Shares of Square Enix Holdings Co. fell 16% in its biggest drop in 13 years after its president said sales of its latest big-budget games had disappointed and that it would take years before a recent restructuring would bear fruit.
Sales of Final Fantasy VII Rebirth, Final Fantasy XVI and Foamstars, all released exclusively for PlayStation by Sony Group Corp. in the previous fiscal year — fell short of the Japanese game publisher’s revenue and profit expectations, Takashi Kiryu told analysts the previous year. day. The company expects an operating profit of ¥40 billion this year, well ahead of analysts’ average estimate of ¥57 billion. Sales and dividend forecasts also fell short of expectations.
Shares of Square Enix fell to a four-month intraday low on Tuesday.
Kiryu, 48, revamped the company’s structure around big-budget games and ditched many in-development games for mobile devices and consoles to focus on quality over quantity. The publisher is also moving away from its practice of releasing its top-tier games first on PlayStation and will make them available on as many platforms as possible, including Nintendo Co.’s platforms, Xbox and Microsoft Corp.’s PC, Kiryu said. .
But it will take time for those efforts to translate into sales, he said.
“It might be great that a company has overhauled its game development pipelines and is rebooting the company, but what do they have to sell this year and next?” This was stated by Toyo Securities analyst Hideki Yasuda. Jefferies analyst Atul Goyal downgraded his recommendation on the stock to underperform and cut his price target to ¥4,600 per share.
Kiryu’s comments suggest that the company has failed to increase sales of Final Fantasy XVI, which investors had expected to boost earnings after its release last June. After the game’s lukewarm reception in its first week of sales, Kiryu said that the company plans to maintain the game’s sales in the long term. There is no sales data for Final Fantasy VII Rebirth and Foamstars.
Square Enix’s mobile games have also struggled, with many titles being shut down in just over a year due to poor sales. “Our winning formula no longer works,” Kiryu said. “It took us a long time to correct course.”
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