Square Enix Reports Profit Drop as Key Franchises Continue to Sell Over Time

Since we've become some fans of financial reports, we were giddy when we noticed Square Enix released [PDF link] its earnings for the six-month period between April and September 2010.

In that period, the Japanese development and publishing giant reported net income of ¥1.723 billion ($21.4 million) versus ¥2.68B ($33.1M)--a 35.7 percent drop over the same period a year ago.

According to the report, net sales were below forcasts; however operating income was higher than expected due to "highly profitable carryover sales" of major titles released in March 2010. What was the big winner in March for Square Enix? Final Fantasy XIII, which sold over five million units globally during the last reported period [PDF].

In the six-month period (ending September 30), Square Enix released five major titles to market with varying levels of success: Dragon Quest Monsters - Joker 2 for the Nintendo DS led, selling 1.28M units in Japan; Kane & Lynch 2: Dog Days sold 560 thousand (K) units worldwide; Final Fantasy XIV on PC sold 630K units worldwide since launching on September 21 in Japan; and Just Cause 2 sold 560K worldwide between April and September after launching at the end of March.

Kingdom Hearts: Birth By Sleep for the PSP managed to sell 510K units worldwide in the same period; however, it should be noted that the game first released in Japan in January with Europe and North America seeing the game hit store shelves in the beginning of September.

Square Enix notes that by the end of its fiscal year--concluding in March 2011--it must "strengthen" its "business framework" in North America and Europe as well as its emerging market business, citing China specifically. The company also calls for a need to expand its intellectual properties with "cross media deployment" as well as create new "AAA brands." To be fair, they pretty much say the same thing in every holdings report.

Square Enix continues its strategic partnerships with Western publishers, once again handling Japanese distribution of the Call of Duty brand for Activision. Black Ops is scheduled to arrive in Japan on November 18.