Today Square Enix released its financial results for the fiscal year ended on March 31st, 2018.
The first table below showcases the relevant revenue and income figures which are all in the black. While sales were slightly lower year-on-year, income shows significant growth.
The second table shows that the publisher’s income exceeded predictions. This is due to high-margin download sales of older console titles (NieR: Automata is unsurprisingly mentioned by name for this), which performed “strongly.” On top of that, another factor is revenue from the operation and expansion disc sales of MMORPGs including Final Fantasy XIV and Dragon Quest X.
We also get a handy explanation of the reasons behind the results mentioned above. Again, we hear that digital sales of games from the previous fiscal years like NieR: Automata saved the day.
“The Digital Entertainment segment consists of planning, development, distribution, and operation of digital entertainment content primarily in the form of game. Digital Entertainment content is offered to meet customer lifestyles across a variety of usage environments such as consumer game consoles (including handheld game machines), personal computers and smart devices.
During the fiscal year ended March 31, 2018, where “DRAGON QUEST XI: Echoes of an Elusive Age,” the latest title of the “DRAGON QUEST” series and “FINAL FANTASY XII THE ZODIAC AGE” were launched, a decrease in the number of blockbuster titles resulted in net sales decline, as compared to the prior fiscal year. On the other hand, strong high-margin download sales of previously released catalogue titles such as “NieR: Automata” have resulted in an increase of operating income, as compared to the prior fiscal year.
In the smart devices and PC browser area, our established lineup of popular games such as “FINAL FANTASY BRAVE EXVIUS,” “HOSHI NO DRAGON QUEST,” “DRAGON QUEST MONSTERS SUPER LIGHT” and “KINGDOM HEARTS Union χ” is continuing to show strong performances globally, and an increase of royalty income pushed both net sales and operating income, as compared to the prior fiscal year.
In the area of massively multiplayer online role playing games, revenues from the latest expansions of “FINAL FANTASY XIV” and “DRAGON QUEST X” led to an increase in the number of paying subscribers and disk sales, which resulted in an increase of net sale and operating income, as compared to the prior fiscal year.”
Apparently, the increase in operating income for the video game business of the publisher is even higher (30.4%) than the growth registered by the whole company.
“Net sales and operating income in the Digital Entertainment segment totaled ¥191,469 million (a decrease of 3.8% from the prior fiscal year), and ¥43,421 million (an increase of 30.4% from the prior fiscal year), respectively.”
Last, but not least, we get the outlook for the current fiscal year.
The business environment surrounding the Group is in the midst of major changes, where consumer needs for content suitable to smart devices such as smartphones and tablet PCs are rapidly expanding, while the console game markets in North America and Europe are increasingly getting competitive and oligopolistic. The Group is focusing all efforts to achieve sustainable growth coupled with profits on a solid revenue foundation through the introduction of flexible content development conforming to the ever-changing environment as well as diversification of profit opportunities.
The publisher predicts sensibly higher overall sales and more significant growth in operating income. While this isn’t explicitly mentioned, it could be seen as a degree of confidence in the launch of upcoming games like Kingdom Hearts III and Shadow of the Tomb Raider, which are scheduled to launch before the end of the fiscal year.