/r/ffxivdiscussion: Square Enix Notification of Recognition of Extraordinary Losses

[Swordsman]

I thought this was important to report this here on the official forums as well to help keep players in the loop.

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Notification of Recognition of Extraordinary Losses
SQUARE ENIX HOLDINGS CO., LTD. expects to recognize extraordinary losses pertaining to abandonment losses associated with its content production account on its books for the fiscal year ended March 2024, as detailed below.

Details

1. Nature of the extraordinary losses At the meeting convened on March 27, 2024, the Board of Directors of SQUARE ENIX HOLDINGS CO., LTD. (the “Company”) voted, in light of the myriad changes underway in the environment surrounding its Group, to revise the Group’s approach to the development of high-definition (HD) games with the intention of being more selective and focused in the allocation of development resources. As a result of a close examination of the Group’s development pipeline undertaken in keeping with this revised approach, the Company expects to recognize approximately ¥22.1 billion in content abandonment losses on its books for the fiscal year ended March 2024.

2. Outlook
The Company is carefully reviewing its consolidated forecasts for the fiscal year ended March 2024 to assess the potential for impact from the above or other factors. Should revisions to its forecasts prove necessary, the Company will promptly disclose the same.

Here's a link to the official SE PDF file: https://www.hd.square-enix.com/eng/i...0430_01_en.pdf

/r/ffxivdiscussion thread: https://www.reddit.com/r/ffxivdiscus...ecognition_of/

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Notable comments:

"Looks like this is specifically regarding abandonment losses and will most likely impact secondary franchises or spinoffs rather than their heavy hitters. I wouldn't expect this to heavily impact FFXIV directly."

"Square Enix just has major problems with decision making. Like with Foamstars, it was evident to anyone with eyes and a brain that it would be DOA and lose a lot of money, but somehow the executives at Square Enix let it get all the way to release, where it promptly died day 1 and lost tons of money. I've never seen such a big company make such horrible decisions constantly."

"All this really means is they will state the loss separate from other expenses in the financial statements so that this year isn't completely judged by an extraordinary expense that isn't directly related to this year's revenues.
Said cancellation likely has nothing to do with FFXIV."

"It's naive for people to think this doesn't affect FFXIV at all.
Square Enix seemed to be pinning their hopes on FF16's performance covering for failures like Forspoken and poorly-marketed AA titles like Harvestella and Valkyrie Elysium. It performed to their expectations in a vacuum but could not claw back the lost money.
It wouldn't surprise me at all if they also pinned their hopes on FF7 Rebirth to cover for failures in other departments and have hit the panic button now it's allegedly underperformed (we will know for sure on May 13 when they release their quarterly earnings).
So, what games do you think they're going to turn to now? FFXIV is the only game consistently printing them money with an avid and large install base. We may very well start seeing subscription price hikes, cooler stuff locked to MogStation etc. No guarantee, but a company is going to be considering those options.
A lot of the reason Tekken 8 fans are currently dealing with battle passes and online store coins is presumably because Bamco's launch of BLUE PROTOCOL flopped hard and knew that Tekken would be guaranteed a huge install base on its name alone. So even though FFXIV isn't under threat of closure, there's a chance we're going to be shouldering the burden of Square Enix's streak of f-ups."

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As you can see, there's some back and forth in the subreddit comments about whether this will have an effect on XIV or not. I'm really hoping there isn't.

Feel free to discuss amongst yourselves below. Cheers.

[Valkyrie_Lenneth]

Do you have any original ideas or do you just repost reddit threads these days?

You didn't even post your own opinion on the topic. You just copied other people's comments without even crediting who wrote them lol

[VerdeLuck]

everyone suddenly becomes a financial expert and a shareholder whenever numbers get mentioned, curious.

[Jeeqbit]

It's pretty obvious they need to focus on titles they know will work. There is room for 1 experiment or two, but trying to throw out 20 mobile and new games or whatever they are doing doesn't seem smart.

FF16 and FF7 underperforming is most likely due to restricting it to Playstation. I hope they got paid a big enough sum by Sony to make up for the losses.

FF14 should be alright because Yoshi-P is on the board and the CEO and their family plays so it would at least be a difficult decision for any of it to affect FF14.

[Kaurhz]

I would like to think their resolution or thought process is a little more advanced than "Oh just hike up prices of subscription" - This can very easily lose them profit as much as it would gain them profit, after all, you make it non-feasible for a lot of people to sustain a consistent subscription.

