Will Square Enix Resort To Facebook Games?

By Colin Tan on May 17, 2011, 7:04PM EDT
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Square Enix is easily one of the largest video game developers-cum-publishers to rise up in the land of the rising sun, among other contemporaries like Konami and Capcom. However, the company hasn't been fairing too well in recent years with net income profits dropping steadily since 2003, with the exception of 2009 where the company finally saw a boost in sales, albeit not nearly as much as earlier in the decade.Now with Square Enix's CEO and President, Yoichi Wada, claiming that development has weakened considerably as of the end of the 2011 fiscal year, one would think they would focus on bringing out the best on what they already have, like Final Fantasy Versus XIII and Dragon Quest X. Instead Square Enix is shifting focus to mobile apps. There's nothing inherently wrong with that, in fact, it's a blossoming and certainly growing niche in the industry, but the shift only shows the lack of confidence Square Enix has in their core portfolio of games.

It's not all that surprising, if only somewhat disconcerting. We previously talked about how Eidos is keeping Square Enix afloat in the gaming industry, no joke, with key releases like Batman: Arkham Asylum, Mini Ninjas, and a slew of upcoming games that are likely to be hits with the industry: Tomb Raider, Deux Ex: Human Revolution and Hitman Absolution, just to name a few. But what about Square Enix? Instead of pulling together and focussing on their core portfolio and creating AAA titles as they should, they'll be shifting focus to releasing games and apps for mobile phones. In all likelihood, it doesn't mean brand new IPs for Android and iOS, but rather re-releases of old games, starting with the easiest plate: Final Fantasy.

Not only is re-releasing titles easier on the budget, but people are sure to eat them up with the low prices that have come to be associated with mobile apps. However, Square Enix seems to be going the other way around with that in an attempt to maximize profits. Final Fantasy III recently hit the App Store at a price point of a whopping $15.99. What's even more worrying is that Wada pointed out in the company's fiscal report that they don't exactly have the talent familiar with developing mobile titles, at least for iOS and Android, effectively meaning that more of the company's budget will be spent on getting up to speed or, more realistically, outsourcing to third party developers.

While Square Enix may not have the expertise to create apps for Western mobile platforms, they certainly aren't shy with their own local devices. After all, Square Enix has been making mobile games since 2003. However, outside of Final Fantasy and Kingdom Hearts, none of their mobile titles are catered towards the iOS/Android market. Who has heard of Code Age, Egg Monster, Brave Shot or even Hexcite?

Square Enix decline in sales and income

Not to mention, that's also when Square Enix's performance started to decline. More games were coming out, but sales and profits weren't increasing. In fact, sales have been on the flux since then. The company dropped from selling 1.6 million units per title sold in 2003 to half a million in 2004. Sales remained relatively abysmal with the exception of slightly improved performances in 2006 and 2009. Net income also decreased annually, save for 2009, but proceeded to drop off a cliff in 2010. Presently, Square Enix have reported a net loss of 12 billion yen for the fiscal year ending on March 31, 2011.

There's no doubt that the mobile/social scene will likely generate some form of income as there remains no loss in republishing older games, not to mention there are a number of creatives that have earned plenty of income through Facebook apps. Regardless, there remains a kind of stigma that social apps are simply cash-ins and demeaning to video game development. To be frank, it would be better if Square Enix took the time to focus on creating top-notch, quality games, especially the ones that are already on their plate. Final Fantasy Versus XIII and Type-0 have been nearly five years in the making, yet somehow Square Enix managed to squeeze in a sequel to Final Fantasy XIII, which only released earlier last year in the West. Promising a release later this year, one can't help but wonder what that says about the quality of the game. While I can't complain about a shorter development cycle, I can't help but remain sceptical. It just doesn't look like Square Enix has confidence in their core portfolio when it comes to generating revenue to the point where they have to turn to putting out ports on the mobile market, or worse yet, Facebook games.

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