Square

How to Launch a Top 100 Grossing App

The mobile app marketplace has evolved into a highly mature and competitive environment where achieving a Top 100 grossing position is increasingly difficult for new entrants.

• The mobile app market is dominated by incumbents, with the average age of apps in the Top 100 Grossing charts being 1,452 days on iOS and 1,648 days on Android.
• Capital alone is insufficient for success; despite $1.8 billion in funding, Quibi failed to achieve sustainable Top 100 Grossing status, while established publishers like Glu, Netmarble, and Square Enix consistently succeed.
• Successful new entries into the Top 100 Grossing charts are almost exclusively games published by large, public companies with existing mobile portfolios and deep domain expertise.

Square Enix Holdings Financial Results Briefing: FY2020/3

Square Enix Holdings reported financial results for the fiscal year ended March 31, 2020, highlighting a period of mixed performance across its diverse business segments.

Financial Results Briefing Session: Fiscal Year Ended March 31, 2020

The financial results for the fiscal year ended March 31, 2020, reflect a period of strategic transition for Square Enix Holdings Co., Ltd.

• Square Enix reported a net sales decline of 10.7 billion yen to 260.5 billion yen for the fiscal year ended March 31, 2020, though operating income increased by 8.1 billion yen to 32.7 billion yen.
• The Digital Entertainment segment, the company's largest, saw operating income rise to 35.3 billion yen (up 6.4 billion yen) despite a net sales decrease, driven by strong performance in MMOs and mobile/PC browser games.
• The Games for Smart Devices/PC Browser category reached 106.4 billion yen in net sales, fueled by the successful launches of 'Romancing SaGa Re;univerSe' and 'DRAGON QUEST WALK'.

Square Enix Holdings 3Q FY2020/3 Financial Results Briefing

Square Enix Holdings reported strong financial growth for the first three quarters of the fiscal year ending March 31, 2020.

• Square Enix reported net sales of ¥189.7 billion and operating income of ¥27.7 billion for the first three quarters of FY2020/3, marking a year-over-year operating income increase of ¥15.4 billion.
• The Digital Entertainment segment served as the primary growth driver, generating ¥29.5 billion in operating income through strong performance in MMOs and smart device titles.
• MMO revenue was bolstered by the release of expansion packs for Final Fantasy XIV and Dragon Quest X, while smart device growth was driven by Romancing SaGa Re;univerSe and Dragon Quest Walk.

The Publisher – Developer Relationship: The Square Enix Mobile Partnership Approach

The mobile publishing division of Square Enix West advocates for a collaborative, partnership-driven model to replace the traditional, often adversarial, publisher-developer relationship.

• Square Enix West’s mobile publishing model replaces the traditional adversarial publisher-developer dynamic with a unified, partnership-driven structure to ensure fully aligned incentives.
• The strategy prioritizes long-term, collaborative relationships over short-term deal-making to mitigate risks associated with the high complexity of the free-to-play mobile market.
• To prevent communication breakdowns and conflicting priorities, the model mandates radical transparency and joint decision-making rather than rigid, top-down contractual enforcement.

Financial Results: Nine-Month Period Ended December 31, 2019

Square Enix Holdings Co., Ltd. reported its financial results for the nine-month period ending December 31, 2019, demonstrating significant growth in profitability compared to the same period in the previous fiscal year.

• Square Enix reported a strong nine-month performance for the period ending December 31, 2019, with operating income rising to 27.7 billion yen, a significant increase from 12.3 billion yen in the same period of the previous fiscal year.
• The Digital Entertainment segment's MMO business drove growth through the release of expansion packs for 'FINAL FANTASY XIV' and 'DRAGON QUEST X,' which led to a sharp increase in subscriber numbers.
• Games for smart devices and PC browsers saw improved year-over-year performance, bolstered by the successful releases of 'Romancing SaGa Re;univerSe' and 'DRAGON QUEST WALK.'

Zuck's Achilles Heel: Disney's Renewed Interest in Games and EA's Spending Spree

The gaming industry is currently defined by aggressive intellectual property (IP) licensing, rapid consolidation, and a contentious push for new monetization models.

