Wada Way To Go: Square Enix Loses Money & Its Boss

By Alec Meer on March 26th, 2013 at 11:00 am.

metaphor

It’s a bad day for Square Enix, latter-day publisher of Tomb Raider, Hitman, Deus Ex and Thief, as well as those dreary Final Fantasy things. Citing “slow sales of major console games” as well as uninspiring business from its arcade machine arm, it’s admitted that its recent monies “substantially fall below its plan” and its president Yoichi Wada has fallen on his sword as a result.

Indeed, the publisher is bracing itself for “extraordinary loss” of 13 billion yen, which I think equates to around $138 million. Prior to today’s reveal, it was expecting a 3.5 billion yen profit. Something went horribly wrong, then.

Part of the loss, though, is also due to “major reforms and restructuring in its development policy, organizational structure, some business models, and others.” Let’s hope a minimum of jobs are lost and projects cancelled. IS THIEF OK? PLEASE, IS THIEF OK?

Things are so grim that Square President Yoichi Wada has handed his notice in after the publisher revealed its woes. This is likely more than an unfortunate blip, then. Square’s board will hold elections in June, with Representative director Yosuke Matsuda expected to take on Wada’s abandoned mantle.

While Square has been making massive efforts in the west, with Deus Ex: HUman Revolution, Hitman Absolution and Tomb Raider, the retail results of at least the second two two of these expensive-lookin’ projects perhaps hasn’t been quite as spectacular as they’d hoped. We have limited information to go on at this stage, but Tomb Raider getting itself knocked off the number one spot in the UK charts after just two weeks by the newly-released Gears of War: Subtitle, a game which apparently sold just a quarter of what its predecessor Gears 3 did in its first week, doesn’t look like too much of a good sign.

Well, onwards, upwards, new console generationwards, I guess. Many onlookers blame the slow arrival of PS4 and Xbox Whatever for why publishers are struggling lately, but I suspect the increasingly dead high streets of Britain suggest there’s a lot more to it than that. Best of luck to all affected.

Here’s the full financial statement, if you’re interested.

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161 Comments »

  1. FurryLippedSquid says:

    IS THIEF OK?
    -
    No, it will be nothing like the games you hold dear.

    • LionsPhil says:

      Honestly, yeah. It’s Squeenix. If you want another Thief, your best bet is for them to hit the rocks so hard that they have to sell the license to someone else.

      • 11temporal says:

        Damn, I want the old thief back :(

        • zain3000 says:

          Old Thief is alive and well. Recently played through Thief Gold and Thief II with all the mods. Both worked like dreams. Working through Thief 2X. If you haven’t given that a shot, it’s one of the better fan-made campaigns of any game I’ve ever played… a real labour of love.

          Both Thief games are available through GOG. They also have a mod thread that explains exactly which mods to install and in what order.

          Thief 2X is available for free download. Just googlize it.

          Happy taffing!

        • njolnin says:

          One could say that old Thief never left. Many people do not know that the game has had an amazing modding scene that’s active, even now. There are thousands of custom missions that have been created, hundreds of which are worth playing.

          The better missions/campaign’s authors work for years on them. It’s not uncommon to see 500-1000 hours spent designing a mission.

          The results are amazing. In terms of originality, scope, and visual impact, the modding scene has exceeded the (already excellent) campaign missions of the original game in many ways.

          Because of that, I can’t really lament whatever changes the new Thief game make. Besides, I think the past record of the studio has earned them the benefit of the doubt (though the less said about the Garrett’s new look the better). I trust them to develop competent stealth mechanics and I don’t mind some ‘actiony’ additions- the focus on nonviolence was only present on Expert, as on Normal one could easily snipe the guards. The beauty of the game really becomes apparent when eliminating the guards is made more difficult and the player has to get out of an action game mindset.

          Large, non linear levels are the most important factor. Thief levels can take hours to complete and dwarf what’s present in most games. Also important, though I’m not counting on it, would be a level editor.

        • 11temporal says:

          Sounds good, thanks for info, will look it up.

      • Llewyn says:

        So it can be bought by one of the multitudes of other publishers who’ve shown themselves to be desperate to make a genuine stealth game recently?

        There’s no IP held by Squeenix which prevents anyone else from making the Thief game Thief fans want. There’s simply no will to make that game in the AAA sector, presumably because (rightly or wrongly) the perception is that there’s no market for it. What Squeenix are doing, as with Deus Ex, is as close as we’re going to get.

        If you want another Thief, your best bet is to make it yourself.

      • Ultra Superior says:

        Oh Phil, you stupid.

      • Snargelfargen says:

        Squeenix are almost completely hands off when it comes to their western games studios. Their current troubles are due to over a decade of colossal mismanagement at the home office.

      • Xardas Kane says:

        They said the same about Deus Ex. Didn’t turn out so grim now, did it?

    • Jason Moyer says:

      I don’t want a game that’s exactly like Thief. I do want one that shares the key core components of vulnerability, improvisation, and exploration. From what I’ve seen so far those will be part of the reboot, so that’s fine with me.

      Sequels that are exactly like the games that preceded them are completely pointless, and the reason why the first two Assassin’s Creed games were the only good ones.

      • Cinek says:

        From what I seen: thief 4 isn’t a Thief 4. It’s Dishonored with different labels on items.
        I don’t see any point in a game like that. If people want Dishonored – they can buy it straight off. They ever released a new DLC. No reason to wait for a new game, no reason to call it “Thief”.

        • Jason Moyer says:

          That’s interesting, I haven’t seen anything Deus Ex-like in the Thief preview stuff so far (Deus Ex-like being the closest thing I’d compared Dishonored to) but I could be missing something. It sounds like they’re adding improvisation tools (like the slowing time to stun guards thing, which doesn’t seem functionally different from say Thief 1′s flashbomb) but overall I get the impression it’s still going to be a game about trying to remain unseen and either dying/running when you’re compromised.

