Today in gaming: Kings of the sequel/AAA power house Square Enix -- developer and distributor of games like Final Fantasy, the MMO Dragon Quest X, and their gritty yet exquisite Tomb Raider reboot game -- have announced the financial losses for Q1 of 2013 that we've known were coming.
And they are not pretty.
Despite net sales being up 15.7% (147B yen from 127B yen), total net income for the company was down big. In the period ending March 31, 2013, the company lost 13B yen -- the equivalent of $134,750,000US.
Now, Square Enix has plenty of cash, so they are not in any trouble. However, this is why their CEO Yoichi Wada was asked to resign back in March. These losses are despite the fact that Tomb Raider (2013) was a stand-out success, selling well over three million copies before the end of Q1. Problem is, Tomb Raider came out late; it was originally scheduled for Q4 of 2012.
They were banking on a lot more money from Tomb Raider and it never came. Nor should it have come; they were asking too much from one title.
So the question remains: what went wrong? As in any large business, the problems are systemic and come from various areas. One of the big problems was the release of several amusement games (physical video games that you play while you're waiting around in the mall) that tanked. But there's an even bigger problem.
Meet the bigger problem. This is CORE Online -- a "free-2-play" service that allows users to play Square Enix games live through their browser. Which games? Well, there's six of them. That's it. Just six games. Why aren't there more? Well, for two reasons:
Reason #1 - No One Has Heard of It
The idea of playing a 3D game in a browser is a novel one and has lots of potential. PC gaming is returning to the front of the pack because the console makers got greedy and held back their new hardware for too long. So they timed it just right. But have you played this thing? Probably not. It's user count is abysmal and it is soaking up huge gobs of money -- as a "beta" -- hoping to revolutionize the way Square Enix distributes their games.
That's the key. This is about distribution. They were hoping to get all of the expense of shipping physical games around the world off the books. Tomb Raider would have made a crazy fortune if it didn't have to be shipped anywhere. So not only do they still have to spend money to ship titles, but now they have to spend money to support a games client that isn't being used.
And it's not working. Why not?
Reason #2 - It's Only Got Six Games
Two Hitman games, two Laura Croft games, Gyromancer, and Mini Ninjas. That's it. And if you're not in the mood to murder people in cold blood or look at Laura's boobs, that leaves you with two games. Who would pay monthly for that? Remember, the free service is to play the game for 20 minutes at a clip. No one in their right mind would do that. Is there a single mission in any Hitman game that you would want to rush through in 20 minutes? Right. So, this is a paid service.
By the way, I physically went in (via Facebook) to see how the system works, and it turns out if you want to pay $4.99 for the title, you only have a choice of three of the six: both Hitmans and Tomb Raider Underworld.
Bigger picture: how many 3D games could one company -- even Square Enix -- possibly put out in a year? Half-dozen? Maybe ten? And they wouldn't be good; they'd be rush jobs.
This company needs to reach out to other developers to add content to this service or close it down. Maybe design one or two games that, you know, you can play in 20-minutes.
Thoughts like "let's build a proprietary games client" are going to sink this company. And that's why Wada was fired -- to change the thinking at Square Enix and send them in a new and (hopefully) profitable direction again.