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Square Enix’s IPs may be flagging on mobile but net sales are 5.3% up

Square Enix’s latest financial report reveals falling mobile revenue but free-to-play, microtransactions and subscription plans aim to turn the ship around
Square Enix’s IPs may be flagging on mobile but net sales are 5.3% up
Date Type Companies Involved Key Datapoint
Nov 8, 2023 report Square Enix 5.3% net sales rise
  • Square Enix has released its latest consolidated financial report with results of the last six-month period
  • Merchandise from Square Enix IPs saw a 12.7% rise
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Square Enix has released its latest consolidated financial report with results spanning the six-month period up to September 30 2023.

Naturally, this half-year report provides insight into the company’s financial results in the period, but it also provides an intriguing glimpse into Square Enix’s mobile revenues, attitudes towards the sector and ambitions within it.

Into the numbers

It’s no secret that 2023 has been tough on Square Enix, with flagging enthusiasm for older titles, limited buzz around new releases, and a heap of game closures entangling this gaming legend in a web of uncertainty.

Square’s determined efforts may be showing mixed results so far, but there are some causes of celebration, with net sales and assets on the increase and merchandise from key IPs doing some heavy lifting indeed. In fact, character-based merch from Square’s many beloved franchises saw its overall merchandising sales rise 12.7% compared to the previous fiscal year, totalling $55.45 million in the period.

Net sales also rose in these six months, increasing by 5.3% over last year’s to $1.14 billion, while sales in its mobile and browser games decreased. This doesn’t come as too great a shock following Square’s quarterly report in August that showed Dragon Quest Champions only saw a lukewarm reception. Meanwhile the company chose to shutter games rather than continue service. Bravely Default: Brilliant Lights and Echoes of Mana have recently gotten the axe, and now SinoAlice and Dragon Quest Monsters: Super Light are on their way out too.

"The June launch of Dragon Quest Champions and the September launch of Final Fantasy VII: Ever Crisis were unable to compensate for factors including weak performances by existing titles," Square’s new report reads.

Across all enterprises, operating income of $114.83 million marked a 33.4% decline too, with ordinary income down due to the Japanese yen’s poorer exchange rate this year. On the brighter side, game sales were up 4.2% overall even if mobile did not perform so well alone, with overall game sales income totalling $808 million.

Net assets have been on the rise too, increasing by $22.9 million to a total $2.15 billion; while Square’s performance has not been its strongest this year, the company certainly isn’t struggling for finances.

The importance of mobile

In its report, Square Enix has been incredibly transparent about the company's views on the mobile climate and intentions within it, discussing the rising diversity of business models outside the traditional one-off purchase approach. Free-to-play, microtransactions and subscriptions were highlighted as potential business models used by mobile games, and Square Enix noted:

"New releases tend to be met with either marked success or marked failure as players throng to a handful of major titles. In the market for games for smart devices, increasingly sophisticated smartphones are making customers demand even richer gaming experiences and enabling greater diversity in game design and business models.

"Given the intense competition in both the consumer and smart device game markets, it will be important for the Group not only to leverage existing intellectual properties but also to endeavour to create new intellectual properties and to recruit development resources if it is to continue to produce hits."

After Final Fantasy VII: Ever Crisis got off to a middling start, Square introduced a younger iteration of Sephiroth, one of gaming’s most famous villains, with a new story chapter to discover and a heap of rewards to celebrate his arrival. Having been introduced on September 29, one day before the financial report’s end date, it seems we’ll be waiting for the next report to find out how great an impact young Sephiroth has had on Square’s mobile front.