          • Cinek says:

            Slow time – skill from Dishonored. Death when trying to stand against opponents – Dishonored again (perhaps not regular guards, but 2 or 3 of them can be really painful if you decide not to use any skills – cause that’s basically what most likely they’ll do here – strip you off the skills, or move skills into the items instead of generic mana pool. Add different labels and some of the models re-made – bang: you’re done).

          • Marik Bentusi says:

            I think the comparison he’s about is that Thief was a very stealth focused series whereas Deus Ex and Dishonored let you pick between stealth and action. Thief 4′s new big mechanics are “attack points” and “focus”, which apparently allows you to shove enemies out of the way for an easy escape, take down large groups of guards (4+ mentioned), initiate takedown sequences (against very much like in DXHR), activate slowmo for fighting or pickpocketing, highlight enemy weak spots or actviate a cloak in addition to highlighting routes and loot (like in Dishonored where there was basically no reason not to use Dark Vision 24/7 for an efficient stealth char).

            The impression is that the game wants to capture a larger audience to make back its way higher production cost, and that larger audience doesn’t actually want to play a Thief game – so they “don’t have to play as a thief if they don’t want to” as I recall an Eidos dev say in an interview. The old Thieves encouraged you to use distractions and run away, which isn’t compatible with modern audiences sneaking around and then killing left and right if their cover is blown.

            These gameplay aspects + city that doesn’t seem to have nearly the levels of weird electric steampunk and weird supernatural elements that made the earlier games intriguing = sad fans expecting a different take on Dishonored’s Creed: Human Revolution rather than holding your breath IRL as a single guard’s walking around the other side of the book case you try to keep between him and you.

          • Hahaha says:

            “The impression is that the game wants to capture a larger audience”

            BREAKING NEWS

          • Jackablade says:

            Yeah, if you want a traditional Thief game, you’re going to have to wait for an indi studio to do it. And it’s not all that unlikely – the game has been rebuilt for multiplayer in several FPS engines quite successfully already, so it seems quite possible that someone would have a crack at a single player campaign, particularly in these days of nostalgia driven Kickstarter projects. I wonder if any of the Looking Glass alumnus would be up for the challenge.

          • ResonanceCascade says:

            The Dark Mod already is basically a Thief game. There is no shortage of Thief-iness in the world, I don’t know why everyone is acting like there is.

        • ResonanceCascade says:

          “From what I seen”

          So like 6 screenshots then.

    • derbefrier says:

      dont bother getting yourself excited about thief. It will be a terrible “modernized” game. They will turn garret into a supernatural assassin like corvo, with the option to stealth but garrets “sneaking” abilities will be so OP sneaking will be very easy(again to make the dumb masses happy) to the point its boring. The game will be incredibly easy as so the dumb masses can play it. Basically its gonna be an action game, not a stealth game. Dishonored 2.0 is what I am expecting and that sucks because frankly Dishonored wasn’t that great of a game.

      • F. Lynx Pardinus says:

        The Thief games on easy difficulties could be played almost as an action game. It was your choice to crank the difficulty up and go for non-lethal playthroughs, but you didn’t have to.

        • mouton says:

          Yup, when I got frustrated in Thief 1/2, I went off onto stabbing and arrow-peppering sprees. Lots of fun, especially when you do it from an inaccessible spot.

        • fish99 says:

          The other difficulties had to be there to make the game sell, but they wouldn’t have spent all that time on the visibility and sound propagation systems if they expected you to just kill everything with arrows from distance. IMO the game on expert is how the game was designed to be played, and the other difficulties are there for …. let’s say people who didn’t want a stealth game.

          • Contrafibularity says:

            Or basically for every gamer who at the time had not played anything like it, ever. I always thought the easy normal difficulties were there just to ease people into the game, if they were coming into it expecting another first-person shooter. I never understand why modern players still choose the easier difficulties, not knowing they’re missing out on half the game (or rather, the game).

          • Sacretis says:

            I’ve got a pretty simple answer for that: there’s often not much of a game in the first place. I come into games like Bioshock Infinite or Deus Ex to explore the world and experience the story; the gameplay (while varied and sprawling) is rarely tight enough and refined to the point that I actually want to play the damn thing. Contrast that with Mark of the Ninja or SMB; games that are meant (and designed) to be played. I have no fun dying over and over in a way that feels punishing in a game with floaty controls and rough gameplay and I’d put most AAA action games these days in that category.

    • BRiDeath says:

      Not expecting much from Thief, and it’s important to note that we live in an economical era for the games industry where 3.5 million copies being sold… is no longer seen as a success :\

    • Suits says:

      You’ve been hit by, you’ve been struck by, a rough fiscal year

  2. PoulWrist says:

    It’s curious how in this day and age with videogames booming like crazy that all we seem to hear about is how the companies behind them are struggling.

    I was reading financial advice stuff the other day and it said to “invest in videogames” as it was a business that had shown only increasing gains in the last many years, but … how does that pan out when all the time the big companies around the videogames are crashing and the small ones are too small to invest in? :p

    • Anthile says:

      They are losing money but they are not going bankrupt or anything like that.

    • Lord Custard Smingleigh says:

      I wonder if it might be Hollywood accounting to blame. You know, the weird dance of numbers that means massive box office successes which rake in money by the planeload manage to make no profit. My favourite example: Return of the Jedi made no profit. Ever.

      • Vorphalack says:

        Exactly. It made lots of money, just none of that lovely, taxable profit.

        • HothMonster says:

          It’s not the taxable part, because the shell companies that they funnel the money to get profit which pay taxes. It’s the royalties that never get paid out. They just like screwing the talent and investors but they wouldn’t want to piss off the government and have them looking through their books.

          http://www.techdirt.com/articles/20120531/07313919143/darth-vader-is-most-successful-star-wars-character-ever-still-no-return-jedi-residuals-actor.shtml

          • Vorphalack says:

            It’s fairly common practice to transfer funds internally to off shore subsidiaries located in tax havens. If the money rests in a tax free state then it wont get taxed at all. At present there isn’t much that governments can do about it, legislation is only just starting to catch up with tax evasion on this scale.

