Briefing Session for Revisions to Consolidated Results Forecasts: Fiscal Year Ending March 31, 2013

Square Enix Holdings issued a significant downward revision to its consolidated earnings forecast for the fiscal year ending March 31, 2013, citing poor performance in its core Digital Entertainment segment. The company projected a net loss of 13 billion yen, a sharp reversal from its previous forecast of a 3.5 billion yen profit. Operating income was similarly downgraded from an expected 7.5 billion yen profit to a 6 billion yen loss, driven primarily by underperforming high-definition console titles in North American and European markets.

The primary catalyst for this financial shortfall was the failure of major titles, including Sleeping Dogs, Hitman: Absolution, and Tomb Raider, to meet unit sales targets despite receiving positive critical reception. Management noted that North American sales efforts were particularly ineffective, achieving only two-thirds of the volume seen in Europe. Furthermore, intense market price pressure necessitated additional channel costs, such as price protection, which further eroded margins. While the company reported steady growth in its social gaming and mobile sectors—highlighted by the success of Million Arthur in Japan and Korea—these gains were insufficient to offset the losses in the HD console division.

In response to these results, the company announced a 10 billion yen extraordinary loss related to structural restructuring, including the disposal and revaluation of content. To address these systemic issues, the company initiated a leadership transition, confirming that President Yoichi Wada would not seek re-election at the conclusion of his term in June 2013. Yosuke Matsuda was named as the candidate for the presidency, tasked with overseeing a comprehensive structural reform of the organization to better adapt to the rapidly evolving global gaming landscape.