures in the market. I'm sure they absolutely made S-E a lot of revenue, enough to cover the costs of development and marketing a few times over. I think their issue is that they didn't sell enough in order to make their company more lucrative to investors. They had very high, probably nigh-impossibly high, expectations for 3 games that succeeded. It sounds to me the management overestimated their success on 3 properties, whereas they probably should've came to the table with a 4th entry to make up the difference.


Last edited by Temjin001 on 3/26/2013 11:11:08 PM

WorldEndsWithMe
WorldEndsWithMe
8 years ago

They clearly thought "Look at these 3 gritty western games we are publishing, the sales from those will be enough to save us from the horrors we committed against JRPG fans.

firesoul453
firesoul453
8 years ago

Square Enix jumped right into the western market, did they expect to instantly be on top so soon? Especially when Tomb Raider was released so close to a big title like Bioshock

WorldEndsWithMe
WorldEndsWithMe
8 years ago

In short, yes, they actually believed that. Which is why Wada had to go and the management needs a shakeup.

kraygen
kraygen
8 years ago

I am a bit surprised that those 3 games didn't sell better, but on the other hand I'm one who waits for price drops. Maybe more people are starting to wait for games to be cheaper.

Tim Speed24
Tim Speed24
8 years ago

I want to buy Hitman and Tomb Raider, Like you I am waiting for the price to drop. Happens soo fast now-a-days.

Note: Hitman Absolution can be bought for $19.95 at estarland.com right now.

Ydobon
Ydobon
8 years ago

I'm kind of getting sick of publishers and developers wanting super sales. Dear goodness, why can't 1 mill be enough? Hell I would even go and say 100,000.

The Doom
The Doom
8 years ago

Isn't it obvious? They wanted Call of Duty sales per title.

firesoul453
firesoul453
8 years ago

While Square Enix clearly had their hopes too high. 100,000 is definitely unreasonable. AAA games take like twice as long to make now a days and cost significantly more money to make.

Though I wonder how much the multiplayer part costs….

PC_Max
PC_Max
8 years ago

If its anything like the film industry then it is possible they may have not been that successful.

In the film industry the rule of thumb is that if the movie does not make 3 times or more than what it cost to make… its not a success. Its has to meet that to considered a hit. If a movie only makes about 2 times its budget then it generally is considered breaking even. In other words, they made their money back AND they have money to cover other costs plus budget for another film. In other words, no or little profit.

For the game industry is could possibly follow the same. All one needs to know is how much it cost to dev, produce, and market the game. I hate to admit it though, I bought none of these games… so it must be my fault. :/

Keep Playing!

daus26
daus26
8 years ago

Well I think that goes for most businesses, because the net income is needed not just to make money, but like you say cover the cost of staff and development so of course it would have to be around 3 or more times than what it costs to make.

However, we're talking about tens of millions of dollars of projected LOSS here. Exactly how much did SE pay to acquire these developers… my goodness.

PC_Max
PC_Max
8 years ago

Thats the thing. Its easy enough to go to imdb to find out budgest and money earnings for films, but I do not have a clue as to what the costs are for many of the popular games. Journey almost broke its dev, and it sounded like they broke even.

Unless someone knows where one can go to get budget costs for games/devs/publishers, would be nice to create one. ūüôā

Mind you I am not sure devs/pubishers are ALL wanting to share that info.

Keep Playing!

Wissam
Wissam
8 years ago

Over 3 millions for 2 titles and not satisfied ?
I hope they don't end up like THQ.


Last edited by Wissam on 3/27/2013 3:25:22 AM

___________
___________
8 years ago

christ, talk about greedy!
im sorry but if your disappointed with the ways those titles have sold, then you need your head looked at!

Beamboom
Beamboom
8 years ago

Oh no… With these numbers not meeting requirements, and head boss now leaving, I got a really bad feeling you all should not cheer too loud yet. We might end up with an even worse SE after this.

Cause really, those games are all of *epic* quality. So if those games were failures according to SEs goals, then what next for SE? A really grand scale niche JRPG like you all hope for? I would really not be too sure about that.
Not too sure at all.

xenris
xenris
8 years ago

Ni No Kuni was sold out at most retailers and aside from the combat being more fast paced, it has all the JRPGs trops the good and the bad, that fans have come to expect.

