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Square Enix - Financial Results FY2019/3; SotTR Shipped 4.12 Million, JC4 Below Expectation; Existing 11 Business Divisions To Be Consolidated Into 4

Koozek

Koozek

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Oct 25, 2017
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Full Financial Results Briefing Session for the nine-month period ended December 31, 2018 ("1-3QFY2019/3"): http://www.hd.square-enix.com/eng/news/pdf/19q3Outline.pdf
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Slides:


On 3Q 2019 (Oct-Dec):
Our 3Q plan was premised on the HD Games sub-segment offsetting sluggishness in the Games for Smart Devices/PC Browsers sub-segment, but results were disappointing as we sold fewer copies of the HD game "JUST CAUSE 4" on launch than we had expected. Both net sales and operating income declined YoY at the Digital Entertainment segment. 3Q at the HD Games sub-segment was marked by growth in the holiday season of digital sales, especially of "SHADOW OF THE TOMB RAIDER," and by the launch of "DRAGON QUEST BUILDERS 2." Meanwhile, while we released "JUST CAUSE 4," we sold fewer units on launch than we had anticipated and were therefore unable to offset charges such as the amortization of development costs.
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Q4 2019 (Jan-Mar 2019) outlook:
I will next discuss our full-year outlook. In 4Q, we expect to achieve significant improvement in earnings with the help of titles such as "KINGDOM HEARTS III" and "Romancing SaGA Re;universe." Global shipments (including digital downloads) of "KINGDOM HEARTS III" have already exceeded 5 million units, and we expect sales volume to grow even further by the end of the fiscal year. In addition, "Romancing SaGA Re;universe," which we launched in December, is outperforming our expectations.
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Q&A:


On why Shadow of the Tomb Raider and Just Cause 4 got off to a weak start:
Q: Why did "SHADOW OF THE TOMB RAIDER" and "JUST CAUSE 4" get off to a weak start? If initial sales volumes are lower than they traditionally have been but digital sales are extending the lifetimes of games, don't you need to change the timing of your advertising efforts?
A: We think the main reason is that we were unable to provide an experience that was novel enough that players would choose to buy them before any of the other numerous major titles on the competitive landscape. Also, while it is true that we are seeing a shift away from sales of boxes to digital downloads, with this many titles competing with one another, initial sales are definitely an important element in increasing user awareness. For that reason, we do need to engage in a certain amount of advertising just ahead of a new title's launch.
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On planning to consolidate their existing 11 Busines Divisions (internal teams at SE Japan) into 4 business units at the end of 2019:
Q: At your 2Q earnings briefing, you discussed changing your policy to developing smart device titles, but how has that gone?
A: The titles we launched in 3Q were already set for release prior to the change in our approach, so they are not reflective of any change. As of FY2020/3, we plan on reorganizing and consolidate the 11 existing business divisions at SQUARE ENIX CO., LTD. into four business units in order to increase the efficiency of our workflows, make more effective use of our resources, and consolidate our expertise with the aim of improving profitability.
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On their FY2020/3 (Fall 2019) release schedule:
Q: What can you tell us about the timeline for your FY2020/3 releases?
A: I cannot go into any detail at the moment, but I believe we will be able to make various announcements in the leadup to this year's E3.

Q: How likely are you to reach your operating income target of ¥40-50 billion with the lineup you have planned for FY2020/3?
A: We believe operating income of ¥40-50 billion will be attainable in FY2020/3 with the lineup we currently have planned, but we still see risk of deviating from our target depending on when we release new titles and on how our development efforts progress.
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Refresher that since last year SE has been expecting a huge spike in operating income for FY2020 (April 2019-March 2020), which I can only imagine is due to FFVII Remake and/or Avengers releasing? I've been long speculating that FFVII Part 1 could release Late 2019/Early 2020.

Also, David Gibson, an investor working in Tokyo who assumedly attended that briefing session on Feb 5 posted this afterwards:




FFVIIR-1 THIS YEAR, BALEE

CJBx0Y2.gif
 
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The Last One

The Last One

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Yeah, I'm really expecting VII-Remake news at E3. Square will probably have a "video press conference" again.
 
Rodjer

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No talk about Babylon's Fall?

Lol at people thinking no FF7R news at E3 because no Sony conference
 
DarkLordMalik

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While I doubt that consolidating all 11 divisions into one will impact game releases, isn't that a major news?
 