          • Panda Powered says:

            Its pretty easy for big corporations in any line of business to be creative with taxes.
            Here in Sweden for example I pay more in taxes than Volvo even though they make billions.

      • Surlywombat says:

        I can’t really see that being the case, since the IPs are held and the development teams all in-house.

        While it could happen with publishers saying a game didn’t make profit so they don’t have to pay a development house. Its my understanding its seldom the case individual developers get much except a wage.

    • BobbyDylan says:

      This. Given how many copies these games tend to sell, I wonder at what’s driving up their costs so high. I mean, DE:HR, H:A and TR all are good games that have done reasonably well.

      • bfandreas says:

        Selling quite a few copies is not the same as doing reasonably well.
        AAA games cost quite a lot to produce. I’d recon most money is spent on cutscenes, voice acting, graphical assets, sound engineering…
        Those things have a budget that is awefully close to Hollywood budgets. I do not know if they actually broke even with DE:HR.

        On the other hand you have indies like Supergiant, Almost Human… who manage to build a game that spends relatively less money on art, costs less to produce, is cheaper and does not need a publisher at all. Distribution of games does not need a publisher. You only need a publisher for marketing and funding. If your game is cheap to produce you need less money and you could possibly manage to fund on your own. If you don’t need to sell a bazillion copies you may get by without massive ad campaigns.

        Let’s face it, publishers are not as important as they were 10 years ago. And they are all ailing(apart from Blizztivision).

        I spent some time thinking about the latest survey ElReg had amongst their Commentards.
        http://www.theregister.co.uk/2013/03/25/reg_readers_gaming_habits_survey_results/
        This is where we are headed. And it is a good thing.

        • Cinek says:

          Most interesting poll. Seems like majority of people play on Windows in 2013.
          One would say that it’s not truth considering what console marketing have pushed for.

          It seems like mobiles and tablets completely killed consoles taking casuals away.

          My prognosis? PS4 / XBOX720 is the last generation of big consoles. Mobiles will kill them completely.

          • bfandreas says:

            Nah. The Hardcore Gamer Commentards play mostly on PC. OTOH Hardcore Gamer Commentards play on about anything they can lay their hands on.

            Just remember: This is a poll among ElReg readers. ElReg is a very good information source for all things IT and as of lately also a hangout for people that love gadgets. I wouldn’t say this crowd represents the whole world. But a few trends can be observed.
            ElReg never was that big on console coverage. So console gamers will propably find another place to hang out.

            The interesting bit is taking a look at the GenXers. They grew up on video games and now have moved into reponsible positions. You propably have a boss who will totally pwn you in Planteside. His ingame handle might be honeysuckle69.

          • Marik Bentusi says:

            More like it’ll be the last console cycle because improved future Gaikai takes care of latency as well as piracy and allows you to play monster AAA titles on an onion.

          • Cinek says:

            bfandreas – right, on his tiny, sweaty pad. Keep on dreaming this BS.
            If you’ll read the comments below the article you shall see that somehow endangered crowd of console kiddies fights like mad for sustaining the consoles. So if anyone is a commentard – I would point at them, especially seeing really high level of comments they got.
            And keep in mind that there’s no way to make an online poll that will be 100% objective, cause there always some retard will jump in saying that it’s not valid because of something. You say that register never was that big on console coverage – I say that it’s perfectly truth on PC games too. So overall I’d say that this is one of the most unbiased polls I seen since quite a while.

            In either case – I find this whole thing especially fun in the light of Square Enix going into financial trouble due to relaying too much on consoles. Consoles are a sinking ship, relaying purely on casuals doesn’t pay off in the long run, cause they now got a new toys.

          • ScubaMonster says:

            “It seems like mobiles and tablets completely killed consoles taking casuals away.”

            Wtf are you talking about? Consoles are going strong and not going anywhere anytime soon. Touch controls will never compare to physical controls period. There are games that just would not work well at all with only touch controls. It’s like the whole motion control nonsense being the future of video gaming. It just doesn’t work well. Anything beyond casual gaming tablets fail at. And if you think consoles are casual gamers you need to think again (apart from day one Wii fanatics who now have their Wii collecting dust). Casuals don’t run out and buy Xbox’s and Playstations.

            This tablets killing consoles argument is also quite similar to consoles killing PC’s. Yeah, that hasn’t happened. It might have taken a certain chunk of the market, but nothing is dying. People like to spout a lot of buzzwords and hyperbole.

      • SkittleDiddler says:

        Marketing budget.

      • Niko says:

        Don’t forget the high rank execs salaries. Those are very important part of game development budget.

        • Cinek says:

          Which serious company got a board of directors that doesn’t get paid well?

          We’ve tried socialism all the time since 1945 till 1990 – it doesn’t work.

          • SkittleDiddler says:

            Not sure if serious or…

          • Baines says:

            The current system hasn’t exactly been working in the US. A lot of financial issues over the last few decades tie back to how the stock market works, how it is used, and how it is abused. Capitalism at work.

          • Focksbot says:

            Because the only conceivable alternatives for society are socialism or the particularly short-termist, self-immolating, brain-damaged strain of capitalism that currently has its claws in us. Right.

          • tormos says:

            I’m actually more confused by the “1945-1990″ label there. Ignoring the fact that socialist states exist in the modern world, by what possible definition did they come into being in the 40s? the USSR was literally 30 years old by then.

          • Josh W says:

            I think he’s talking about the postwar consensus, because he’s forgotten about the actual socialism of the socialist bloc.
            It’s strange how the famous capitalist vs socialist fight was conducted by parties that these modern proponents would both call socialist!

    • welverin says:

      Well, for all the money they’re raking in, they’re throwing a lot out. Big AAA games cost a lot of money to make, so they need to sell a lot to recover those costs. Most games don’t.

      Everyone’s trying to be the next Call of Duty, or even just Assassin’s Creed, so they spend the money to compete, fail and start going under.

