Square-Enix Slashes 2006 Profit Expectations

Japan’s largest creator of RPGs today slashed its annual profit expectations, citing problems with its strategy behind online titles and lower then expected sales of several key releases.. Initially Square-Enix predicted net profit for the year ending March 31st 2006 to stand at 17.5 billion yen (£83.8 million), however now the second largest Japanese publisher behind Nintendo expects this figure to drop heavily to 10 billion yen (£47.9 million). Operating profits have been cut to 15 billion yen (£71.8 million) from 29 billion yen (£138.8 million), whilst its revenue forecast has been reduced to 125 billion yen (£598 million) from 136 billion yen (£650.6 million).

Citing failed attempts to nurture their online strategy with titles such as EverQuest II and Front Mission Online, Square-Enix president Yoichi Wada told a press conference of the need to consider changing their business model for such titles, but claimed that Final Fantasy will continue to grow. Suggesting that less emphasis will be laced on epic online experiences, Wada-san claims the Japanese publisher will look at lighter online titles as a result.

Perhaps of more concern is the fact that Final Fantasy XII hasn’t met expectations upon its first month of release in Japan. Despite garnishing a perfect 40/40 from Famitsu, Square-Enix was forced to reduce the price of the title due to adverse market conditions, whilst all titles released prior to September failed to meet sales expectations.

Source: TVG