Square-Enix saw MMO profits from FFXIV and FFXI dip in 2016

Now is the time for all good companies to report profits and losses for the previous year, and at first glance Square-Enix's report looks pretty rosy. What looks less happy for readers who are heavily invested in the company's online titles such as Final Fantasy XIV is the fact that operating revenue and net sales have seen a sharp decline year-over-year. That's enough to bring a raised eyebrow or two, possibly even some panicked posting about the future of the futures of the titles.

It's probably not worth the panic, however, as the same report also notes that revenues from operation have held very steady.

"In the area of massively multiplayer online role playing games, revenues from operation has been showing steady performance while net sales and operating income declined significantly compared to the same period of the prior fiscal year mainly due to the absence of expansion disk releases during the nine-month period ended December 31, 2016."

In other words, it looks like the titles are still keeping subscribers happy, but the company's online offerings have been in a bit of a slump in terms of attracting new subscribers. One would think that this would serve as a prime time to release a new expansion this year, then. That should earn some impressions.

SHARE THIS ARTICLE

LEAVE A COMMENT

27 Comments on "Square-Enix saw MMO profits from FFXIV and FFXI dip in 2016"

Subscribe to:
Sort by:   newest | oldest | most liked
Reader
pyroromancer

Dip in revenue? not surprised. The changes between ARR to HW, came with lots of little tiny changes that made the game less enjoyable, think of each change as a cut.

Bard mobility to immobile, this was a heated topic where couple thousand bard mains voiced their dislike for a change. A game changing change that has obviously led to couple hundred if not a thousand players stopping the game.

Rotation for all classes have become more complex to a degree where the gap between hardcore high skill players and midcore middle skill players is wider than ARR.

Raids have become more difficult, huge HP pools because Yoshida claims that the developers have now taken healers dps into account. Coupled with the earlier notion that rotations have already become more complex, this is a compound increase in difficulty between ARR and HW.

There are more dislikes that came with HW but you get the picture. couple hundred cuts that will lead to a game death as every expansion comes.

Reader
Steven Williams

All classes? Heavensward made Ninja easier. Armor Crush and Duality are crazy good.

Dip in revenue? not surprised. The changes between ARR to HW, came with lots of little tiny changes that made the game less enjoyable, think of each change as a cut.

There are more dislikes that came with HW but you get the picture. couple hundred cuts that will lead to a game death as every expansion comes.

73e6f4406062c6e5e7a630ea51e07b88.jpg
never_enough_toast
Reader
never_enough_toast

Holy mackrel, did anyone even bother to look at the financial results? There is some Daily Mail-level analysis going on here.

Leaving aside the financial situation of the company (EPS up yay, profit up yay, what is going on with cost of sales? Man, their taxes are way down), MMOs are not separated out from broader "Digital Entertainment" in their reporting. So unless someone is auditing their books, or Massively gets an interview with their CFO, the only comment we have to go on is:

"In the area of massively multiplayer online role playing games, revenues from operation has been showing steady performance while net sales and operating income declined significantly compared to the same period of the prior fiscal year mainly due to the absence of expansion disk releases during the nine-month period ended December 31, 2016."

Now, without divisional reporting on the MMO side, we don't really know very much. Based on this comment we know that their online titles are "steady", which could mean anything, while net sales and operating income are down. We don't know how much they mean by "significantly". They are comparing the nine months to end December for 2015 and 2016. This is the period of Heavenward's launch. The astonishing takeaway is that they sold less copies last year in comparison to a year with an expansion release. Truly, my jaw dropped.

Now Eliot says:

operating revenue and net sales have seen a sharp decline year-over-year. That's enough to bring a raised eyebrow or two, possibly even some panicked posting about the future of the futures of the titles.

Which is...um. Look. First off, operating revenue is never mentioned in the report and is essentially net sales. Secondly, we have no idea if profits (from FFXIV and FFXI) dipped, but we can charitably assume it. Lastly, let's just take the talk of "raised eyebrows" and "panicked posting" as Massively flavour text.

