Square Enix profits rise despite net sales falling

Square Enix has had a good year despite a fall in overall sales due to a lack of a new flagpole western release. Profits were up, largely thanks to catalogue titles and digital sales. And that’s despite the company being adverse to microtransactions on console. 

More precisely net sales from the Digital Entertainment segment were down from ¥199.0bn (£1.34bn) to ¥191.4bn (£1.28bn), a fall of ¥7.6bn (£5.1m) year-on-year. Operating income though made big gains in the opposite direction from ¥33.3bn (£22.2m) to ¥43.4bn (£29.2m), a rise of ¥10.1bn (£6.8m).

Commenting on the results, Square Enix noted that the decline in sales was down to ‘a decrease in the number of blockbuster titles resulted in net sales decline, as compared to the prior fiscal year.’ And looking at the fiscal 2017 line-up tit’s clear hat the company lacked a major western release – with no Tomb Raider or Deus Ex titles for instance.

Those increased profits largely cam from existing titles, singling out Nier: Automata for praise: ‘On the other hand, strong high-margin download sales of previously released catalogue titles such as NieR: Automata have resulted in an increase of operating income, as compared to the prior fiscal year.’

It had strong release slate in terms of Japanese-developed titles with Dragon Quest XI: Echoes of an Elusive Age and Final Fantasy XII: The Zodiac Age. While in mobile and PC it said ‘our established lineup of popular games… is continuing to show strong performances globally, and an increase of royalty income pushed both net sales and operating income, as compared to the prior fiscal year.’

While the latest expansions for live games, Dragon Quest X and Final Fantasy XIV, ‘led to an increase in the number of paying subscribers and disk sales, which resulted in an increase of net sale and operating income, as compared to the prior fiscal year.’

So digital sales on titles with strong fanbases, increasing mobile revenue, and an increase in paying subscribers in live titles. It’s pretty much checkbox stuff for a thoroughly modern publisher (read our interview with Square Enix CEO Matsuda) and with Shadow of the Tomb Raider coming this year, it’s all looking very rosy for the company.