Square Enix Adopts Ambitious Multi-Platform Approach Amid 70% Profit Decline

Square Enix has released its financial results for the fiscal year ending March 31, 2024, which fell short of expectations. In response, the company is implementing a new strategy aimed at achieving 'stable profit generation' in its digital entertainment segment by 2027. Key financial highlights include net sales of ¥356 billion, up 3.8% year-over-year, and operating income of ¥32.5 billion, down 26.6% year-over-year. Despite a slight increase in digital entertainment sales, driven by the HD Games sub-segment, the company's MMO and Games for Smart Devices/PC Browsers sub-segments both experienced declines. Higher development costs, advertising expenses, and content valuation losses contributed to operating losses in the digital entertainment segment. The company's previous forecasts were not met, partly due to weaker HD game sales and recognition of valuation and abandonment losses associated with its content production account. Square Enix's new 'Square Enix Reboots, and Awakens' strategy involves a three-year plan targeting long-term growth, enhancing productivity, and releasing titles more regularly by optimizing its development footprint. The company will also pursue an aggressive multi-platform strategy, expand digital sales, and develop its IP across multiple media and markets. Additionally, it plans to rebuild its overseas business divisions and make strategic investments to expand into new domains. For the fiscal year 2025, Square Enix expects to increase its operating income to ¥40 billion and achieve a consolidated operating margin of 15% by the fiscal year ending March 31, 2027.