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Investor Relations

To Our Shareholders

Business Segment Overview
Digital Entertainment

Net sales rose from the previous year to ¥204.5 billion while operating income fell to ¥29 billion at the Digital Entertainment segment in the fiscal year ended March 2019. The HD (High-Definition) Games sub-segment released “SHADOW OF THE TOMB RAIDER” and “JUST CAUSE 4,” the latest installments in these major franchises from our Western studios. With competition intensifying in the AAA game market, both titles struggled immediately after their launches, resulting in initial sales well below our plans. However, thanks to subsequent sales promotion initiatives, we are in the process of making up for that initial shortfall and intend to continue to add to sales during the course of the fiscal year ending March 2020. Our Japanese studios meanwhile released titles including “KINGDOM HEARTS III,” “LEFT ALIVE,” and “OCTOPATH TRAVELER.” Our customers around the world had especially high expectations for “KINGDOM HEARTS III” as it was the first new installment in that franchise since the release of “KINGDOM HEARTS II” approximately 13 years earlier. The response to the game was excellent, and although we did not release it until our fourth quarter, it contributed significantly to the achievement of the ¥270 billion in sales we had targeted in the fiscal year ended March 2019. “OCTOPATH TRAVELER” is a brand-new RPG (role-playing game), and its artistic style, gameplay, and plot were well received by RPG fans the world over. The game represents the successful creation of a new piece of IP (intellectual property). The creation of new IP and new franchises is the core business of game and content companies. We need to constantly maintain development investment with the goal of establishing new pieces of IP. “OCTOPATH TRAVELER” is the result of our sustained efforts to create new IP, and we have high expectations for its further growth and development.

OCTOPATH TRAVELER© 2018, 2019 SQUARE ENIX CO., LTD. All Rights Reserved.

SHADOW OF THE TOMB RAIDERSHADOW OF THE TOMB RAIDER © 2018 Square Enix Ltd. All rights reserved. Published by Square Enix Co., Ltd. SHADOW OF THE TOMB RAIDER and TOMB RAIDER are registered trademarks or trademarks of Square Enix Ltd.

JUST CAUSE 4JUST CAUSE 4 © 2018 Square Enix Ltd. All rights reserved.
Developed by Avalanche Studios AB (Fatalist Production AB).
JUST CAUSE, SQUARE ENIX and the SQUARE ENIX logo are registered trademarks or trademarks of the Square Enix group of companies. AVALANCHE and the AVALANCHE logo are trademarks of Fatalist Entertainment AB. All other trademarks are the property of their respective owners.

KINGDOM HEARTS III© Disney. © Disney/Pixar. Developed by SQUARE ENIX

Net sales at the MMO (Massively Multiplayer Online game) sub-segment fell as no new expansion packs were launched for either “FINAL FANTASY XIV” or “DRAGON QUEST X,” but we worked to maintain and grow our subscriber base via ongoing operational initiatives. In the fiscal year ending March 2020, we will launch expansion packs for both “FINAL FANTASY XIV” and “DRAGON QUEST X” and work to grow our subscriber base further.

FINAL FANTASY XIV© 2010 - 2019 SQUARE ENIX CO., LTD. All Rights Reserved.

DRAGON QUEST X ONLINE© 2012-2019 ARMOR PROJECT/BIRD STUDIO/SQUARE ENIX All Rights Reserved.

Romancing SaGa Re;universe© 2018, 2019 SQUARE ENIX CO., LTD. All Rights Reserved.
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ILLUSTRATION: TOMOMI KOBAYASHI

As with the HD Game sub-segment, the Games for Smart Devices/PC Browsers sub-segment struggled considerably in the fiscal year ended March 2019. “Romancing SaGA Re;univerSe,” which was launched in December 2018, got off to a good start, contributing significantly to both sales and profits in the fourth quarter. However, we saw weak performances from all of the other new games we launched between the beginning of the fiscal year and the third quarter, resulting in extremely disappointing sales and profit figures for the sub-segment as a whole. We maintain our strategy of launching new titles to offset waning performances by existing titles and thereby growing our overall portfolio, but we deeply regret that we were unable to satisfy our customers with our new titles. It is true that the maturing of the smart device game market in Japan has made for more intense competition, but new titles that meet with customer approval continue to appear on the scene. We attribute the sluggish performance of this sub-segment in the fiscal year ended March 2019 solely to our inability to provide our customers with new, fun gaming experiences and take this fact to heart. In light of these results, we have undertaken a major overhaul of how our development functions are structured at SQUARE ENIX CO., LTD. We hope that you will look forward to our forthcoming releases.