Final Fantasy 7 Rebirth and 16 profit didn’t “meet expections”

To say the recent form of Square Enix has been like a rollercoaster would be a nice way of putting the C-suite’s poor decisions. The Japanese publishing giant in recent years has gone down the blockchain and AI rabbit hole, not just once but also “triples down” and further ratifications of this sentiment to do questionable things. All of which is easily contributable to the neverending desire for constant growth and uninterrupted profit for shareholders. However, even with the release of Final Fantasy VII Rebirth earlier this year and Final Fantasy XVI last summer, the publisher and developer seem disappointed by sales and profit.

In Square Enix’s yearly financial reports, thanks to Eurogamer for spotting it, it tells us that according to Square Enix president, Takashi Kiryu, both games “unfortunately did not meet our expectations.” For those that don’t want to read the full financial report, because you aren’t weird or something, it is about halfway down on page 2 of the Outline of Results Briefing held earlier in May but not published until this week. Kiryu goes on to say, “Despite the release of Foamstars and Final Fantasy VII Rebirth in Q4, initial sales were not as strong as expected, in addition to which an impairment was made to the content production account, resulting in the operating loss.”

As I say, these comments were made in May, when Rebirth was only out for three months or less, and XVI was almost out for a full year by this point. Nonetheless, aggressive strategies have been employed since this briefing and these comments. The same day of this briefing, Square Enix confirmed layoffs would occur in the US and EU “as part of [a] restructuring,” according to VGC in May.

Doing a little digging, Final Fantasy XVI sold over 3 million units in its first week. The only reported units sold for Rebirth are from Famitsu, which reported in the first week, the game sold 262,656 units in Japan. Speculation seems to be that Square is unwilling to acknowledge the number of sales publicly as analysts reportedly speculate it sold less than expected due to the PS5 exclusivity. If that’s the case, then what’s the excuse for Clive’s My Chemical Romance adventures?

I guess what I don’t understand here is that among all the buzzwords and quotable bits about not meeting profit expectations, the numbers seem to be decent in a number of cases. On page one there is a bit about consolidated sales being up ¥13.1 billion Year-on-Year to ¥356.3 billion.

Ok, the Yen isn’t doing fantastic, the exchange rate at the time of writing is about $1 = ¥140-ish, but there is still money being made. With digital sales supposedly 3.8 million to 26.32 million sales, and “The Merchandising segment posted net sales of ¥18.9 billion (up ¥3.3 billion YoY) and operating income of ¥5.6 billion (up ¥1.9 billion). Sales were strong of merchandise based on key IP including Final Fantasy XVI, Final Fantasy VII Rebirth, and other new titles launched by the HD Games sub-segment in FY2024/3.” However, “Operating income and net income were at their lowest in the three years.”

Net income in 2021 was reported at ¥26.94 billion, which converted today would be about, $189,142,225. Meanwhile, in 2020 operational income would be around $229,582,433. This isn’t perfect in the eyes of people who wear ties and golf, and explains why this is the first public acknowledgment that the company has made of the sales on Final Fantasy VII Rebirth. It is hardly alarm bells, the ship is sinking, and so on, but might explain what is going on with (historically) the biggest purveyor of the JRPG.

It is also important to say that a lot has changed in the four months since this briefing. Just this month Final Fantasy XVI was released on PC more than a year on from its PS5 launch; to which I’m not saying it shot the game to number 1 in sales. However, we also have to assume there will be an Intergrade (or whatever) version of Rebirth as there was with Remake in 2021 for PC as well. Which is certainly what I’m waiting for, along with the third (hopefully final) part of the Remake, Rebirth, and Reprise/Rince and Repeat saga on PC.