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Deleted member 16657

User requested account closure
Banned
Oct 27, 2017
10,198
Am I misinformed to think Square is horribly mismanaged?

Seems like they're seeking huge numbers for their western titles because of overinflated budgets, and their eastern productions suffer development hell like crazy.
 

MegaXZero

One Winged Slayer
Member
Jun 21, 2018
5,079

APZonerunner

Features Editor at VG247.com
Verified
Oct 28, 2017
1,725
England
I'm reading the exact opposite though:

So the decision to refocus on AAA meant work on non-AAA titles had to be deprecated...

They never actually said outright what they were doing, but given this is the team behind FF15 under another name, it's reasonable to expect that Luminous were working on smaller-scale games, movies, anime, etc etc - other peripheral works to tie in to whatever they were doing game-wise. Tabata suggested this in a few interviews too. So chances are the stuff canned is smaller-scale games and non-game side projects using the Luminous' new game world & tech.

Either way, what I said is correct. The TLDR of that official statement is: Luminous Studio had a much larger focus. They've now decided to refocus on AAA games and cancel anything else they were working on, resulting in a loss of expenditure from those projects that now won't be recovered.

All I was explaining to the poster I was replying to is that this loss isn't just a write-down of the cost of setting up the studio, it's a loss resulting from the studio changing course and killing off some projects they didn't believe in. Clearly, they're still making Tabata's big game... just probably now no longer an extended universe to go along with it, heh.
 

Strings

Member
Oct 27, 2017
31,368
Err, is it important that they no longer mention their goal being to push a new IP? If this means that team is back on Final Fantasy, then I'm pretty annoyed :(
 

RestEerie

Banned
Aug 20, 2018
13,618
Can SE just give up on making engines and just license some off the shelves tech like unreal to safe their life already. Their crystal tools already cost them so much money with very little reward in terms of income generation or cost-saving and yet their pride insist on them creating proprietary tech.
 

-girgosz-

Member
Aug 16, 2018
1,042
Launching a brand new AAA studio working on multiple next-gen projects and people surprised by 33m? lol
 

Izanagi89

Member
Oct 27, 2017
14,546
Where are you reading about Octopath underperforming? I don't see it and I can't imagine it underperformed unless they expected carts to materialize from the wishes of those who couldn't buy it at a store.

"In the console games area, we launched "OCTOPATH TRAVELLER," a brand new IP, and "SHADOW OF THE TOMB RAIDER," the final chapter of the rebooted TOMB RAIDER trilogy. Overall this sub-segment's net sales and operating income decreased compared to the same period of the prior fiscal year"

Doesn't explicitly say underperformed but I think it didn't do as well as games released at the same time in the last financial year
 

Deleted member 426

User requested account closure
Banned
Oct 25, 2017
7,273
"In the console games area, we launched "OCTOPATH TRAVELLER," a brand new IP, and "SHADOW OF THE TOMB RAIDER," the final chapter of the rebooted TOMB RAIDER trilogy. Overall this sub-segment's net sales and operating income decreased compared to the same period of the prior fiscal year"

Doesn't explicitly say underperformed but I think it didn't do as well as games released at the same time in the last financial year
Yeah that doesn't suggest each of those games underperformed, although I suspect SotTR did. It just shows they performed worse than games released last year, which could be as much about what games were released as it is about their performance. Having said that, I can't remember what did release last year, anything significant?
 

CaviarMeths

Avenger
Oct 25, 2017
10,655
Western Canada
Oh , I am not supprise, they keep waste resource on trash content , increase reused asset and decresaed number of stuff player recieve trhough out each patch . I am glad to see FF14 do bad so they can open their eyes
Erm.

XIV had an expansion out the prior year. Revenue is down because there was no packaged release this year. It will be back up when the next expansion launches. Subscription base is very, very healthy right now.
Yeah that doesn't suggest each of those games underperformed, although I suspect SotTR did. It just shows they performed worse than games released last year, which could be as much about what games were released as it is about their performance. Having said that, I can't remember what did release last year, anything significant?
July-Sep last year was FFXII:TZA, DQXI (JP), and LiS:BtS.
 
