Low sales and rising development costs push Square Enix to $67.6M loss for first six months of 2012 fiscal year


By Kathleen De Vere Comment

Japanese developer and publisher Square Enix posted a loss for the six month period between April 1 and Sept. 30, 2012.

While the company reported net sales of 61 billion yen ($763.8 million), an increase of 6.2 percent over the same period in 2011, it reported an operating loss of 5.2 billion yen ($65.1 million), and a net income loss of 5.4 billion yen ($67.6 million).

By comparison, between April and September 2011, the company’s operating income was 7.3 billion yen ($91.4 million), good for a net income of 3.7 billion yen ($46.3 million).

Square Enix’s digital entertainment business (the division that includes both mobile and console games) saw net sales of 30.7 billion yen ($384.4 million) between April and September, and an operating loss of 2.08 billion yen ($26 million). The company blamed the loss primarily on its console titles, explaining sales have fallen short of expectations.

While Square highlighted the performance of its Mobage smartphone game Final Fantasy Brigade, saying the game continues to post favorable results and is seeing revenues growth on a quarterly basis, increases in development costs have stagnated the title’s profitability. Square did not report information on any of its other smartphone titles.

Aside from mobile ports of classic back catalogue titles, the company’s smartphone offerings have continued to struggle internationally. The company’s recent casual adventure title Wizardlings was a flop, the company’s English-language card battle game Guardian Cross hasn’t been able to compete with similar titles from A-Team or DeNA. According to our app tracking service AppData, it is currently the No. 172 top grossing role playing game on iOS.

The company’s stock is currently trading at 1,074 yen ($13.44), giving Square Enix a market capitalization of 123.9 billion yen ($1.5 billion), down 14.7 percent from August, when the company had a market cap of 138.8 billion yen ($1.76 billion).