Square Enix have made a reported $61.23 million USD loss in their last quarter from HD games; with the only notable game in that period being Marvel’s Avengers.
The news comes via Square Enix’ second quarter fiscal results [1, 2, 3]; particularly page 9 of the Results Briefing Session. Therein, it shows that while net sales for HD games were ¥23.7 billion JPY, operating income was at a loss of over ¥5 billion JPY.
While not declared, the graph indicates this could be around ¥6.25 billion JPY; though analysts have put this as high as ¥6.5 billion JPY. At this time of writing, ¥5 billion JPY would equal $47.1 million USD (with ¥6.25 billion JPY equaling $58.875 million USD, and ¥6.5 billion JPY at $61.23 million USD).
As the financial results were released on November 6th, the only major release that could qualify as HD for the prior quarter (September, October, and November 2020) was Marvel’s Avengers. The game launched September 4th for Windows PC (via Steam), PlayStation 4, Xbox One, Google Stadia; and will launch Holiday 2020 for PlayStation 5, and Xbox Series X.
The game received middling scores from critics, and harsh scorn from players [1, 2, 3]. Our own review stated “at its highest highs, Avengers is generic.” This was furthered hindered my microtransactions, rarely having enough in-game money to buy want you want (tempting you to buy more), and an out of place loot and leveling system.
Developer Crystal Dynamics had stated they were confident in Windows PC players returning despite dwindling active-player numbers; to the due to new upcoming content and improvements.
David Gibson, co-founder of Astris Advisory Japan KK, tweeted that Square made a ¥6.5 billion JPY loss on HD games that quarter; “driven” by Marvel’s Avengers, at that the game sold 60% of estimated sales goals. The latter was not mentioned in any of Square Enix’ financial reports.
Further, Gibson estimates the games’ development costs were $170 million USD to $190 million USD; along with his thinly veiled condemnation of the game not being cancelled and at Square Enix’ positive outlook on the game’s future.
Square Enix – reported Yen6.5bn loss for HD Games driven by Marvel Avengers, would not say how many sold but that volumes were 60% of plan. Implies game cost over $100m to make but only sold 3m or so. Ouch
Marvel Avengers- it looks like the total cost of the game is closer to $170m-$190m given they only expenses 70% of cost in the qtr plus marketing costs. Why someone didn’t say stop post the multiplayer beta will remain a mystery . Square are adamant they can make a recovery ….
It is worth noting other factors may have also caused costs of development, marketing, and more to inflate. Square Enix have announced one of their staff at their Tokyo HQ has tested positive for COVID-19 in April of this year, not to mention the pandemic causing quarantine orders creating hindrances to almost all businesses.
The situation mirrors Anthem; another big-budget “live-service” game that was poorly received by players and critics, that failed to reach Electronic Arts’ sales goals on launch, and with developer BioWare attempting to improve the game with major overhauls.