Square Enix has very recently released the financial report for the fiscal year ended March 2013 which can be found here. Everyone is urged to give it a read, but here are some very interesting points that I’d like to bring to your attention:
“The first initiative is to re‐ consider long‐term, large‐scale development. Long‐term, large‐scale development makes asset turnover very slow, and the period from investment to sales is too long, so we must consider how to increase turnover.”
Final Fantasy Versus XIII is definitely a long term, large scale development project, so this might be referring to it, at least in part. What this could mean is that Square Enix will change how they will handle these games’ developments. This will be elaborated on as you read further.
“There is a huge difference from the perspective of business risk between a model where no revenue opportunities take place for several years until the product is completed (upon which investments are recovered at one time), and a model where revenue opportunities exist in some form prior to product completion, even if the amount of money invested is the same. I believe this is a crucial point.”
What this point seems to be referring to is that Square Enix will, in some way, be able to make profit from their games as they are being developed. One possibility as has been pointed out to me, is that they might revamp their Square Enix Members, and grant paid members access to features such as “sneak peaks” or what not. It’s all up in the air at this point, but this is simply a possibility.
“Poor asset turnover means that we have little contact with customers during several years of development of a game title. In a model where a game is developed without customers knowing what it’s like for many years, the product is presented to customers only after it has been finished, and all investment is recovered at one time, customers are forced to wait for too long, and opportunities for profit are passed up.
One could go as far as to say that in today’s times, making customers wait for years with little to no information is being dishonest to them. We’re no longer in an age where customers are left in the dark until a product is completed. We need to shift to a business model where we frequently interact with our customers for our products that are in‐development and/or prior to being sold, have our customers understand games under development, and finally make sure we develop games that meet their expectations.”
This was, to me, the most exciting part of the report. It basically has Final Fantasy Versus XIII painted all over it. It seems that Square Enix finally realize as a company, that customer interaction is vitally important to their success at these modern times. This could be the change that they were speaking of in the first point I brought up, basically, that they will be more open with regards to these huge projects that they are working on. This could be due, in whole or in part, to the large change in management that has happened recently.
“On the basis of the progress of recent devices, moving forward we are thinking to push into publishing games on smart phones and tablets, which we had hitherto only published on game consoles, in particular our strong‐point of single‐player,story‐driven games, etc. I have already given these instruction to our development teams, and we are moving ahead with this effort.”
Basically, this means we can expect less iOS remakes of previous Final Fantasies and such and more games like Chaos Rings, which I personally enjoyed immensely. In essence, we will most likely be seeing more ambitious and serious games from Square Enix on these platforms.
“While we had been making investments in the game development under the assumption that major titles would sell a lot worldwide, however, we have found it extremely difficult to achieve. We created our budgets on the basis that our games would be sold worldwide. We had not given much consideration of the regionality of each market, and had focused more on how to sell the major titles globally; however, titles fitting this method are limited.”
What this is saying is that Square Enix seem to plan to be more regional when it comes to their games. What this could mean is that the West will be seeing less JRPG’s from them, but more games along the lines of Tomb Raider or Sleeping Dogs. While this is disappointing, this next piece is a bit uplifting.
“Of course, we will continue to invest in flagship titles that showcase our technological prowess, pursuing high‐end game quality, and which can earn profits on a global basis. Regarding a number oft hese types of titles, we will share information with everyone at this year’s E3.”
Hopefully, this points to games such as Final Fantasy Versus XIII, which has been reported to be global already, and Final Fantasy Type-0, which most definitely shows Square Enix’s prowess when it comes to game quality. It’s a good thing Project Crystallis is going to this year’s E3! We’ll definitely keep everyone updated in that regard.
“We provide entertainment content to our customers. I believe it is important to go back to the basics, to provide our customers with content they enjoy, and to establish a long‐term relationship with our customers. In the end, that is the shortest way to serve the best interest of our shareholders. Our creators are growing to become capable of taking on such roles.”
I believe this last point does not need any further elaboration. All I can say is, I’m really looking forward to the future to see what Square Enix are going to do with their new management team.
Thanks to Evyn for finding this report at Siliconera.