Thanks to the success of their popular MMO Final Fantasy XIV, Square Enix has added 10 billion yen to their expected revenue, bringing their projected operating income to a record 50.1 billion Yen.
In Square Enix’ Financial Results for Q3 (FY ending March 31st, 2022), the company explicitly stated that “Net sales and operating income rose YoY [year-on-year] primarily due to ‘FINAL FANTASY XIV’ paying subscriber growth and the December 2021 release of [the Endwalker] expansion pack.”
Even before the launch of the Endwalker expansion, there was a surge of interest in the title.
Much of this was caused by World of Warcraft players abandoning ship, thanks to a combination of being disappointed in the release of Shadowbringers, prominent WoW content creators such as Asmongold praising the game and encouraging others to try it, and developer Activision Blizzard being hit with their various sexual harassment and discrimination lawsuits.
In fact, the surge of players was so great, Square Enix had to temporarily stop selling and advertising Final Fantasy XIV, as well as restrict free trial play time to off-peak hours, in order to prevent the servers from overcrowding.
Aside from net sales of MMO content – which includes both Final Fantasy XIV and Dragon Quest X Online – earning Square Enix 48.2 billion yen in net sales (an estimated $418 million), the company reported that HD games earned 65.5 billion yen ($569 million) while smart devices and browser games earned 97.8 billion yen ($848 million).
Nonetheless, Square Enix isn’t actually happy about it’s HD games performance, noting in their financial report that while it “launched multiple new titles,” such as Guardians of the Galaxy and Neir: Replicant, the division “did not reach level seen last year, when we released major titles.”
Other Q3 releases included Final Fantasy VII Remake Intergrade, Life is Strange: True Colors, Dungeon Encounters, and Outriders, the last of which was particularly disappointing for the company.
While Square Enix had previously stated Outriders was “on track to become the company’s next major franchise,” the game was ultimately met with average scores from journalists and middling to poor reviews from players.
Developer People Can Fly stated in August 2017 that they hadn’t received their first royalties for the game, a claim which suggested that Outriders hadn’t turned a profit four months after launch.
Prior to the failure of Outriders, Square Enix president Yosuke Matsude admitted that as of two months after launch, Marvel’s Avengers had failed to recoup its initial development, later stating in November 2021 that the game “produced a disappointing outcome.”
In their financial report for the Q2 ending March 31st, 2021, Square Enix reported that their HD games divsion, which produced the Crystal Dynamics developed failure, lost roughly ¥5 Billion JPY between the first and second quarters of the current fiscal year.
While HD Game sales dropped by 11.2 billion yen ($97.2 million) compared to the same Q1 to Q3 period last year, MMOs grew by 18.7 billion yen ($162 million) in the Q3 Fiscal Year ending March 31st, 2022.
In light of this growth, Square Enix has adjusted their previous operating income expectations from 40 billion yen ($347 million) to a record-setting 50.1 billion yen ($434.9 million).
Should these expectations come to pass, 2022 ‘s operating income would beat the prior year’s record of 47.2 billion yen ($409.7 million).
In their Notice of Revisions, Square Enix yet again attributed the more profitable revisions to Final Fantasy XIV, asserting, “among the factors contributing to this revision are substantial growth in the number of paying subscribers for ‘FINAL FANTASY XIV’ and brisk expansion pack sales in the MMO (Massively Multiplayer Online) Game sub-segment.”
However, Square Enix also acknowledged this revision was done in light of “sales of character merchandise based on the Company’s own content exceeding its initial expectations in the Merchandising segment.”
They also “expects higher ordinary income and profit attributable to owners of parent than it had previously forecast, in part because the yen has been weaker than the Company had initially assumed. ”
Across the rest of Q2 and Q3, Square Enix is set to release Babylon’s Fall, Triangle Strategy, and Stranger of Paradise: Final Fantasy Origin, along with regular updates to Final Fantasy XIV.
Is Final Fantasy XIV the key to Square Enix’ future? Let us know on social media and in the comments below!