Despite the relative success of console titles such as Tomb Raider, Hitman: Absolution, and Sleeping Dogs, the Japanese publisher is experiencing difficult times.
Sales were ¥148 billion (around $1.5 billion), but the company posted a loss of around $140 million.
And as senior executive managing director Yosuke Matsuda points out, this isn't a one-off.
He says it's "a structural issue within the package product sales model" that the company relies on.
Three new ways
So Square Enix is looking to turn things around via three initiatives.
One is to re-consider how it develops console games, switching from what Matsuda calls "large-scale, long-term development" that offers little contact with customers, to the more agile and open development available through channels like Kickstarter and Greenlight.
The second is focusing on smart devices.
Matsuda says previously Square Enix split its development teams into console-focused teams and smartphone, tablet and PC-focused teams.
Now, however, it's looking to release games on smartphones and tablets that previously were released on consoles.
"Unlike now, we have published games on these devices [phones/tablets] such as remakes of our old titles or turning our old franchises into social games, but going forward, in addition to these efforts, we will create new game titles of similar type."
Of course, the company points out it will have to ensure revenue models such as pay-per-download, F2P, DLC, and hybrids, are unified with the game design.
Think local
Square Enix's third initiative is regionality.
It's found that it's now much harder to have global hits, especially with console games.
While Matsuda says the company will continue to invest in flagship titles on a global basis, across its portfolio of games it will look to take a more local approach.
Indeed, he says the industry will have to review the very definition of triple-A games.
The result of this three-way restructuring is that Square Enix hopes to achieve an annual operating income level of ¥25 billion (roughly $250 million).
[source: Square Enix IR (PDF)]