    • Mman says:

      The cost of making “AAA” games is increasing almost exponentially and, while they are rising, the number of sales games get isn’t enough to balance it out outside of the biggest ones like Call of Duty. By extension those costs mean one failure can be enough to sink a company.

      I’m not sure where it was but I saw something that showed how costs have increased and it’s shocking; from what I recall just in the course of this generation the average costs have risen more than in every earlier generation put together.

      • bfandreas says:

        The stuff that costs the most in AAA games are what make me less interested in them altogether.

        They spend a lot on voice acting and cutscenes. These are exactly the things that make the games linear and possibly shorter.

        Here’s a shocker: by now I’ve played the excellent and infuriating Elder Signs: Omen on my tablet as much as I played Deus Ex: HR. And I’m what many would consider a hardcore gamer. Just yesterday I spent a couple of hours unlocking everything in Riptide GP which also would be considered the kind of OCD that’s hardcore gaming. On my tablet. In a game that cost less than the catering budget of DE: HR.

        Why again is the risk of producing a AAA game worth taking? Quite a few have tanked financially and in enjoyment.

        • Mman says:

          Because they want that COD (or insert other rare fully profitable AAA franchise here) money, except most publisher’s idea of doing that is cookie-cutter clones and tacking multiplayer on everything, while completely lacking the self-awareness to realise that taking on a juggernaught on it’s own terms is a really shitty idea.

          • Baines says:

            They don’t just want COD money, they want COD money for years.

            They want to establish franchise juggernauts that will generate hundreds of millions year after year, game after game, “guaranteed”.

            That’s why they are willing to sink so much money into what are effectively attempts to “buy” such franchises. It is also why they panic when a sequel doesn’t outsell the game that came before.

            Sadly, some also get caught up in spending more and more on each sequel, which only sets them up for an eventual failure and potentially bigger losses, because eventually they are going to release a title that doesn’t see the continued growth that they project. (Though some companies can kill a franchise faster than others.)

            Add to that the typical big company bureaucracy, disconnected management, fantasy world accountants, short-sighted focuses on boosting profits that cause long term damage, and the rest, and it is a recipe for disaster.

        • greywolf00 says:

          Agreed, if they spent less money on making the game look and sound pretty and more on making the game fun and fixing bugs they’d probably be spending less and selling more.

        • Shuck says:

          Although the cost of developing a mobile game is orders of magnitude lower than a AAA console/PC title, the revenue is usually even lower. There’s a huge failure rate with mobile games, with a few of the top titles getting almost all the money. (So it’s turned into a scaled-down version of the AAA industry in many ways.)

      • Schmudley says:

        I think there’s been a trend towards bigger and bigger companies which hold lots of different licences. In theory, this means they have more resources to spend on AAA titles.

        The only issue is that this means they have massive amounts of fixed costs (all those support staff draw a salary regardless of how the company does, and their growth may be funded by getting into a lot of debt), which means they are actually much more fragile than smaller companies. So if one, expensive project doesn’t go as planned, suddenly they’re in deep trouble.

        I think a lot of the growth in the gaming economy comes from small companies who only have couple of products that are cheaper to make and moderately successful. Though that’s just a hunch, don’t have any numbers to base it on. I think that the AAA model may not really be sustainable, but too many companies aimed for it because it seemed the most lucrative prize.

        • analydilatedcorporatestyle says:

          The larger the crowd the lower the collective IQ applies in AAA games. A dumbed down collective realisation(beautifully rendered mind). The great idea of a single person or small group watered down beyond recognition by the time the marketing people get their hands on it!

      • Brun says:

        Basically the problem is that customer expectations have kept going up without a corresponding increase in sales, while production costs haven’t gone down at all. In other words, the same essential group of customers is demanding more out of your products while refusing to pay more for them. That doesn’t leave you much room to make money, as the increased cost of meeting those higher demands is not offset by your sales (which aren’t going up much since it’s the same group). The hardcore gaming market (while still growing) has long since stopped growing at a rate capable of sustaining these costs, which is why over the past 5 years we’ve seen a mad dash into growth sectors like mobile and social.

        Part of the problem is technological – the fact that developers are complaining about the next generation of consoles (because consumers will expect more out of them) tells me that the art of game-making (“gamecraft” if you will) has not kept pace with technology over the past 5 years, and that modern games are made by large-scale, brute-force application of methods that are nearly a decade old (which explains their high cost). Those methods were adequate for making relatively small numbers of low-quality models, textures, and sounds when everyone was working on N64 and PlayStation games. But applying only moderately improved techniques to modern hardware and the modern expectations of high fidelity is highly inefficient and cost-intensive. The ideal way of solving this problem for publishers and developers is to invest in research that will yield increased efficiency in making games. Unfortunately that’s a rather painful prospect for most developers, so no one wants to do it.

        The other option is to force a price point increase and just eat the short-term losses from people unwilling to spend more than $60 on a game. A better way of doing that though, is to charge more for games that are worth more, and less for games that are worth less. I wouldn’t have any qualms about dropping $80 or $90 on something like Skyrim, but I won’t pay $60 for the yearly CoD clone.

        • Blackseraph says:

          Shamus Youngs arguments sounds much more plausible than yours.

          http://www.escapistmagazine.com/articles/view/columns/experienced-points/10240-Where-EA-Went-Wrong

          • Brun says:

            He makes good points, particularly about costs increasing due to rush. But he doesn’t address the fact that several prominent developers were actually dreading the next hardware generation because of the increased costs of development on those platforms. Having more powerful hardware should be something that you look forward to, as it liberates you from the limitations of the old hardware. It’s symptomatic of something worse, in my opinion.

            I know you aren’t exactly my biggest fan, Blackseraph, but I don’t think my viewpoint is incompatible with his.

          • Blackseraph says:

            Fair enough.

            And I apologise, I indeed got bit too annoyed at you in the past.

          • Brun says:

            No worries. I went and dug up some old articles that I drew some of those points from:

            http://www.wired.com/gamelife/2011/02/dice-blockbuster-games/ – The first half of that one is just talking about social games, but the last section talks more about budgets.

            http://www.wired.com/gamelife/2012/04/opinion-kohler-video-expensive/ – Again this one focuses more on used games, but parts of it (particularly that graph) are pretty compelling.