About the only plausible one I could foresee is them adding more cool stuff to MogStation, or, well, at the very least increasing the pace with which they put stuff out on the MogStation -- But then my only doubt is here, if this were within their interest then they probably would have done some moves already, seeing as many, many people have been gagging for them to add more cosmetics, e.g., Hilda's hairstyle.

It does of course affect XIV in some shape or form, but the latter notable comment you've mentioned is just taking an extreme of one possible solution.

[LilimoLimomo]

They just need to invest more in NFT's, surely that will make the line go up.

[DiaDeem]

My prediction? They're gonna axe that garbage Symbiogenesis NFT game that nobody's even playing, and they're probably done giving PlayStation any kind of exclusivity. Both XVI and Rebirth were part of this fiscal year, and both missed on the XBOX/PC Market. If they're reporting "Extraordinary losses" then that means the exclusivity deal was just not worth it.

Other than that, I don't know what else they can do. They haven't done particularly well in the mobile market either, so my hope is that we'll see more mid-range games that don't cost as much to make but can still sell well like Octopath or Triangle Strategy. Not every game needs to be Porsfoken.

Also, other than XIV and XVI, I'm glad they're done making their own engines. There's a charm to an in-house engine, but they're insanely costly to make and rarely justify the time and expense.

[WeebPolice]

Post

Forspoken is calling, citizen. I wonder who at Square thought it would be a good idea to greenlight that project?


Also, I recommend you find some reddit threads from a user named CutieShut-In, citizen. Those threads and the comments within will provide great entertainment.





Go forth to victory.

[GTK0HLK]

It's pretty obvious they need to focus on titles they know will work. There is room for 1 experiment or two, but trying to throw out 20 mobile and new games or whatever they are doing doesn't seem smart.

FF16 and FF7 underperforming is most likely due to restricting it to Playstation. I hope they got paid a big enough sum by Sony to make up for the losses.

FF14 should be alright because Yoshi-P is on the board and the CEO and their family plays so it would at least be a difficult decision for any of it to affect FF14.

Spot on on the things you touched on.
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While the folk that for some reason or other want to see SE fall on some things.(Though they are the vast infinitesimal number)

It's basically SE needing to Figure out what it is Customers want or need.

The need to Evolve/Grow rather than Keeping themselves in their cycles of "Rebirth".
(Where their Final Game to save the Corp is keeping things going. Rather than just being a Series amongst other Series Creating Revenue.)
[The only Series Doing alot of work keeping things alive. Amongst Small Fan Favorite Titles.]

Remake and New FF titles do as they expect.
While not as astronomical as they expect, still doing enough to do afloat.

XIV really is showing how they need to do better to earn the money it's offering.

Now that they basically have to rely heavily on it, and Trust that Yoshidas Plans will work out for the next 10 Potential Years on the Ship he managed to keep "Sea Worthy".

I personally Can't Say anything about Foam Stars. Except it had no roots to grow.
Maybe if they Found a Existing Market and Playerbase, it could of living dead. But Huge Doubt.

Forspoken was Dead from Inception.

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The next bit is different based on how users see it individually. Though There is a More Supported Side on Reason.

It may be the time where they choose to Suffer for longer or Actually Focus/Demand for content that draws in their Consumers.

From their Most Well Known SP titles, and Few Multiplayer titles.

We can see which markets will buy into them, if they don't sacrifice vision.

But seeing how they're still slightly in bed with Sony. While trying to open their Connections with XBOX. (Even though it's the same Wolf, Different Clothing. Same Ideals.)

Even though Alphabet is Kicking the Unmarketable/Unsellable/Untradeable Concepts out already.

__________________

TLDR: we will see trash in the Mogstations as usual that cannot be dyed or in different parts.
[Or my reason why I don't even bother with the Mogstation. IT AINT ACCOUNT WIDE for all items that should be.]

But over all shouldn't be to much of an issue on XIV.

It really only highlights their own Failures of being too reliant on The Final Fantasy Franchise. (And Various Popular Small Titles, and Other Well Known Titles like Nier <of the top of my head> in their respective release years.)

So they don't really want to piss off this community unnecessarily. Hence probably why the Benchmark got so fast a response.

Probably a good time to Make "Reasonable" Demands. and Yoshi P is likely Trying to Squeeze some Changes into his Projects.

Since the Corp is seeming in need of Relief.

[Rolder50]

Wonder when they'll start packing the mogstation with junk again. Someones gotta cover their bills!