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werezompire

Zeboyd Games
Verified
Oct 26, 2017
11,309
"In the console games area, we launched "OCTOPATH TRAVELLER," a brand new IP, and "SHADOW OF THE TOMB RAIDER," the final chapter of the rebooted TOMB RAIDER trilogy. Overall this sub-segment's net sales and operating income decreased compared to the same period of the prior fiscal year"

Doesn't explicitly say underperformed but I think it didn't do as well as games released at the same time in the last financial year

EDIT: Got my years wrong. Same period of the prior fiscal year is DQ11 Japan release which sold a ton. Also FF12 remake. Chances are Octopath Traveler did above expectations, but Shadow of the Tomb Raider did far below expectations (given how quickly it got drastic price drops).
 
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Pyros Eien

Member
Oct 31, 2017
1,974
Oh , I am not supprise, they keep waste resource on trash content , increase reused asset and decresaed number of stuff player recieve trhough out each patch . I am glad to see FF14 do bad so they can open their eyes
Last year 6months period which is being compared saw the release of Stormblood. Even if the subs were up, it'd do worse because no box sales. It'll only be relevant if they compare that same period in 2019 to 2017 to see how it's going overall.
 

-girgosz-

Member
Aug 16, 2018
1,042
Because it's not the cost of establishing the studio. It's investments that won't be recouped on at all, because they've been abandoned and the focus of the studio amended.

How do you know that?

Edit: Read the PR more carefully. So that means making prototypes and stuff? That's pretty standard with AAA game developers.
 
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Oct 30, 2017
330
Japan
This is modern day S-E, a company which always needs to take 2-3 stabs to get anything right.

With that considered I'm going to assume these were awful projects that they've abandoned because they won't be good money making ideas like they initially thought. (anime/movies/novels/mobile games/online components etc....) It's in their DNA to do this....

After the whole XV universe crap I'd be happy if this is the case and they just put all resources into making one large and complete project.
 
Oct 27, 2017
2,581
Having conducted an in-depth review of the business strategy for Luminous Productions Co., Ltd., a wholly-owned subsidiary (the "Subsidiary"), the Company had decided to focus the Subsidiary's development efforts on large-scale, high-quality AAA game titles, which best leverages the Subsidiary's strengths.
This decision has resulted in the booking of an extraordinary loss amounting to 3,733 million yen, including the disposition of the portion of the content production account related to the game titles under development at the Subsidiary and impairment losses on intangible assets,

Unless i read it wrong this means they have this loss because they established Luminous Production to develop AAA game titles. So, they had to give them money to develop these AAA titles, for the content production.

Nowhere they say the studio purpose has been changed.

Tabata always said the new Luminous Production studio was developing AAA next gen games.
 

werezompire

Zeboyd Games
Verified
Oct 26, 2017
11,309
How do you know that?

Because that's what they said in the statement. They've "decided to focus the Subsidiary's development efforts on large-scale, high-quality AAA game titles" and "This decision has resulted in the booking of an extraordinary loss." That means that non-AAA game title projects have been cancelled which has resulted in an "extraordinary" loss meaning a loss that was unexpected & unusual. Before cancelling those projects, the money spent wouldn't have been considered a loss in the same way since it would be expected that revenue from the completed project would make up for the money spent.
 

PshycoNinja

Game Developer
Verified
Oct 25, 2017
3,223
Los Angeles
No, this is them writing off costs on projects the studio has been pursuing since opening that they are no longer pursuing. This is why it's an "extraordinary loss" - like, if you set up a studio you expect those costs to be factored into the budget or be recovered by the successes of whatever thy make. Then you either have a profit or an acceptable, predicted, budget-for loss (an investment, then). An extraordinary loss occurs when the business takes a turn that means you suddenly have an additional loss you hadn't planned for.

In this instance, as said above, it appears a bunch of the more ambitious Luminous Studio side projects have been permanently shelved, so all the money spent on those projects and the resources for them is a write-off. The studio will continue with its other projects and they'll be working within the agreed budget.

A notice of extraordinary loss in this sense is about alerting investors to the fact projects have been canned and direction has been changed as much as it is about the money lost, in that sense. These are project(s) that will now never make a profit as they'll never be finished so whatever money spent on them so far is lost, obviously, but also there's no chance of them being a sleeper hit that claws it back either.