            Neither one of those articles directly addresses the issue at hand, but it’s interesting to read the responses of the industry execs. It gives some insight into how they’re thinking and that lets you draw some conclusions.

          • Blackseraph says:

            Thank you, those were indeed interesting to read.

            Writer of that second piece isn’t all that impressed with those execs opinions though, at least not on used games.

          • Brun says:

            Well the second one is a full-up opinion piece, the first is more of a general news/analysis. But yeah, he’s not that impressed – and let’s be honest, who would be?

          • Shuck says:

            Shamus Young makes some good points, though simply discounting the idea that game development costs have risen for any reason other than larger team sizes (and shorter dev cycles) was just weird. He didn’t even make an argument, he just declared that to be so. And that’s clearly not the case – just because the graphics hardware hasn’t changed in the last 8 years (although does the PC not exist in his world?), that doesn’t mean that player expectations about game length, world sizes, amount of (and the polish on) content, etc. haven’t increased. Because they have. (Also, as consoles age, developers figure out ways to get more out of the hardware, so the graphics do, to some degree, also improve, increasing costs.)

    • Snargelfargen says:

      Square Enix has some pretty odd problems that don’t plague the rest of the industry (much).

      They maintain a huge stable of concept artists pumping out material, which leads to oddities like Final Fantasy XIII’s cg videos being finished before any other work was done on the game.

      There was also the disastrous launch of the last Final Fantasy MMO in 2010 which was so terrible that they rebuilt it practically from scratch. It’s supposed to be released some time this year. So that’s the production costs of 2 MMOs with almost no return on investment.

      Squeenix is also very slow to move into western markets and mobile devices. Too bad, the company is sitting on some great games, which they refuse to localize or port.

    • shutter says:

      “booming like crazy”? How do you figure? The industry only comes close to booming if you include social and mobile.

      The hardcore market has been in the doldrums for at least 2-3 years, between a crappy economy and the fact that people don’t buy games at the end of a console generation.

      The industry will probably pick up again when Gen 4 comes out and gamers are willing to take a flyer on new AAA IP again.

      • Shuck says:

        Yeah, it’s true. The industry is booming because there are so many more entities selling products in it. Which says nothing about the health of any one of those entities. (Even specific mobile developers aren’t necessarily doing that well.) Consumer spending is getting divided between more products, which means less money for each developer. There was a mobile/social gold-rush because of the success of the early developers, but there’s so much competition that most aren’t succeeding these days. With the new consoles there will no doubt be an increase in consumer spending, but some of the fundamental problems will remain. I’m glad I’m not working in console games right now.

        • Brun says:

          This, although the nice thing about a new console generation is that it evens the playing field a little bit amongst the all publishers and developers. Suddenly the tried-and-true ways of doing things may not work quite as well anymore, and that gives different entities the chance to take the lead.

          Also, “Gen 4″? PS1 wasn’t the First Generation, hoss. The PS4/Durango/Wii U are the Eighth Generation of video game consoles.

  3. Brosepholis says:

    It’s extremely cheeky of them to blame the console gaming market for their failure, since they haven’t put out any console games worth a damn since 2007.

    However, Eidos is one of the few parts of their business that is actually doing its job. I think they should be fine.

    • thelongshot says:

      Nier was a very underrated gem. And when you talk about Final Fantasy, those games sell no matter what the quality, or how good the last one was.

      • rockman29 says:

        Final Fantasy XIII only sold well, because it was the first next-generation FF game.

        If you look at the sales, they are basically more heavily skewed towards the release date. Most FF games had huge longevity in sales, except for XIII.

        The next XIII game (XIII-2) did very poorly at retail, because people realized the new series direction just wasn’t that good.

        Final Fantasy XIV I’m sure everyone here heard about since it’s a PC game. Botched launch and spending a lot of money to rebuild the game.

        Their flagship franchise isn’t doing that great, and Enix isn’t doing much to write home about except for Dragon Quest IX and Dragon Quest MMO in Japan.

        Eidos is the only bright light in the Square-Enix conglomerate right now. Final Fantasy is essentially directionless, and Nomura clearly doesn’t have the qualities to lead the way forward for FF.

        • Baines says:

          FF XIV wasn’t a botched launch, it was a botched Chinese outsourcing in an attempt to reduce development costs/increase profits. It was a really bad job, and Square-Enix launched with what quickly became a laughing stock.

      • Reapy says:

        I think final fantasy needs to grow itself up a little and stop targeting 14 year olds with no purchasing power.

    • mouton says:

      Also, weren’t consoles supposed to be this beautiful promised land of money waterfalls, unlike that bad, dying, thieving PC gaming hell-hole?

  4. Cockles says:

    It’s a shame, I like the fact they’ve been publishing old veteran PC franchises and I wanted them to do be doing well. Deus Ex looks like an expensive game to produce and I have no idea how it sold, I’m just glad I got the chance to play another entry in the series, hopefully the same will be said of Thief. PLEASE DON’T AXE THE THIEF!

    • empyrion says:

      It will most likely just be blackjacked around a little bit.

      • Cockles says:

        Probably more likely to sneak out of the door one night with last-quarter’s profits.

  5. james.hancox says:

    “Fallen on his sword” is probably a slightly loaded phrase to use when referring to the Japanese. It’s still within living memory that this was genuinely what he would have been expected to do. :\

    • JFS says:

      Maybe that was part of the joke. However, I also feel it’s a little touchy, but well. I guess if it’s not against women, it’s okay ;)

      • bfandreas says:

        They don’t fall into their sword. They rip open their guts and turn the knife a couple of times. And if they are lucky somebody with a sword is standing behind them to decapitate themwhen they did done the deed.

        Falling into your sword just doesn’t cut it.

