Square Enix reported some steep drops in its latest financial report, leading the company’s stock to take a hit on the Japanese market. Notably, the company’s MMO segment saw a 22% drop in revenue year over year.
The financial report was for the period ending June 30th. As reported by Bloomberg, Square Enix president Takashi Kiryu spoke on an earnings call and said that Final Fantasy XVI didn't meet sales expectations,speculating that PlayStation 5 adoption slowness contributed to the lower than hoped for sales. With the PlayStation 5 having become easier to obtain after massive shortages, the company does hope that greater adoption will lead to an improvement here.
Square Enix had a mixed bag of results overall. While Final Fantasy XVI did not sell fast enough to meet expectations, the company's net sales were up 14% year over year, and their Digital Entertainment net sales were also up by 16%. Digital Entertainment is divided into three segments: HD Games, Mobile/PC browser games, and MMOs.
HD Games includes Final Fantasy XVI, and the company revealed that the title sold three million copies in the first week, but the expectations were for higher sales. When it comes to mobile and PC browser games, they state an 18% decrease, especially since there was only one new launch, Dragon Quest champions.
When it comes to MMOs, this is a significant part of Square Enix’ overall picture, and there were some very significant shifts. This quarter, the MMOs made a total of 11 billion yen, which is about 77 million. This is a 22% year-over-year drop. Sales of Final Fantasy XIV were down year over year, which isn't surprising since this marked the post-Endwalker period, and also a greater return to something closer to pre-pandemic life across the world. Sales in 2020 and 2021 were buoyed both by other industry events, but also the pandemic affecting so many around the world.
Final Fantasy XIV has a couple of significant happenings do for 2024, including the MMORPG's launch on Xbox, set to be followed by other Square Enix titles, and the release of the upcoming expansion, Dawntrail.
However, it's not all bad news, since the publisher sold 7.54 million game copies across its entire portfolio in the first quarter and that's a 76% increase. They are looking forward and predicting a net sales total of about 2.5 billion dollars for the fiscal year that ends March 2024.