Square Enix remains profitable despite losses of its gaming division

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Square Enix has released its latest earnings report, and despite the gaming side having been loss-making for the last two consecutive quarters, the company has managed to achieve year-over-year growth while remaining profitable. Over the nine months ending December 2020, Square Enix reported a 33.7% increase in net sales compared to the same period in 2019.

This boosted the company’s operating income by 47.7% to 41,022 million yen and while profitable, those figures were 4.3% lower than in 2019. Final Fantasy VII Remake proved to be a big hit for Square Enix as the Q1- release saw net sales more than double that of the company’s best period in 2019, accounting for 34.1 billion yen.

The second and third quarters of the year were less successful, however, as Square Enix suffered from a decline in net sales and operating income despite earning 18.8 billion yen during that period. During this period a loss of about 5 billion yen was recorded.

This drop in earnings is in line with the release of Marvel’s Avengers in Q2, which not only had lukewarm reviews, but also struggled to build a healthy player base and sold below expectations. Sales on MMO games such as Final Fantasy XIV and Dragon Quest X also declined in 2020, but the division still managed to remain profitable thanks to the revenue players generated in those games.

Marvel's Avengers
Marvel’s Avengers

Net sales and operating income increased year over year for games on smart devices and PC browsers, with Dragon Quest Walk, Final Fantasy Brave Exvius and Dragon Quest Tact proving to be standout titles. COVID-19 resulted in a terrible Q1 for Square Enix’s entertainment and arcade operations, but by the third quarter, these divisions were returning to profitability. The segment still posted an overall operating loss as a result of the mid-June shutdowns in an effort to combat the COVID-19 pandemic.

At the beginning of February, many other companies have started to record financial results. PlayStation has had a blockbuster year with 4.5 million sales of the PlayStation 5 around the world, while EA also has plenty of reasons to smile, as the Star Wars license has earned more than $ 3 billion for it to date. company.

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