Square Enix profits drop, despite Final Fantasy 16 sales boost

Square Enix has reported a drop in profits, despite a boost from sales of its most recent Final Fantasy games. However, 2024 is likely to be a stronger year by comparison.

According to its latest financial report from April to September 2023, company operating income has dropped by 33 percent and ordinary income by 42 percent.

That's despite an increase in sales for its HD Games, owing to the releases of Final Fantasy 16 and the Final Fantasy Pixel Remasters.

Indeed, net sales were up 5.3 percent compared to the same period last year, but the weakness of the Japanese yen has resulted in lower profits.

The company did not give an update on Final Fantasy 16 sales, though previously the company stated sales were "extremely strong", despite not being at the upper end of expectations.

More notably, net sales in the MMO segment fell compared to last year when sales overtook those of single player games.

However, context is important here. Latest expansion Endwalker was released in 2021 and was so popular the game had to be temporarily suspended from sale. Those sales continued into 2022.

With next expansion Dawntrail not due until 2024, a dip in sales for Final Fantasy 14 - the company's most profitable game - is expected for this year. Dawntrail's release in summer 2024 will give the next financial year a significant boost, as well as the game's release on Xbox consoles.

Square Enix also reported a decline in sales for mobile games despite the June launch of Dragon Quest Champions and September launch of Final Fantasy 7 Ever Crisis, which "were unable to compensate for factors including weak performances by existing titles". Maybe all those microtransactions aren't quite working.

In all, net sales for games totalled 122m yen (up 4.2 percent), but operating income was 15.5m yen (down 36.9 percent). Total company net sales for the full financial year are still expected to increase by almost 5 percent compared to last year, but with 21.9 percent lower profits.

The release of Final Fantasy 7 Rebirth on 29th February 2024 will likely boost sales at the end of this financial year. A PC release of Final Fantasy 16 (and DLC) is also expected at some point next year.

"Given the intense competition in both the consumer and smart device game markets, it will be important for the Group not only to leverage existing intellectual properties but also to endeavour to create new intellectual properties and to recruit development resources if it is to continue to produce hits," reads the report, noting strong competition has players focus on a handful of major and familiar titles for both HD and mobile games.

Final Fantasy 7 Rebirth will be the company's next major release, which looks to be Remake supercharged.