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Square Enix Q3 FY3/2024 Financial Results (Oct - Dec 2023) | Net sales up by 0,8% and ordinary income down by 19,5% over Apr - Dec 2022

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Consolidated business results

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The Square Enix group (the “Group”) is continuing determined efforts to strengthen the competitiveness and profitability of its business segments of Digital Entertainment, Amusement, Publication and Merchandising.
Net sales for the Nine-Month period ended December 31, 2023 totaled ¥257,612 million (an increase of 0.8% from the same period of the prior fiscal year), and operating income amounted to ¥34,918 million (a decrease of 15.5% from the same period of the prior fiscal year). In foreign exchange rates, the weakness of Japanese yen compared to rates as of the end of the prior fiscal year resulted in the booking of a foreign exchange gain amounting to ¥4,570 million. As a result, ordinary income amounted to ¥40,910 million (a decrease of 19.5% from the same period of the prior fiscal year), and profit attributable to owners of parent amounted to ¥26,768 million (a decrease of 42.3% from the same period of the prior fiscal year).

Digital entertainment

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The Digital Entertainment segment consists of planning, development, distribution, and operation of digital entertainment content primarily in the form of game. Digital entertainment content is offered to meet customer lifestyles across a variety of usage environments such as consumer game consoles (including handheld game machines), personal computers and smart devices.

At the HD (High-Definition) Game sub-segment, net sales for the nine-month period ended December 31, 2023 rose compared to the same period of the previous fiscal year due to the release of titles including “FINAL FANTASY XVI,” “FINAL FANTASY PIXEL REMASTER” and “DRAGON QUEST MONSTERS: The Dark Prince.”
In the MMO (Massively Multiplayer Online) Game sub-segment, net sales fell compared to the same period of the previous year.
In the Games for Smart Devices/PC Browser sub-segment, net sales declined compared to the same period of the previous fiscal year as the June 2023 launch of “Dragon Quest Champions” and the September 2023 launch of “FINAL FANTASY VII EVER CRISIS” were unable to compensate for factors including weak performances by existing titles.
Net sales and operating income in the Digital Entertainment segment totaled ¥179,654 million (a decrease of 2.6% from the same period of the prior fiscal year), and ¥30,715 million (a decrease of 20.7% from the same
period of the prior fiscal year), respectively.

Results briefing session for the first nine months of FY3/2024 - https://www.hd.square-enix.com/eng/ir/pdf/24q3slides.pdf

FY3/2024

Q1 - https://www.installbaseforum.com/fo...inancial-results-net-sales-14-4-oi-78-5.1850/
Q2 - https://www.installbaseforum.com/fo...-income-down-by-42-1-over-apr-sept-2022.2103/
 
Lol. This is not going to survive long at this point.

And People are wondering why people is not optimistic with SE doubling down more on AAA and GaaS project which is expensive while slowing down on more cheaper AA games that can be successful as well with little risk.

This is an outsourced title from a not massive dev that only had three years in development so I would guess it didn't have a AAA budget.

But still shows that SE barely understands these service games at all.
 
This is an outsourced title from a not massive dev that only had three years in development so I would guess it didn't have a AAA budget.

But still shows that SE barely understands these service games at all.

GaaS usually grow into AAA because they build content for several months forward or even a year of content so they can maintain interest for the game there.

But if the game dont even shows any beat of life. All those investment will went to drain.
 
This is maybe a dumb question, but is there a difference between "outsourcing" and "acting as publisher for independent studios?" My idea of outsourcing is a scenario where the company is driving the decision-making and has the creative vision and they've just hired a bunch of contractors to realize the company's vision.

But the context here sounds like they're using the term to just refer to publishing games that weren't developed in-house, even a scenario where they signed a publishing contract on an 80% complete game that just wanted some of SE's $$ and distribution networks to get out of dev hell and out the door... which is what I thought a lot of their AA titles were.

Live Wire seems like a really good dev so hopefully another publisher hires them for a big-ish project if Square passes.
I hope so too.
 
This is maybe a dumb question, but is there a difference between "outsourcing" and "acting as publisher for independent studios?" My idea of outsourcing is a scenario where the company is driving the decision-making and has the creative vision and they've just hired a bunch of contractors to realize the company's vision.

I think the question is complicated, as Square Enix's relationship between Producer and Developer isn't necessarily some industry-wide standard. Like, Team Asano has never really been the developer for any of their games (Matrix, then Silicon/Clay whatever, Acquire, etc.) The outside studios have tons of Planners/Designers on the games and I think it undersells their contributions. I imagine the mix of overall direction differs from game to game and Business Unit to Business Unit. Enix basically never had substantial in-house development before the merge.

One of the problems with having the main development studios is how to deal with games that aren't really coming together (need to negotiate some type of contract extension), or post-game support (which needs to be budgeted for). I assume something like the Pixel Remasters has Tose on a long-term maintenance contract (there's still at least one more set of patches being worked on), but other games are just kind of done whenever the contract with the developers is over.

So... it is complicated. I think it is easier to delay games that need more time, and work on patches and updates post-release when the games are primarily in-house development, but Square Enix just isn't big enough to sustain ~10 retail releases per year and several MMOs on their own, and really, no developer is.
 
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Enix also has always followed a contractor model. That's part of the reason Dragon Quest, NieR and Team Asano still do too. Maybe CBU2 is looking to change that in the future though given they absorbed Luminous.

CBU4 also operates on a contracted dev model. Really it's just CBU1 and CBU3 who do significant inhouse dev.
 
I wonder if this is a possibility for other 3rd party titles published by NOA?

For Square Enix that includes:
  • Bravely Default II
  • Dragon Quest XI S: Echoes of an Elusive Age - Definitive Edition
  • Dragon Quest Builders
  • Dragon Quest Builders 2
  • Live A Live
  • The World Ends with You: Final Remix
  • Triangle Strategy
 
This is maybe a dumb question, but is there a difference between "outsourcing" and "acting as publisher for independent studios?" My idea of outsourcing is a scenario where the company is driving the decision-making and has the creative vision and they've just hired a bunch of contractors to realize the company's vision.

But the context here sounds like they're using the term to just refer to publishing games that weren't developed in-house, even a scenario where they signed a publishing contract on an 80% complete game that just wanted some of SE's $$ and distribution networks to get out of dev hell and out the door... which is what I thought a lot of their AA titles were.


I hope so too.
The difference comes from who controls IP and creative direction.

When publishing titles whose creative direction and IP control must be wrestled away from them, there are opportunities to negotiate retention of those things. Contracting is where you own the IP and creative control from the outset and work with labourers to enact that vision.

The "Enix model", as it was known, only partly still exists, as Enix originally did not retain full IP rights to its projects. The contractor model holds some obvious similarities, but following the merger with Square in the 2000s, SQE has opted more towards the contractor model, with producers inside the company generating the IP and holding full creative control. All of its prior arrangements under the "Enix model" (such as with DQ, where the IP rights belong primarily to Horii but Enix had an exclusive production contract and some rights retention) were grandfathered in as part of the merger, but minimal to no new arrangements like the "Enix model" moved forward.
 
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I wonder if this is a possibility for other 3rd party titles published by NOA?

For Square Enix that includes:
  • Bravely Default II
  • Dragon Quest XI S: Echoes of an Elusive Age - Definitive Edition
  • Dragon Quest Builders
  • Dragon Quest Builders 2
  • Live A Live
  • The World Ends with You: Final Remix
  • Triangle Strategy
I think it is safe to assume that it will happen.
 
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