ILikeFeet

ILikeFeet

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FF7 ain't gonna be seen for a while. Maybe next year. Consolidating all those divisions makes me think their output would lower a bit. Wonder what that means for Asano's team
 
JB2448

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IDreamOfHime said:
I'd rather they unveiled FF16 at E3 than dragging that remake weekend at bernies corpse out again.
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I'd rather they release the first part of this fucking project before announcing another one that'll take forever and further erode consumers' confidence in the brand and the company. Shorter time from announcement to release is key across every franchise in Square Enix's portfolio now. Dragon Quest, Final Fantasy, and Kingdom Hearts can no longer be exceptions to the rule.
 
Jessie

Jessie

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Oct 27, 2017
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Condensing business divisions is horrible, horrible news. Most of their business divisions have horrible leadership, and their best outputs come from a few shining stars.
 
Mesharey

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Well, I guess TR was successful, no one talks about it even though it's a lot of fun, probably because it's more of the same.
 
Sho_Nuff82

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Nov 14, 2017
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Glad to hear that Tomb Raider eventually did well. I'll pick it up eventually as the reviews seem solid.
 
K Samedi

K Samedi

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Avengers makes sense for 2019 and a possible FF7 remake and some Switch ports.

Regarding Tomb Raider, that game had a 100 plus million budget and with advertising costs it would have to sell at least 7 million copies at full price to make a decent return on investment. The moment I saw the game and heard of its budget I was like, yeah you're not going to turn a profit on that one. If you make 100+ million dollar games you want it to be game of the year quality stuff. I don't think they will ever go that high with Tomb Raider again.
 
Oregano

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ILikeFeet said:
FF7 ain't gonna be seen for a while. Maybe next year. Consolidating all those divisions makes me think their output would lower a bit. Wonder what that means for Asano's team
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That's my concern. Consolidation doesn't sound good for a team that has been making mid sized games for Nintendo platforms...
 
CocoaFusion

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Definitely FF7R given what we know of its development. Nomura and Kitase already plainly hinted at its marketing road starting this year on several occasions and I don't have much reason to doubt them on that. E3 to a Q1 2020 Release also lines up with their shorter marketing to launch.
 
OP
OP
Koozek

Koozek

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Oct 25, 2017
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DarkLordMalik said:
While I doubt that consolidating all 11 divisions into one will impact game releases, isn't that a major news?
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"Into one"? It's four.

twisted heart said:
After what we heard about FF7 remakes development were not getting that game anytime soon.
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Well, this is what we've heard since last year now and fwiw it's apparently going well according to Kitase, Hamaguchi, Hashimoto, and SE's president Matsuda (also Uematsu accidentally leaked that at some point FFVIIR was actually supposed to release in 2018, lol):

Jan 2018:
Kitase-san mentioned that the game's development is going well. Asked his goal for 2018, he explained that about the remake he'd like to work on "comfort," also playing on words by mentioning that on a personal level hopes to take it easy (using the same word, "raku" which means "ease" or "comfort") if possible.

Source.
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Feb 2018:
Hamaguchi goes on, after Nomura leaves, to comment on the long draught of info since the first trailers, and apologizes. He goes on to say that the project has moved completely in-house, and is again, progressing very smoothly. At the current point they're at the stage where they're basically cramming a bunch of stuff into the game, but once they hit the stage of polishing up the look of things and can deliver something with suffuciently high quality, they will be releasing new footage.

He anticipates this will be in the near future due to how smoothly things are progressing.

Kitase then signs us off by making the joke previously mentioned in the thread, saying he wishes to keep on polishing up the game for the 35th anniversary, to which they all laugh and Hamaguchi responds objectingly "Hey that's a long ways off!"
He then however, also goes on to say that a lot is hanging on the next (presumably big) event, and that they're hoping to show off (the game) by then.

Source.
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June 2018:
It's been three years since we've seen anything from Square Enix regarding its episodic remake of Final Fantasy VII. The game was a no-show again at E3 this year, but it remains in development, according to Tetsuya Nomura, who has a hand in the title along with directing Kingdom Hearts III. "We are developing [Final Fantasy VII] in parallel, and it's not just in the early concept stages," he tells The Verge. "We are actually in development."