Honestly Square should go back to making those types of games if they want to get back into a position of RPG dominance.

Beamboom
Beamboom
8 years ago

According to vgchartz Ni No Kuni has not sold more than 0.66m units world wide, and if that number is in the vicinity of the actual sales number then I'm afraid that doesn't prove more than that most retailers didn't order that many copies.

And it most definitely is nothing that will impress SE, seeing how their goals are.


Last edited by Beamboom on 3/27/2013 10:31:23 AM

WorldEndsWithMe
WorldEndsWithMe
8 years ago

Dude, they were gonna get worse and worse anyway, at least now there's a chance.

Beamboom
Beamboom
8 years ago

I've liked a lot of the games coming from SE's studios in recent years. Deus EX:HR were *fantastic*. One of my clear favourites of the entire generation. If it was up to me I'd want them to keep on doing what they were doing.

I'm afraid they now will change focus to the new gaming arenas. Ergo multiplayer/internet games, portable devices of all sorts and microtransactions. And that would be so insanely much worse than up until now, in my humble opinion.

Underdog15
Underdog15
8 years ago

VGchartz is ballocks. I'm the only one of my friends that bought a physical copy of it (for some reason).

I've decided that VGchartz is useless until they find a way to track digital sales.

Also, it had a DS release in Japan a year prior.


Last edited by Underdog15 on 3/27/2013 11:27:21 PM

xenris
xenris
8 years ago

Yeah sorry Beam VGchartz is severly lacking in how it collects data of sales. It doesn't cover digital, and Ni No Kuni was downloaded a lot according to PSN. Also I don't think it covers online orders so but I'm not sure about that, I do know that it is not accurate at all.

Lets say though that the number is 1 million game sales, for a new IP that is a good number. Further more for a game that has had no huge marketing campaign, and is in a super niche genre that is incredible.

Its not like a military shooter selling 1 million copies that would be terrible, because those rehashes are expected to sell a lot more because thats what "most" gamers are into currently.

Also Ni No Kuni has only been out for two months exactly, 1 million sales in two months is excellent for this type of game.

Now what if Square made a game that was marketed as a throwback to their golden age of games? I can bet that it would sell well, if they could find a good blend of oldschool RPG gameplay but make it up to date and get rid of the annoying things like terrible save point systems, random encounters, long loading times etc. Well I think they would have a game that sells a lot.

They could even make it indy and low budget and release it on the PSN as a test.

xenris
xenris
8 years ago

Honestly I don't know what to think about this company anymore. They put all their fish in one basket, one that none of their fans were interested in and then they suffer huge losses because of it.

I'm sure a lot of this loss is due to them essentially remaking FF14online, but still they screwed that game up as well by not listening to fans and feedback from the beta tests. I was part of the PC test and the forums were littered with great suggestions a lot of them simple and easy to implement. But they just didn't listen.

I find it remarkable when devs refuse to listen to their core fans. It must be an ego thing, they want to make the game their way. But some of the best games on the PC I have played have shifted and changed for the better due to fan feedback and suggestions.

However for Square it is much more than this, they seem to have forgotten why people trusted anything with a Squaresoft branding on it, why people would blindly buy the next Final Fantasy game regardless of reviews, or any knowledge of the title. They have forgotten that Square used to be synonymous with quality, and that Final Fantasy games were ALWAYS a safe bet.

Most people have favourite Final Fantasys from the PSX era, but not a lot of people thought that any of them were terrible games. For example I hated the characters in FF8 but the game was awesome, and I still enjoyed playing it. Fast Forward to FF13 and I hated the characters, and the game wasn't fun to play for me.

If square can go back to their roots and capture what made them so special then they can recover from this. But with a lot of the talent responsible for making Final Fantasy what it was, gone, and more concern with profits. I don't know if they will ever return to greatness.

SmokeyPSD
SmokeyPSD
8 years ago

I agree with Gaffe, they have rocks in their heads SE like the film industry does chasing ever bigger box office figures. Shifting the posts of what makes a "hit" to ridiculous points until everything looks like a disappointment.

Nothing wrong with those sales figures for Tomb Raider and even Sleeping Dogs is nothing to scoff at for a new IP.