• Electronic Arts spent $4.7 billion over a twelve-month period to acquire studios including Playdemic, Codemasters, and Glu Mobile to expand its mobile gaming footprint and gain leverage against platform holders like Apple.
• Disney has pivoted its interactive strategy to a licensing-heavy model, offloading the operational risks of game development by granting third-party developers like Ubisoft and Square Enix access to its franchise portfolio.
• Facebook’s attempt to integrate advertisements into its Oculus VR platform failed due to community backlash, forcing developers to withdraw from ad-testing programs and highlighting the incompatibility of current ad models with immersive environments.

The Game Industry of Poland: 2020

The Polish game development industry has matured into a significant global powerhouse, characterized by a diverse ecosystem of over 440 studios and a workforce of approximately 9,710 full-time professionals.

• The Polish game industry has over 440 studios and companies, with 43 of them listed on the Warsaw Stock Exchange (12 on the main floor, 31 on NewConnect).
• Between 2017 and 2020, over 120 studios closed down while over 160 new ones were established, indicating a high variability in the sector, though the rapid growth observed before 2017 has slowed.
• 11 bit studios, founded in 2009 by former Metropolis studio members, developed 'This War of Mine' (the first video game on Poland's official school reading list) and 'Frostpunk', and has 140 employees.

Square Enix Holdings 2Q FY2020/3 Financial Results Briefing

Square Enix Holdings reported positive financial growth for the first half of the fiscal year ending March 31, 2020.

• Square Enix reported strong H1 FY2020/3 growth with net sales of ¥120.7 billion (up 8.2% YoY) and operating income of ¥15.9 billion (up 62.9% YoY).
• The Digital Entertainment segment's MMO sub-segment and mobile titles like 'Dragon Quest Walk' and 'Romancing SaGa Re;univerSe' were primary drivers of financial performance.
• The HD Games sub-segment recorded an operating loss due to development cost amortization and a ¥2.35 billion impairment loss on content production.

Financial Results Briefing Session: Six-Month Period Ended September 30, 2019

Square Enix Holdings Co., Ltd. reported its financial results for the six-month period ending September 30, 2019, reflecting a period of growth driven by strong performance in its digital entertainment and publication segments.

• Square Enix reported a strong first half for the fiscal year ending March 31, 2020, with net sales reaching 120.7 billion yen and operating income rising to 15.9 billion yen, a significant increase from 9.7 billion yen in the same period the previous year.
• The Digital Entertainment segment's MMO business saw growth in both net sales and operating income, driven by the release of the 'Final Fantasy XIV: Shadowbringers' expansion pack and an increase in paying subscribers.
• Games for smart devices and PC browsers performed well, with net sales and operating income rising due to the continued success of 'Romancing SaGa Re;univerSe' and the September 2019 launch of 'Dragon Quest Walk'.

Bushiroad Consolidated Financial Results for the Fiscal Year Ended July 31, 2019

Bushiroad achieved significant financial growth during the fiscal year ending July 31, 2019, characterized by an 11.4 percent increase in net sales to 32.18 billion yen and an operating profit of 3.06 billion yen.

• Bushiroad reported net sales of 32.18 billion yen for the fiscal year ending July 31, 2019, representing an 11.4 percent year-over-year increase.
• The company achieved an operating profit of 3.06 billion yen and earnings per share of 132.12 yen.
• Financial growth was primarily driven by the performance of the BanG Dream! franchise and the international expansion of New Japan Pro-Wrestling, which included an event at Madison Square Garden.

Square Enix Holdings 1Q FY2020/3 Financial Results Briefing

Square Enix Holdings reported strong financial results for the first quarter of the fiscal year ending March 31, 2020, characterized by significant year-over-year growth in both net sales and operating income.

• Square Enix reported strong Q1 FY2020/3 results with net sales of ¥53.3 billion (up 19.1% YoY) and operating income of ¥7.1 billion (up 85.8% YoY).
• Growth was primarily driven by the Digital Entertainment segment, bolstered by increased subscriber numbers for Final Fantasy XIV and strong sales of the mobile title Romancing SaGa Re;universe.
• The company shifted its accounting policy in Q1 2020 to recognize digital content revenue in the same month it is earned, rather than with a one-month lag.