Square Enix released its financial report for the fiscal year ending March 31, 2019. And while new releases helped increase net sales for video games, profits tumbled. Now, Square Enix says it's heavily investing in new IP and games as service titles to help the company prosper in the future, but don't expect these new IP out by 2020.
Square Enix's operating income fell by about 36% this fiscal year compared to 2018. Income and profits also dropped by about 22% and 29% respectively. Even with releases like Kingdom Hearts 3, Shadow of the Tomb Raider, and Just Cause 4 which helped raise overall video game sales, they couldn't help diminishing returns faced in Square Enix's mobile, MMO, and merchandising sectors.
Furthermore, Square Enix doesn't expect profits or game sales to increase significantly by March 2020, even with new game launches and IP development planned for 2019.
We know Square Enix is working on new games by Luminous and Final Fantasy 14's Naoki Yoshida, but there's also the recent teaser for Final Fantasy 7 Remake, with a bigger reveal promised at E3. And we can't forget the still untitled Avengers game from Crystal Dynamics. Despite both titles presumably in the pipeline, Square Enix isn't raising their projections significantly.
This could mean a variety of things for Final Fantasy 7 Remake and Avengers, though nothing conclusively. Still, it sounds like Square Enix doesn't expect either title to factor into improving the company's guidance in the coming year. Whether that's because Final Fantasy 7 Remake's first episode won't be out in the coming year, or because Square Enix is keeping sales expectations low is unclear.
As a result of declining profits, Square Enix says that it will focus on reaching midterm goals by 2020. Square Enix is promising "multiple new titles slated for launch" by the end of March 2020. And Square Enix is also focusing on "creating new IP that will enable sustainable growth."
To do this, Square Enix says it wants to invest in new technologies like AI, 3D modeling, blockchain, AR, VR, and leverage games as service style engagement. Square Enix's CEO has previously been bullish on games as service titles, and past attempts to deliver multi-year content for Final Fantasy 15 led to the cancellation of a slate of planned DLC.
Check out our Final Fantasy 7 Remake guide for more coverage on Square Enix's highly anticipated remake and check back in with USG at E3 where we'll maybe get a clearer picture for what's in store with the upcoming remake.