TheHighlander
TheHighlander
8 years ago

Hopefully Yosuke Matsuda has some kind of vision for SE based on the things that made them great, and can find a way of engaging the older audience SE squandered for most of this generation, while at the same time building lasting relationships with new fans to move forwards.

I feel like what SE did this generation was tear down the bridges to their existing loyal fan base, and at the same time instead of building new lasting fans, instead they indulged in the hollow pursuit of casual fandom. The games were not enduring classics, and the audiences did not build on the past, nor were those fans engaged on an emotional level sufficient to create any brand loyalty. The net result was the alienation of the audience they had coming out of the PS2 generation, and nothing to take their place.

SE's best bet now – IMHO – is to go back to basics and re-engage the large number of JRPG fans who'd been disillusioned and alienated this generation, and restore faith among the fans of other games who's western Devs SE acquires – like Hitman, Tomb Raider and so forth.

It means listening to the very people they've ignored for 6-7 years now. Oddly enough, I think that the work done on A Realm Reborn could foreshadow Square Enix's best, last chance at rebuilding. With FFXIV they recognized what an abject failure the game was when it launched and literally went back to the drawing board. They engaged fans and asked them about games, they put key people in place who actually know something about MMORPGs as well as the lore/mythos/universe of FF games.

Sadly though, I am not sure that Yosuke Matsuda is the greatest choice for their future. His one listed producer role on a game is Unlimited Saga – which was not well received outside Japan. Yosuke Matsuda is also not the most game oriented person at Square Enix, check this quote out;
"Recently, Final Fantasy XIV Producer Naoki Yoshida admitted that another failure like FFXIV’s original launch could doom the company. This was not just hyperbole. A recent financial report from Square-Enix only confirms Yoshi-P's prediction, and this one is straight from SE’s Chief Financial Officer, Yosuke Matsuda. Despite being released over two years ago, the financial impact of FFXIV’s horrific failure are still being felt throughout the entire company. "

Yes, Wada was replaced by the CFO at Square Enix, the accountant is in charge. That said, perhaps he can once and for all kill Square Enix's tendency to try to make movies instead of games, when making games.

This is Matsuda's bio at IGN;
Director of Taito Corporation, a division of Square Enix. Born in 1963, Matsuda worked for Mitsui Life Insurance Company Ltd. and Actus (Gran Thornton Taiyo) before joining Square Co. in December 1998.

Oh boy…Want a frightening view into Yosuke Matsuda's mind?

This I found at Quora.com…

Yosuke(Matsuda) followed the question "
User Acquisition: How much is a decent "users acquiring cost" for a startup?". 21 Dec
Yosuke followed the question "
What new billion dollar markets are currently being created and/or will emerge over the next 5 years?". 19 Dec

Yosuke followed the question "
What is the standard ARPU and ARPPU for a social game?". 18 Dec
Yosuke followed the question "
Social Games: How do you calculate LTV for a social game (mobile or Facebook) reliably early in the game's lifecycle?". 18 Dec
Yosuke followed the topic
Fashion Trends
Yosuke followed the topic
Web Marketing
Yosuke followed the topic
Business Models

::facepalm::
ARPU – Average Revenue Per User or Annual Return Per User
ARPPU – Average Revenue Per Playing User or Annual Return Per Playing User
LTV – Loan-to-Value (ration of loaned or invested capital vs the assessed value of the asset the loan is against).

Matsuda-san is not a gamer, he's an accountant.

Ultima
Ultima
8 years ago

re: sales

The chart I saw was misleading: I couldn't tell if the numbers listed was the numbers that Square -wanted- to sell but didn't meet expectations, or the numbers actually sold but were short of expectations.

Regardless, as PC_Max alludes too, merely selling large number of units isn't the issue. The issue is PROFIT: That is, how much money you make compared to how much the game cost. Even if the numbers put up are the actual number of units sold, if they provide enough profit (or as suggested, resulted in huge losses), then it's pointless.

On this note, this is why Sony moving to simpler architecture for the PS4 is a good thing, for the last few holdouts who think otherwise: If this coming console generation can rein in development costs (preferably they would go -down-, but I'm doubtful) by making the architecture easy and familiar to develop for, then we hopefully wouldn't have issues were selling 3.6 million copies of a title still results in a loss.