Square Enix HD Games division posts $63M loss

Square-Enix-Hd-Games-Division-Posts-$63M-Loss

Square Enix has now reported that their HD Games business did not turn a profit. Even worst, the department lost as much as $63 million.

Marvel’s Avengers was still a big seller on its tumultuous September release. Even then, it was not enough to tank the costs sunk into Square Enix’s HD games division. The unit lost a ton of money, all thanks to the much lower volume sales than expected.

Marvel’s Avengers cost too much to make

Square tried to push their HD games division to a very productive year. Amidst the pandemic, the Japanese giant should have made a ton of money on their titles.

Some of the games they released include Marvel’s Avengers, Trials of Mana, and Final Fantasy 7 Remake.

According to reports, the division estimated a loss of 6.5 billion yen during the latest period. It equates to as much as $63 million net loss.

The net sales for the division were high, going at 23.7 billion yen or $230 million. The problem for the team was the cost of goods sold, which was way higher than expected.

It seems Marvel Avengers is the game that broke the division. It’s no doubt that Final Fantasy 7 Remake was a big draw. Even then, Avengers was too expensive to develop for how much it sold.

“Square Enix – reported Yen6.5bn loss for HD Games driven by Marvel Avengers, would not say how many sold but that volumes were 60% of plan. Implies game cost over $100m to make but only sold 3m or so,” said David Gibson, co-founder of Astris Advisory Japan, who broke the news.

“Marvel Avengers- it looks like the total cost of the game is closer to $170m-$190m given they only expenses 70% of the cost in the qtr plus marketing costs. Why someone didn’t say stop post the multiplayer beta will remain a mystery . Square are adamant they can make a recovery.”

Avengers game in deep trouble with forgettable service

So far, Square Enix is reeling from the sudden net negative of their HD games division. It also doesn’t bode well for Marvel Avengers as a service game.

The Avengers title, which was a heavily hyped title, went through a rough September. Even then, it was able to push through and fight back, eventually earning enough. The game, however, is unbelievably dead right now.

Marvel’s Avengers does not even break through the top 100 games played on Steam right now. It only garners between 400 – 800 players every day, with a peak of almost 1200 players daily.

Marvel’s Avengers will come to the next-gen consoles, but they are delayed to 2021. The game’s first DLC, Kate Bishop, is also delayed. They’ve lost all momentum they had from their launch, which fizzled like it was nothing.

Even then, Square Enix still earned money overall. The company turned a profit of 16 billion yen or a little over $154 million.

They posted an additional 43% sales from their other divisions, but the Avengers loss would still sting for a while.

Featured image courtesy of Marvel Entertainment/Youtube Screenshot

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