    • elevown says:

      I thought ‘fallen on his sword’ should be qualified with ‘just kidding’ too when talking about a japanese director. But im sure it woulda been the main talking point with alot more detail if he realy had!

      http://www.lancet.com/journals/lancet/article/PIIS0140-6736%2804%2916066-2/fulltext

      Apparently its still a big problem with much higher rates than other oecd countries- and many are ‘to take responsibility’.

      Ofcourse I’d assume they dont actualy commit seppuku any more- id assume owning a sword is pretty rare for one thing.

    • frightlever says:

      Falling on your sword was a Roman thing, IIRC.

    • Henke says:

      Hah yeah. When I read that phrase I was like “Wait- literally?”.

    • scottossington says:

      Racists!!!

    • ResonanceCascade says:

      So have we figured out whether or not we’re supposed to be offended and outraged by this yet?

      • SuperNashwanPower says:

        How can you be so flippant about Seppukugate ??

        • james.hancox says:

          Pointing out that maybe we should try to be a little culturally sensitive isn’t the same as trying to blow it up into a massive scandal…

    • zenjestre says:

      …so much so, in fact, that when i first read those words, i took them literally without hesitation, and was rather shocked until i read further and eventually deduced that it was an idiom.

  6. Simon Hawthorne says:

    This is a bit sad – Square Enix have quietly become my favourite publisher with some cracking (if not ‘old school’ enough for some) PC games.

    Their ports are generally excellent with a minimum of DRM. Plus their sales are great – I’ve picked up Hitman Absolution, Deus Ex and Sleeping Dogs all for quite cheap and had a blast with all of them.

    I’ll pay more for Tomb Raider than I would for an Ubisoft or EA game simply because I trust the PC port and that it’ll be a good experience (even if it’s not a technically challenging ‘game’). I’ve even considered pre-ordering Thief – and I’ve not preordered a game…well, ever actually.

    I hope Square Enix make it through this – I’d miss them like a friend’s dead pet hamster.

    • Baal_Sagoth says:

      Very true! I’ve gained a lot of respect for them, their very good games and unusually fine PC Ports. The new Deus Ex, Hitman and Tomb Raider all were very much to my liking. I really hope those weren’t huge failures.

    • Hoaxfish says:

      Certainly something I’d agree on. Deus Ex was treated very well in the new iteration.

      My only real question is how much the performance of SE’s “original” franchises like Final Fantasy is effecting them (especially FF13 versus’ ongoing vaporware status, and FF14′s horrible launch/subsequent reboot).

      It’s certainly something they cling to, but it may be killing them. I’m not sure the JRPG genre is particularly strong atm.

      • dE says:

        I don’t think the JRPG Genre is the issue. I’ve had some great fun outside of Square Enix Territory. Their problem seems to be, that they are clinging to characters which seem rather insufferable. For example, while I enjoyed Lightning as a strong female lead character, her one way hardline way of thinking got old real fast and by the time it started to change – I had given up on the game. Mostly due to two other characters called “Whiny Grimey” and “Bouncy Drug Idiot” – or Hope and Vanille if you go by Square Enix names.
        Those didn’t as much grate on my nerves as they nuked them from orbit with an army of Chainsaws wielded by purry Moogles out for delicious, bloody and well chopped nerves.

    • Simon Hawthorne says:

      I forgot Just Cause 2, Quantum Conundrum and Lara Croft Guardian of Light, as well. Genuinely enjoyable games that work great on PC.

    • Cinek says:

      Buying games on sales is not really a good thing in the end for developers.

      • greywolf00 says:

        True but how often are the games worth their full asking price these days? Very few original concepts anymore. Most big titles are recycled garbage with big budgets.

    • Deadly Sinner says:

      Plus, they’re one of the few publishers to optimize their games toward AMD cards.

  7. ChrisGWaine says:

    I think the article is slightly misinterpreting the terminology “extraordinary loss”. That is referring to the “approximately ¥10 billion” it now expects to incur from deciding to make changes.

  8. amateurviking says:

    Bumcakes! Although hardly surprising given the FFXIV debacle and FFXIII being shit.

  9. lizzardborn says:

    I think that the new Tomb Raider will be one of those games with phenomenal legs … pun intended. I expect to bring a steady stream of revenue in the next year – it is a quality product with very warm acceptance. But maybe Square problem lies in other parts of their business …

  10. c-Row says:

    “slow sales of major console games”

    Console gaming is dead – you read it here first.

    • frightlever says:

      Pretty sure I read it first shortly after ET was released for the Atari 2600.

      • Cinek says:

        And look where Atari is now?

        Besides – don’t twist the stuff other way around. It’s the console gamers who announced PC gaming death over and over and over again for years – something that never has happen.

        • The Random One says:

          So wouldn’t you say it’s fair that PC gamers get to say console gaming is dead now?

  11. Greggh says:

    “Gears of War: Subtitle”

    I thought it was the actual games’ name :( even looked up on Google… Alec, you’re a bully!

  12. rustybroomhandle says:

    I too used to have an arcade machine arm. Working those joysticks built muscle I tells ya. Good thing it was balanced out by my bachelor arm.

  13. Chalk says:

    I think a large part of this, is also due to people getting fed up of the same old gaming tropes.

    Whilst games have become increasingly cinematic and epic – they are ultimately the same only yearly rehashes.

    Time something changes…

    • Solidstate89 says:

      Is it; “WARFACE…WARFACE never changes?”

      No, that doesn’t sound right.

  14. karthink says:

    I think I agree with Shamus Young in his arguments on why AAA development practices have become unsustainable. The link is about EA, but many of the points mostly apply to most publishers today.

    A dream: Publishers restructure their studios into smaller teams (25-35 employees) and diversify their portfolios, sharing back-end technology and middleware among their studios.

    EDIT: The link, because I idiot.

    • bfandreas says:

      Publishers aren’t needed anymore. Big companies are also not needed for game development. All you need is a core team and you can hire external talent whenever you need them for as long as you need them.
      Having 25-35 people on your payroll at all times would mean to have ~3 games going at any given time. You do not need artists during each project phases. You don’t need a full programmer squad at all times.
      Having to build a lot of games at once means you propably have very little time to putz around to come up with completely new games. Which is one of the reasons we get a lot of Last Years Bestseller: New Subtitle stuff. Now with navel battles. And a barbecue defense minigame.