TL,DR
Someone on the internet is wrong. Yes, this did irk me enough that I spent far more time on it than I should have.

Reader
Steven Williams

Not a big surprise here. The active playerbase peaked during Realm Reborn and Heavensward's launches, and it will peak again when Stormblood releases later this year.

Not all players stay for the patch schedule between expansions. Heavensward's launch was rife with players returning after a year's absence. Lots of queues for Final Steps of Faith; lots of players in the 2.x questhubs; lots of newbies derping around the new zones (unless you're on the Balmung server, in which new players are a rare, expensive commodity). Stormblood will be the same.

I don't understand why people are turning something this obvious into a rant about how the MMORPG industry is stagnating and dying. Players during the "golden age" didn't have many choices for online multiplayer gaming. There were a lot of financial and technological limitations, too. Now we have mobile games, pseudo-MMOs, MOBAs, social shooters, and more. Most of the popular games run on cheap computers. Internet is faster, too. It's not surprising that communities have become fragmented.

Reader
Christopher Allcock

This is true; in fact Yoshi-P when asked about 'ways to prevent players from game burnout' actually suggested NOT playing FFXIV all the time as he'd rather have players leave and come back when they feel ready then play the game until burnout, hate it, and never return

Reader
Malcolm Swoboda

That's beautiful.

Reader
Blood Ravens Gaming

I know one thing...... Red Mage cometh! They will get some $ from me soon.

Reader
Van

I don't want to sound to hip for the room, but this is clearly not a big deal. Game development is cyclical and there are heavy development years and release years. FF14 has been in a development cycle which means costs are going to be up and revenues flat or down.

I'm someone who is a part of a company that has development cycles and it's this is a clear case of it.

Line
Reader
Line

MMOs are not really the popular thing anymore, so it's not very surprising to see them all staggering between expansions. Content patches are just not the way to make money.

Quite surprised to see FFXV doing so well. Maybe they'll think about the PC port, one day. Gotta wait for that year without news, and a release leaked in the Steam newsfeed. Why would you use the big marketing push, if you can just stealth release them a year later? Right.
Rise of the Tomb Raider had the same issue with the late PS4 port.

And poor Deus Ex Mankind Divided was a massive flop...
I wonder if the Eidos part of SE will one day get the axe.

Reader
Steven Williams

1997's Deus Ex is my favorite game. I'm still not over the crap SE Publishing pulled with Mankind Divided. There is no new Deus Ex on the horizon anymore, and I'm not surprised. If I were Eidos Montreal, I'd wait until a new publisher takes the reigns. Hopefully.

Reader
Jeremy Barnes

you do realize that MMOs are more popular by every remotely measurable metric than ever before...right? It's not rocket science. FFXIV released an xpac which means a bunch of extra revenue in 2015. They did not release one in 2016. They will release one in 2017 so next year will be a story about how much more revenue than 2016...

Line
Reader
Line

While there are more MMOs today than in the two decades before WoW combined, that does not mean that the market is large.
Just overcrowded.

By pure numbers, the MMO genre has shrunk dramatically in the West. WoW has been on the decline for years, and the newer contenders did not pick up the slack.
In the East, things are not quite as bad, but Lineage being a powerhouse (that actually made a comeback, it wasn't always that healthy) does not mean that everything is good; hence the transition to mobile (and that another can of worms eating corpses of mountains of dead games)
And again, way, way too many titles. There are dozens of Asian MMOs that release (or call that open beta) and close down in a year. If they're lucky, because I could find a few on massivelyop that did not live more than a few weeks.

FFXIV and a few others keep players around, but do no grow. They just shake a bit with expansions.
And there's a reason why nobody in the industry wants to give player numbers...

