Earlier this month in Japan, Square Enix held a briefing for investors. This week, the Tokyo-based game company finally released an official transcript of the meeting.
During the presentation, Square Enix President Yosuke Matsuda said, “The HD Games subsegment posted an operating loss as initial sales of Marvel’s Avengers were lower than we had expected and unable to completely offset the amortization of the game’s development costs.”
How much was this loss? When addressing Matsuda, one participating investor estimated the loss was 7 billion yen ($67 million)—an estimate that Matsuda did not refute. The same participant asked if the HD Games subsegment would have been profitable if Marvel’s Avengers had sold enough to cover those development costs, seemingly unable to believe the loss was too large to simply be due to lackluster Avengers sales.
“Absent factors associated with Marvel’s Avengers the subsegment would have been in the black,” Matsuda replied. “In addition to the amortization of that game’s development costs, another significant factor associated with the title was the fact that we undertook a major advertising campaign at the time of its launch to make up for delays in our marketing efforts resulting from the covid-19 pandemic.”
According to Matsuda, a “certain amount of development costs” remain, but Square Enix hopes to recoup those costs by increasing sales. The game is getting DLC next month, while the PlayStation 5 and Xbox Series X/S versions of the game have been delayed to next year to improve the game.
“Our intention is first and foremost to work to expand sales in order to improve its profitability.”
Matsuda was also asked if there were reasons for these unexpectedly low sales or if something could’ve been done, to which he replied, “We engaged in ample preparations ahead of the launch, but it is true that there were aspects in which we were wanting. We intend to leverage the lessons we learned from this experience in future game development efforts.”
If you haven’t read it, be sure to check out Kotaku’s review right here.