While Capcom has emerged like a phoenix from the flames in the last few years, Square Enix has been taking the opposite trajectory. During the latest Square Enix earnings report, it was revealed they’ve had a rough time of it with profits dropping a massive 60.1% year on year and net sales down 4.8%.
The disappointing financials were attributed to lower-than-expected sales of both Just Cause 4 and Shadow of the Tomb Raider. Just Cause 4, in particular, was quite the blip on Square Enix’s efforts. “We sold fewer units on launch than we had anticipated,” said Square Enix president Yosuke Matsuda. Just Cause 4 sold so badly that Square Enix has been unable to recoup the development costs.
Shadow of the Tomb Raider fared a little better with 4.12 million units sold as of December 31st, 2018, although this has been pegged as a disappointment by Matsuda. Considering the rapid speed with which Shadow of the Tomb Raider was available for a deep discount, a large number of these sales are also likely to be well below MSRP. Shadow also joined Xbox Game Pass earlier this month, just three months or so after it originally launched. That tells you all you need to know about how it’s currently doing.
On their part, Square Enix is at least cognizant of its failings on both of these fronts. “We think the main reason is that we were unable to provide an experience that was novel enough that players would choose to buy them before any of the other numerous major titles on the competitive landscape,” explained Matsuda to investors. There can be little argument that both Shadow and Just Cause 4 were pitifully low on innovation and it comes as little surprise they struggled against other holiday blockbusters.
Moving ahead, Square Enix has said it will be consolidating its 11 business divisions into four over the next year, all in a drive to become more fiscally efficient.
On the upside, Square Enix believes the upcoming year (April 2019 - March 2020) should see a massive spike in income. Looking at their upcoming slate of announced games it’s difficult to see what could drive such a spike. Barring the arrival of unannounced projects, the only two games that look as if they could pull off such a feat are Final Fantasy VII Remake and The Avengers Project, neither of which are currently pegged for this year.