Pretty much. Pretty much, Square evaluated Luminous and decided they want the studio to focus more on AAA games, then some of the other stuff they were also producing. There's a lot more to it, and some are blowing this a bit out of proportion, but basically SE is making a strategic move with the studio and want a 100% focus on developing AAA games and content. The loss is because of that SE decision.
 

-girgosz-

Member
Aug 16, 2018
1,042
Because that's what they said in the statement. They've "decided to focus the Subsidiary's development efforts on large-scale, high-quality AAA game titles" and "This decision has resulted in the booking of an extraordinary loss." That means that non-AAA game title projects have been cancelled which has resulted in an "extraordinary" loss meaning a loss that was unexpected & unusual. Before cancelling those projects, the money spent wouldn't have been considered a loss in the same way since it would be expected that revenue from the completed project would make up for the money spent.

Edited my post since. Read the PR again. Keep in mind English is not my first language. So that means making prototypes and stuff? That's pretty standard with AAA game developers.
 

CaviarMeths

Avenger
Oct 25, 2017
10,655
Western Canada
How do you know that?
This decision has resulted in the booking of an extraordinary loss amounting to 3,733 million yen, including the disposition of the portion of the content production account related to the game titles under development at the Subsidiary and impairment losses on intangible assets,
"content production account related to the game titles under development" almost certainly refers to the tie-in products like anime/films/whatever. That all appears to be canned while game development moves forward as the focus of the studio.
 

werezompire

Zeboyd Games
Verified
Oct 26, 2017
11,309
Edited my post since. Read the PR again. Keep in mind English is not my first language. So that means making prototypes and stuff? That's pretty standard with AAA game developers.

No, in this instance, it most likely means stuff like anime, movies, mobile tie-in games, stuff like that.
 

Kalor

Resettlement Advisor
Member
Oct 25, 2017
19,624
Oh , I am not supprise, they keep waste resource on trash content , increase reused asset and decresaed number of stuff player recieve trhough out each patch . I am glad to see FF14 do bad so they can open their eyes

FFXIV is doing fine. It's only down because there's no expansion this year. Otherwise it's healthy.
 

EarthPainting

Member
Oct 26, 2017
3,873
Town adjacent to Silent Hill
Square Enix doesn't write off costs that easily. I'm suspecting they found a more lucrative use of this studio. If I recall correctly, this studio would pursue new IPs, so maybe this is no longer going to be what they'll be doing.
 

Alice

Banned
Nov 2, 2017
5,867
Seems logical? They haven't released a single game, so they're working on zero profits. Of course they'll push out losses until they actually release a game.
 

Strings

Member
Oct 27, 2017
31,368
Edited my post since. Read the PR again. Keep in mind English is not my first language. So that means making prototypes and stuff? That's pretty standard with AAA game developers.
Nope, prototypes etc are an expected / operating cost and are filed differently. Extraordinary loss is the term used to refer to an abnormal loss you weren't expecting to incur and that you don't expect to repeat - and doesn't at all relate to the size of the loss, which might be where some folks are getting tripped up, since that's the usual context you'd see 'extraordinary' used.
 

PshycoNinja

Game Developer
Verified
Oct 25, 2017
3,223
Los Angeles
No wonder they started selling character designs and shit on youtube
That was luminous productions right? That 1 eyed female android trailer thing

No. That wasn't Luminous Productions.

They never actually said outright what they were doing, but given this is the team behind FF15 under another name, it's reasonable to expect that Luminous were working on smaller-scale games, movies, anime, etc etc - other peripheral works to tie in to whatever they were doing game-wise. Tabata suggested this in a few interviews too. So chances are the stuff canned is smaller-scale games and non-game side projects using the Luminous' new game world & tech.

Either way, what I said is correct. The TLDR of that official statement is: Luminous Studio had a much larger focus. They've now decided to refocus on AAA games and cancel anything else they were working on, resulting in a loss of expenditure from those projects that now won't be recovered.

All I was explaining to the poster I was replying to is that this loss isn't just a write-down of the cost of setting up the studio, it's a loss resulting from the studio changing course and killing off some projects they didn't believe in. Clearly, they're still making Tabata's big game... just probably now no longer an extended universe to go along with it, heh.