The longtime Square Enix developer says he's been giving equal effort to both highly anticipated games. "So right now, it's like I've been putting in 100 percent into Kingdom Hearts, 100 percent into Final Fantasy VII, 100 percent into Kingdom Hearts... just going back and forth," he says. "It's just like [working on] two titles is just going to be one [after Kingdom Hearts III's launch]. That's pretty much how I see it."

Source.
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June 2018:
Final Fantasy VII Remake director Tetsuya Nomura commented on the status of the game's development in the latest issue of Weekly Famitsu.

Here are the tidbits:
"We're trying to figure out when we will put out the next news release."​
"Production is going well."​
"The scenario will also delve into the members of Avalanche."​
"[Development] is moving along more than expected, so please wait for the next news release with peace of mind."​

Source.
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June 2018:
Square Enix Holdings 38th General Meeting of Stockholders [June 2018]

Question: Regarding Final Fantasy VII Remake, it's been three years since it was announced at E3 2015. About what percentage has development progressed?

Shinji Hashimoto: "I can't say a single word about that. As it has been reported, we took a second look at the development structure and continued from there. It's certainly hitting its milestones accordingly."

Yosuke Matsuda: "There is a lot being said about it, but it's progressing as it should so please don't fret. Things are coming along well."

Source.
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June 2018:
When asked about Final Fantasy VII Remake during a recent interview, director Tetsuya Nomura said he acknowledges that there's been some fake news [Likely about the rumored 2023 release window] and fans may feel uneasy about it but he said the development is going favorably and solidifying.

However, Nomura said that the lack of new information on Final Fantasy VII Remake has nothing to do with its development Status. According to the director, the reason for this is because Square Enix is prioritizing the release of other titles, including Kingdom Hearts III.

Square Enix is currently looking ahead for a possible timing to release new information on Final Fantasy VII Remake, and Nomura asked fans to wait a little while longer. Kingdom Hearts III releases in January 25-29, 2019, so hopefully we'll get a more steady flow of news on the game after its release.

Source.
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Dec 2018:
Nomura:

Keyword: 7

Thoughts: Various presentations to be released.

Kitase:

Keyword: Long-awaited!

Thoughts: Development on Final Fantasy 7 Remake is progressing smoothly! I would like to try hard to meet the expectations of fans.

Source.
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Linus815

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I think Tomb Raider is here to stay, but will probably be scaled down in terms of budget, which actually might not be a bad thing for the games themselves. Shadow's focus on more puzzles and exploration is a good way forward
 
Kaz Mk II

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I would love for FFVII (part 1 or whatever) to come this year just so some people cant stop meeming that it's vaporware and never coming out.
 

Deleted member 41931

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Those Tomb Raider sales are rough. At least with Rise they had Microsoft's partial funding. Sad to hear JC4 didn't do well. I have to wonder what their expectations where because they didn't give it much marketing or budget.
 
Masagiwa

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Koozek said:
Dec 2018
Keyword: 7

Thoughts: Various presentations to be released.

Kitase:
Keyword: Long-awaited!

Thoughts: Development on Final Fantasy 7 Remake is progressing smoothly! I would like to try hard to meet the expectations of fans.
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Dem teases!

Ethifury said:
Isn't Bablyon's Fall and the Avengers project due for a reveal now? I hope they're at E3
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Considering they stamped 2019 at the end of the Babylon's Fall trailer, yes. I wonder how big the project is. We have literally seen or heard nothing about it outside of the announcement trailer.
 

Deleted member 18742

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Damn we might actually get to play FFVII remake in a year wow

I hope SE secretly decided to not make it episodic behind the scenes.
 
Dirtyshubb

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To those saying avengers is more likely then ff7, how so?

I mean at least we have seen actual gameplay from 7 instead of just an announcement cgi video with avengers.

Hell we don't even know what type of game avengers will be.
 
huH1678

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It's going to be weird have FF7 release in parts in 2 separate generations. Assuming it part 1 actually gets a release date soon.

Also sounds like the holiday sales saved tomb raider after week initial sales, explains the 50% off not even a month(?) after release.

Consolidation of all their separate divisions doesn't sound great for their non AAA efforts.
 
CaviarMeths

CaviarMeths

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My guess for the restructuring:

- BD1-3 being reshuffled into two divisions for their internally developed flagship games.
- Producer-lead projects like Asano's stuff, DQ, and Nier into third division.
- Mobile in fourth division.
 
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