      • Cinek says:

        That’s great for small titles or titles developed on a span of over 5 years. For everything else: You still need a large studio and loads of money.

        [eidt] replay to bfandreas

      • frightlever says:

        Publishers aren’t needed, big developers aren’t needed, little developers aren’t needed, we’re all going to go to the park and ride our bikes, skip stones on the pond and play with frisbees.

      • LionsPhil says:

        What you’re saying there is “people working in the games industry don’t need job security”. Even moreso than currently.

        This is why even middling studios like Double Fine have multiple projects pipelined so that every type of person has something to be working on.

        Edit: Oh good, RPS’ comment system has gone mad again.

      • greywolf00 says:

        This is why I like inXile’s setup. The have a team and a 1/2. The 1/2 team does pre-production (Torment) while the full team takes over when pre-production is done and finishes the game (Wasteland 2). Allows for smaller (and cheaper) wage costs, no need to waste money keeping people employed when not needed or laying them off between projects.

  15. karthink says:

    I think I agree with Shamus Young in his arguments on why AAA development practices have become unsustainable. The link is about EA, but many of the points mostly apply to most publishers today.

    A dream: publishers restructure their studios into smaller teams (25-35 employees) and diversify their portfolios, sharing back-end technology and middleware among their studios.

    • greywolf00 says:

      Very nice link. Should be titled “What’s Wrong with big Developers”, not just EA.

  16. Christo4 says:

    Well you know what? Hitman absolution is nothing like the original and Tomb Raider was too short and too much on rails for me to care. Deus Ex is pretty interesting and much better in comparison IMO. This doesn’t surprise me in the least.

    • Matt_W says:

      I spent 15 hours with Tomb Raider, without going back to pick up collectibles. This seems like a pretty respectable length for an action game to me.

      • Buemba says:

        20 hours here to 100% it. That’s quite a lot considering most action games these days are between 5 to 10 hours long.

  17. thegooseking says:

    This is a shame. Wada is one of the most refreshingly honest big publisher execs (very publicly and apologetically admitting that “Yeah, actually, FFXIV was a bit shit.” and all).

    Also a shame because Square-Enix have a reputation for using the vast sums of money they get from guaranteed franchises like Hitman and Tomb Raider to underwrite riskier ventures. If they’re not getting so much money from the big names, will they become as risk-averse as all the rest? It’s not unlikely.

    • analydilatedcorporatestyle says:

      Don’t worry, it’s the sales pre next gen calm before the storm. Consolites aren’t going to splash the cash on ‘new’ but ultimately ‘redundant’ games are they?

  18. apocraphyn says:

    Hmm. Having been a long term fan of Square’s first party products, I’ve been increasingly wary of them ever since they merged with Enix. It’s like they’ve made one mistake after another. Lately, they’ve only seemed content with releasing a multitude of iOS titles in the west, refusing to port some of their biggest successes in Japan (such as Final Fantasy Type 0 for the PSP and Bravely Default for the 3DS) and continuing to develop Final Fantasy XIII titles, something that very few people seem to want. If you add to this the supposed reports of Wada going a bit crazy lately and taking the opinions of fortune tellers on where they should situate their new workplace, then perhaps it’s a good idea for him to go.

    On the other hand, as a publisher in the west, they’ve been doing a fine job lately. I do hope this doesn’t affect the company adversely and only serves to kick them into a sensible frame of mind.

  19. honuk says:

    One would imagine it is the Final Fantasy side of things that is the biggest problem, here. Final Fantasy XIV is an MMO that bombed so spectacularly that they stopped charging for it, and then canned the game and are in the process of remaking it. The console version never even came out. No one liked either of the FFXIII games, and Versus XIII is some spectacularly expensive vaporware. Even Dragon Quest X sold poorly for them.

  20. Acefrog says:

    So then.. does this mean they will hopefully go back to decent games?

    Like.. the last GOOD Final Fantasy was IX (And X being debatable) after that it was load of rubbish…

    • Bhazor says:

      Man I loved FInal Fantasy 9.

      Even if it did have one of the skeeziest main characters ever.

    • thelongshot says:

      I liked XII a lot, and I know I’m not alone in that. I’m playing IX right now, and it is solid, but not any sort of greatness.

      • DrollRemark says:

        XII was a fabulously unique system buried in an utterly dull plot with boring characters. The story was Phantom Menace-levels of bland.

  21. Bhazor says:

    Yoichi? More like Yowchi?

    Amiright!?!

  22. Megakoresh says:

    What a shame, their games are really good.

  23. SuperNashwanPower says:

    Personally I have definitely been buying less games recently. Not because I can’t afford them, but because there have been less titles that really inspired me to buy, at least at full price. So many games I bought over the last year or so have ended up disappointing, or mushed into an inert exercise in streamlining and mainstream appeal. I can’t claim this to be the reason for struggling companies, but perhaps in their bid to milk their titles of all available revenue streams, the teat has begun to run dry? As that Supermeat article said the other day, one of the most dangerous things is gamer apathy – and if I am honest, I do feel apathetic about games lately.

    Bioshock Infinite is sitting waiting to be played though.

    • greywolf00 says:

      Indeed, I find myself far more excited about Kickstarter and indie games these days then recycled AAA titles.

  24. Xocrates says:

    Wait, Tomb Raider sold bellow expectations? What info I can find says it had the biggest launch this year so far, selling over 1 million in 48 hours, and doubling the sales of Legend by the first week.

    Is this speculation by Alec, or is SE pulling a Darksiders 2 and expecting a game to vastly outsell its predecessors?

  25. Lemming says:

    You can expect your game to sell well and all, but pinning everything on a game being no.1 in sales for longer than two whole weeks and beating a new Gears of War game was the equivalent of ‘putting it all on black’, surely?

