When Only Tens of Millions Will Suffice: Square Enix’s Expectation Problem.

The AAA game industry is unquestionably a hit-based business and consequently that means there isn’t a lot of room in the market for dozens of companies to compete successfully. Whilst there are many companies making a rather good living from such games, able to deliver title after title that will sell 10 million+ copies, they’re predominately sequels in established IPs who’s success stems largely from their dedicated fan base. Smaller publishers with larger aspirations are still quite numerous though with many of them burning through untold amounts of capital in the hopes of replicating such success. As far as I can tell this way of doing business isn’t sustainable but that doesn’t mean that quality titles have to disappear.

Square Enix Sales FY2013

Square Enix recently published its sales figures for its last 3 big hit games and for plebs like me they don’t look too shabby. Indeed there are many titles I know of with lesser sales figures that were considered wildly successful and I’m not just talking about runaway indie hits. Heavy Rain, for example, would be considered easily around the same level of quality as any of the above titles and it has managed to snag some 2 million sales over the course of its life. Quantic Dream had said previously that their expectations were more around the 200~300,000 mark so the order of magnitude increase was completely unexpected, showing that big sales aren’t required to produce polished games. Turning back to Square Enix then you have to wonder what drove them to expect much higher sales, especially in light of their past performance.

I think the main reason is the amount of capital they invest in these titles, thinking that will have a direct causative effect on how many sales they’ll get out of it at the end. Whilst this is true to a point I don’t think that Square Enix is doing this efficiently as whilst their games are objectively good (on par with those who’s sales are much higher) most of them simply lack the dedicated community which drives those massive sales. In that regard then Square Enix needs to drastically cut either its overall sales expectations and rework their game development budgets accordingly because if selling multiple millions of copies isn’t profitable¹ then you’ve got to seriously reconsider your current business practices.

Indeed I feel this is a major issue with the games industry today. Many of the bigger titles are developed with big sales in mind and that means both developers and publishers aren’t willing to take risks on titles that might not perform. Sure we get a few token efforts from them every so often but it’s a sign of how little innovation there is from the big guys when the indie developers are able to churn them out by the truck load. I’m not saying its better or worse if either side of the industry does the innovation, more that the big developers and publishers are stuck in a rut of churning out sequels or, in the case of Square Enix, thinking they’ll make it big if they copy the formula.

¹They haven’t said that any of these titles weren’t profitable but their predicted $138 million dollar loss this year would seem to indicate that none of them were. The loss could also be heavily influenced by the redevelopment of their failed Final Fantasy MMORPG FFXIV, but the breakdown didn’t go into this unfortunately.

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