Reader
Damon

have mmos really become more popular or have we jammed more and more types of games into the mmo catagory so the numbers are bigger but less people actually play traditional mmos overall.

LoL, world of tanks, etc are huge games but do they really contribute to games like FFXIV , wow, EQ etc being " more popular than ever " ?

Reader
Sray

If that were remotely true then Western publishers would still be cranking out hundred million dollar WoW clones.

Reader
Van

AAA big budget MMORPG's are still getting major investments. ESO, FF14, WoW & GW2 to a lesser extent.

Reader
Sray

Publishers maintaining successful products is not the same as major investment. There is no investment in new properties by big money publishers, which means they don't see a future in MMORPGs.
Sure, Amazon has New World coming, but they're clearly doing what Amazon does: playing the long game. By the time New World actually launches (2020ish in all likelihood) a huge portion of today's games will have died from old age, and the market will be ripe for an MMORPG driven by sandbox elements and live events as opposed to unsustainable scripted content.

Reader
Blood Ravens Gaming

In the generation of crowdfunding you have seen the decline across the board for the need of big investors to fund games. I do not see that as an indication that the genre of MMOs has declined. There are many MMOs in development and being released shortly.

Reader
Sray

Crowdfunding for videogames is also in decline, and the crowdfunded one on the horizon are almost universally niche PVP. The widest appeal of MMORPGs as a genre is that they are the one online game genre that is cooperative PVE focused, and that's what no one is building right now.

Line
Reader
Line

At one point, it was massively multiplayer.
But really, that's been dead for more than a decade.
Now an MMO is a virtual chatroom, with a timer before joining an instanced dungeon with automated players that may as well be bots (and they are in PvP modes, more often than not).

Many of the so called "MMORPGs" on the market dropped the pretense and are not massively multiplayer in any form (Skyforge, Vindictus, Dragon Nest...).

And that's what players want. They don't give a shit about open world (just look at the flak taken by GW2 for trying to make challenging open world pushing to group).
They want to do solo quests, with plenty of instancing, and maybe some people around to spam memes when they're bored.

Reader
John Kiser

It is because it went mainstream and you have a particular company always scraping the bottom of the barrel as far as lowest common denominator goes.

Line
Reader
Line

Understand that by their own numbers http://www.polygon.com/2017/2/6/14311836/crowdfunding-video-games-down-in-2016-kickstarter-fig-gambitious , almost all crowdfunded video games in 2016 (the immense majority not MMOs) on all crowfunding services combined funded less than $30M.
That's not even half of a big name project in the years past.

Reader
Melissa McDonald

we seem to be hearing that most of them are either losing, or making less money.
I feel like the market is oversaturated, but I haven't a clue how that remedies itself beyond simple capitalism, i.e., oversaturation means stagnation and failure of the weak brands until there are clear leaders who have the right combination of product and business model.

Reader
Van

I wish indie studios would join forces to make something closer to a AAA level game. It's a shame that there are a lot of good ideas out there, yet not enough resources to accomplish anything.

Line
Reader
Line

Ideas are cute, but rarely feed you.
Looking at the MMO landscape, it's very unlikely that novel ideas are the way to go.
Look at what works: barebones themeparks. WoW, GW2, FFXIV, ESO... none of them are particularly innovative. Because none of the ones that tried lived to tell their stories.

It's even worse than that, as themepark MMO mechanics are now everywhere in solo games, and even competitive games with bullshit "progression" and RNG lockboxes.
New ideas are just a death sentence in the current market, and yes, that's also why this market is melting.

Reader
Kurt Shadle

Wouldn't this all just be as expected? Heavansward came out in 2015 which will be a big boost to revenue but with no expansion in 2016 you won't have all of those sales.

Reader
Jeremy Barnes

That is likely the reason and they mention it in their report. FFXIV is the bulk of their "MMO" revenue.

Reader
John Kiser

They will likely end up seeing a boon this fiscal year in mmos with the new xpac.

wpDiscuz