  26. Emeraude says:

    Can’t say I’m surprised, the writing’s been on the wall for some time now, but saddened anyway. Wada had his faults, and took some pretty bad decisions, but he certainly was leagues better than those CEOs who act like they’re selling soap…

    I’ll remember some of his comments on personally liking – Resonance or Fate was it ? – and publishing the game even though he new it wasn’t going to be a market killer because he thought it was good for the brand.
    Pretty sensible of someone playing the long term game.

  27. Neo_Bahamut_19 says:

    I’m sure their plan of selling Agility on Steam will pan out for them in the end. Seriously, go look it up. They’re literally selling the Agility stat on Steam as DLC. Facepalm of the year or epic fail of the year?

    • Buemba says:

      Since you can acquire all those upgrades just by playing the game (And unless you absolutely suck at it you’ll likely have more than enough XP and money to get every single one before you finish it) I’m not too incensed by this. Hell, if anything I wish more DLC was like this.

  28. Moraven says:

    Its ok, Square is releasing FF10 FF10-2 HD remix…On the PS3. Releases when the PS4 comes out, which can not play PS3 games. Sure they done a lot of fan service video and side games to FF7…but really, if they remade the game and released it they would made a lot of money.

    They mentioned slow sales of Sleeping Dogs, digital sales and arcade games are to blame. But really, how bad could have Sleeping Dogs been. They picked up a half finished game, renamed it and finished it. Sold 1.5 million copies and still took a big hit?

    The funny thing is, Square Enix has basically avoided mentioning FF14 failed launch in any finacial statements the past 6 months. That has to be having a bigger drain than Sleeping Dogs has. I guess they expect it to be very profitable like FF11.

  29. RandomEsa says:

    http://store.steampowered.com/app/208802/

    It has already begun.

  30. rps-dk says:

    SE is downright the most PC friendly publisher in recent history in my book. Just Cause 2, DX: HR, Sleeping dogs, Hitman: A, Tomb Raider… all stellar pieces. Where has the world gone to???

  31. TheMhodi says:

    Lets see. Nearly every mobile game they have released in the iTunes app store has been priced in the 7.99 to 19.99 price range (what are they smoking over there) would tell me they have no idea what they are doing in that market… I am not convinced that that is not endemic to the entire company.

  32. Arithon says:

    How to put your gaming company out of business
    (1) Rely on console revenue
    (2) Spend a fortune employing “recognised” actors to voice the cut-scenes.
    (3) Let modellers and animators spend three years making cut-scenes.
    (4) Ignore the fact nobody buying games wants cut-scenes.
    (5) Give Dr. Evil sales-director $1BN to market a game with a prospect of 100,000 sales per platform.

  33. Sugoi says:

    I shall very much miss his imperial hotness.

    With that said, Squeenix has been putting all its big eggs in mobile for a while now, and their internally developed games have been pretty much crud. They’ve also been excessively coasting on remakes in lieu of creating new IPs and concepts, so it’s very obvious that a reshuffling was desperately needed.

  34. Zycho says:

    I genuinely hope Squeenix goes bankrupt, so their western branch gets bought out by a more competent publisher, one that doesn’t waste money on garbage like FFXIII or FFXIV.

  35. Vercinger says:

    Maybe they’ll focus on the PC now.

  36. Fox89 says:

    I’m pretty cross at Square Enix for this. I mean, I don’t want the franchises I really enjoy such as Deus Ex and Tomb Raider be put in jepoardy because their business is so mind bogglingly inefficient that three and a half million Tomb Raider sales in the first month is not enough to ‘meet expectations’.

    Even Sleeping Dogs, a brand new I.P, did 1.5million, and none of these figures even include digital. I know games are expensive, but when you’re planning a game’s budget and you decide that “OK, we’ll give Crystal Dynamics X amount of resources which will mean we need to sell about 5 million copies in the first month to turn a profit”, then you have a crippling and completely unsustainable problem.

    I just hope the changes they make a) doesn’t get too many people fired and b) doesn’t get all the series I love shelved or butchered beyond recognition.

  37. Beelzebud says:

    I would have bought Tomb Raider had it not gone “gritty”. The original Tomb Raider was a thinking person’s game. It was purely about exploration and solving puzzles. Enemies were wild animals and obstacles.

    When they turned the franchise into mostly shoot-em-up action (much like Resident Evil), I lost interest.

  38. Jraptor59 says:

    Dang, Deus Ex and Tomb Raider are some of the best games released. The scarey thing to me is that Gears, a short game in its 3rd (?) generation, beat Tomb Raider off the charts. That says something about gamers. In fact it says that rip off games in their 3-10th generation of the same game with a couple of new maps and weapons out sell the more intelligent games, which means the gamers are no longer the intelligent elite and instead are now mouth breathing, button smashing morons with “kill kill kill” tattooed on their chests.

  39. Panda Powered says:

    Perhaps it’s time they ask themselves what the hell they are doing when 3+ MILLION sold copies is considered a failure? And the idiocy of just counting the first one or two weeks for a games failure or success…

    The “massively increasing development costs” every company keep blaming is just half the problem when they throw out twice that on marketing in an attempt to lure in the mass market.

    For example: Battlefield 3 cost $25 million to develop and had a marketing budget of $50 million.

    It’s time they realize their attempts to create a mass market game with every title is doomed since the mass market are mostly people who just buy one or two games a year (CoD and FIFA/Madden).

  40. kud13 says:

    my biggest concern with this:

    Who will get the Legacy of Kain IP?

  41. Frank says:

    What happened to that side-business, in, you know, the biggest JRPG franchises of all time, and reruns of same on mobile devices? I thought these guys rescued Eidos IPs because they had more money than they knew what to do with.

  42. buxcador says:

    Good news! Company who ruined Tomb Raider: You go the way of the dodo.

  43. yourgrandma says:

    Production values out of control and highly scripted streamlined reboots with generic gameplay does not make a good game and thankfully neither good sales. I’m talking about hitman and tomb raider… deus ex was quite good and was definitely the most successful of those games.