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Square Enix’s fiscal 2015 outlook for physical game sales is its lowest in 5 years

Above: A large party in Final Fantasy XIV: A Realm Reborn.

Image Credit: Square Enix

Final Fantasy maker Square Enix netted a profit in fiscal 2014, but the publisher is predicting that parts of its business will slow significantly.

The publisher reported revenue of $1.5 billion for the year ending March 31. That’s up 4.8 percent year-over-year. Square Enix generated $65 million in net income. Those numbers are largely due to strong performance of games like Final Fantasy X/X-2 HD Remaster, Thief, and Tomb Raider: Definitive Edition. Looking forward to fiscal 2015, however, reveals that the company is expecting physical-game sales to take a big dive.

In fiscal 2014, Square Enix sold 17.23 million copies of packaged software. From April through next March, the company only expects to sell around 12 million. If that outlook plays out as expected, it would represent the lowest number of physical games that Square Enix has sold in more than five years. The publisher is anticipating that the bulk of the slowdown will come from sluggish retail sales in North America and Japan. That’s due to a lack of big launches as anticipated titles like Kingdom Hearts III likely won’t debut this year, but the company is not expecting a return to losses. Instead, Square Enix is looking to make up much of the difference through digital sales, social, and mobile.

For fiscal 2015, Square Enix is predicting it will generate revenues between $1.37 billion and $1.47 billion. That would represent a decrease in sales of 15 percent to 5 percent. That guidance would also likely look a lot worse if the Japanese game maker wasn’t expecting so much from its full digital games as well as mobile its slate of current and upcoming smartphone software.

The company anticipates that many of its customers will move to start downloading Square Enix games digitally on their Xbox One or PlayStation 4 systems. It is expecting even more from mobile. The company touted its lineup of smartphone games, which includes titles like Dragon Quest Monsters, Puzzle Bobble, and Hitman Go. It expects those releases to continue their success in Japan and other regions.

Square Enix also promised big things for its upcoming “full scale” Final Fantasy for mobile.

In addition to these releases performing well in familiar territories, Square Enix is focusing on China. That nation spent $1.8 billion on mobile games last year, and Square Enix expects that to grow beyond $5 billion by 2015. In terms of all game spending, the publisher estimates Chinese gaming revenues will reach $18 billion in two years. That’s up from $13 billion currently.

The company plans to introduce its latest massively multiplayer online title, Final Fantasy XIV: A Realm Reborn, in mainland China this summer.

With all of its plans for digital and China, Square Enix looks like it could stave off any major issues with its shrinking retail business.

More information:

Square Enix squares off pretty well in the fight to be the top gamer in Japan. The company is a leading developer of video games for consoles from Sony, Microsoft, and Nintendo, as well as for PC and mobile. Popular titles include King... read more »

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