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Square Enix "hoped for more" from Final Fantasy 16 sales, expensed all costs in FY24 Q1 so future sales will all be profits
- Thread starter Phantom Thief
- Replies 362
- Views 45,000
- Start date
- Financial Results
We know that it became profitable between Day 1 and Day 8.
If it isn't "launch", then I don't know what is.
No we don't, we know Square Enix profit last quarter went down a lot and an analyst (Hideki Yasuda from Toyo Securities) estimated that FF16 made a loss of 10 billion yen last quarter (source).
So FF XVI is ~70 millions in loss.
Their MMO segment is down.
Smart devices segment is down.
And yet they are 25 millions in profit.
Uh huh.
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No, what SE did was a slight of hand accounting trick. Essentially they took all the expense of FFXVI and ate it during Q2. From an accounting perspective, it would mean all future sales in q3 and onwards are "profit" because the expense was already written off. That doesn't mean the project holistically broken even, just that on their books they'll consider future sales as profit. Hypothetical simple numbers as an example
If the game cost 1 million yen to make, and the game only made 500k yen in Q2, then the game lost 500k yen on their q2 financials. In q3 if they sell 200k yen of additional copies, on the q3 financials the game was 200k yen of profit (200k minus 0 is 200k), though anyone being honest would say the game still hasn't broken even (500k + 200k doesn't cover 1 mill of production expense).
The financial report specifically, regarding the drop of profit last quarter says "Net sales up YoY due to the launch of “FINAL FANTASY XVI” and other new titles, but operating income down, partly due to amortization of development cost" (source), I wonder why they had to write that if said project was able to generate revenue that would compensate the development cost.
But, by all mean, if you have "knowledge" of Square Enix being able to break even or making a profit with Final Fantasy 16 last quarter, please present your proof.
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They released the Pixel Collection. We have to assume that the Pixel Collection has extremely good margins and probably contributed quite a lot to profits.
And what has being down to do with generating profit? Of course two major segments can be down and still generate profits.
How do playstation exclusive ports perform on PC? I hope for a succes on PC to show Square Enix that the money of Sony isn't enough to keep it exclusive first year. But im afraid they hype is gone in 2024
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DA4 is a 2024 summer game at best according to leaks and it seems it will release even later than that, while DD2 almost 100% doesn’t make it to this FY while FFXVI PC release should release Q4 FY (6 months +- post release). FFXVI will have no competition on PC when it releases but at the same time I feel like FF even with the jump to action based has been still stuck with the same fanbase of JRPG fans + Playstation fans that like ‘cinematic highly impressive games’ which to be fair has been FF thing since FFVII
It hasn't been profitable yet, basically the revenue they got from the 3m shipment + digital sales was still not enough to profit, and it will only be any additional shipment and digital sales from that point (July) onward that would then be counted as profit, and it has yet to have any new shipment sent out and it's digital sales are weak, roughly from week 2 to now it has probably barely even done 350k globally.
Considering that it has such weak physical legs it is highly doubtful it has even sold through its physical shipment to even warrant retailers to order more shipment so that it could even begin to profit, especially given it already was put on 29% off sale by SE themselves this soon, done so clearly to clear stock and hopefully drive more interest in the title with a reduced price so that they could try and hopefully reignite momentum and result in retailers ordering more stock. The fact that it's barely even keeping up with Forspoken in the UK charts and the fact that according to Amazon US it has only sold around 1k in the last month vs Forspoken selling 900 in the last month isn't a good result for it's legs. In a best case scenario it would have done 50:50 digital vs shipment ratio, so 1.5m sold digitally and of the 1.5m shipment, it's more than likely that only around 1m of that even sold in its first week, and that from week 2 to now it still hasn't even sold out the remaining stock, otherwise SE would be parading FFXVI numbers around if it had hit a new milestone by now, it is in all likelihood still below 3m sold through and still not profitable.