Square Enix's portfolio of AAA single-player games in a highly competitive market could spell a "very tough" year ahead.
Square Enix's latest profit announcement reveals the company expects to incur significant losses, partly due to slow sales of major console releases in North America and Europe. Videogame analyst Billy Pidgeon believes that Square Enix has painted itself into a corner with its focus on single-player focused titles, and he predicts that this points to a "very tough" year ahead for the company.
Pidgeon, an independent industry analyst previously with M2 Research, thinks that Square Enix has a difficult task ahead trying to make their big budget console franchises successful. "The AAA market is extremely competitive," he told GamesIndustry. "Most of Square Enix's franchises are single player games, which are less popular than multiplayer. Square Enix has been a leader in that sector, but now faces stronger competition from multiple publishers, both large and small, including Bethesda, Capcom, Xseed, Atlus and Level 5."
He explains that the company's franchises, including Hitman and Tomb Raider, are well established, but require progressively higher budgets to exceed expectations. Hitman: Absolution and Tomb Raider managed to sell approximately three million units and earned aggregate review scores of approximately 80%, but Pidgeon still thinks the titles fall short. "For games with development budgets approaching $100 million to be truly profitable, ratings have to be above 8.5 and sales need to be in the five to ten million unit range," he says.
Pidgeon did make some positive observations for the company, though. He saw Yoichi Wada's departure from his role as President as a good thing, encouraging positive changes ahead. He also noted that Square Enix had invested in online, social and mobile games, some of which have performed well in Korea. However, it may take some time for the company to realize any profits from these ventures.