Financial Results Briefing: Fiscal Year Ended March 2013

Square Enix concluded the fiscal year ending March 2013 with a net loss of ¥13.7 billion, a result primarily driven by declining profitability within its Digital Entertainment segment and elevated costs associated with advertising and sales return provisions. This financial downturn highlights the inherent volatility of the traditional packaged software model, which has struggled with slow asset turnover and intense competition, particularly within Western markets. In response to these structural challenges, the company is initiating a comprehensive reform of its high-definition game business, shifting focus toward online-centric titles, accelerated development cycles, and a robust expansion into the smart device sector.

To restore long-term stability and improve investment efficiency, the company is adopting a more agile development philosophy that emphasizes customer engagement throughout the production process, mirroring the iterative models seen in crowdfunding and early access platforms. Future strategy will prioritize regional content tailoring over the pursuit of singular global blockbusters, aiming to better align products with local market preferences. This pivot is supported by a new management team and a revised dividend policy designed to bolster investor confidence while transitioning the firm toward a digital-first operational structure.

Looking ahead to the fiscal year ending March 2014, the company has introduced range-based financial forecasting, projecting net sales between ¥140 billion and ¥150 billion with operating income targets between ¥5 billion and ¥9 billion. These figures serve as a baseline for a broader recovery plan, which aims to eventually reach an operating income of ¥25 billion. By integrating external expertise and sharpening its focus on online business models, the company seeks to mitigate the risks of the current console market and establish a more sustainable, high-growth trajectory across its global operations.