Pushing back on the last bit there. This loss isn't the result of a studio decision or them not believing in their own projects, but a Square Enix one. SE wants them, strategy-wise, to focus on solely making AAA games. SE says as much in the report. SE wants them to focus on their "strength" which is "making large-scale, high-quality AAA game titles."

This financial report has SE saying this is their fault for the decision on where to focus the studio and that the studio is just going to focus on making AAA games per that decision.

Can SE just give up on making engines and just license some off the shelves tech like unreal to safe their life already. Their crystal tools already cost them so much money with very little reward in terms of income generation or cost-saving and yet their pride insist on them creating proprietary tech.

This has nothing to do with the Luminous Engine. And considering the inroads they've made on the engine and how comfortable they are with it, it would cost more (in time and licensing) to go to another engine than update the engine they do have. This would be like telling Capcom to drop their RE engine for UE4, even though their engine is getting better and better and the teams are getting comfortable with it.

Erm.

XIV had an expansion out the prior year. Revenue is down because there was no packaged release this year. It will be back up when the next expansion launches. Subscription base is very, very healthy right now.

July-Sep last year was FFXII:TZA, DQXI (JP), and LiS:BtS.

Ehhhhhhhhhhhh....
 

Nirolak

Member
Oct 25, 2017
5,660
Here's the full report. Seems Octopath, SoTTR and even XIV performed below expectations (I think, well that's how I'm interpreting it)

http://www.hd.square-enix.com/eng/news/pdf/19q2earnings.pdf
Not exactly.

The statement is:
- Their traditional games this quarter made less money than the games released this quarter last year did, which was an expected decline.
- Their mobile games from last fiscal year largely weren't successful, so their mobile revenue is all from their ongoing giant hits from previous fiscal years. However, this means their results aren't growing as much as they wanted.
- Final Fantasy XIV's revenue is down because last year had an expansion pack, while this one didn't, which was expected.

So they're down, but not because of anything that underperformed this quarter, as opposed to them just not having much to release, along with previous failures from a while ago.
 

Qvoth

Member
Oct 26, 2017
11,876
yeah latest ffxiv unofficial census shows subscriptions are down to less than 600k, peak was 750k i think at start of stormblood?
s-e really need to start thinking of a brand new content for next expansion (rumoured to be called shadowbringers) because a lot of players are bored of the same gear treadmill they've been doing for the last 5 years
 

Malek

Member
Feb 15, 2018
551
Probably Tabata wanted to upgrade all the computers in the office to the new rtx 2080 ti and the new i9's

33 millions makes sense

Am I misinformed to think Square is horribly mismanaged?

Seems like they're seeking huge numbers for their western titles because of overinflated budgets, and their eastern productions suffer development hell like crazy.

Or maybe this ^
 

Pyros Eien

Member
Oct 31, 2017
1,974
There's a blog that keeps track of active characters over time using the lodestone achievements and filtering trials/people who haven't gotten stuff in a while so it's relatively accurate(not necessarily as a raw sub number, but to compare between patches and such), and numbers seem fairly consistent.
Launch of SB 663k, October 2017 798k(peak of FFXIV said Yoshida), Jan 2018 606k, May 2018 622k, Sept 2018 627k. They tend to go down between patches though.

If anything, numbers seem up compared to HW.
 

APZonerunner

Features Editor at VG247.com
Verified
Oct 28, 2017
1,725
England
Pushing back on the last bit there. This loss isn't the result of a studio decision or them not believing in their own projects, but a Square Enix one. SE wants them, strategy-wise, to focus on solely making AAA games. SE says as much in the report. SE wants them to focus on their "strength" which is "making large-scale, high-quality AAA game titles."

This financial report has SE saying this is their fault for the decision on where to focus the studio and that the studio is just going to focus on making AAA games per that decision.

This is semantic wank. Square Enix owns the controlling stake in the studio and has the final say. Square Enix clearly looked at what they were doing and decided that a chunk of it wasn't going to be a good return on investment; that's the very definition of a lack of belief corporately. So they canned them to focus on the stuff they think will make money. It's pretty simple really. The fact they were willing to accept a 30 million plus write-down indicates they really didn't think this stuff was going to make money, too. That's fine. Not everything works out. Who knows if even the game will - only time will tell.

The level of belief in whatever was canned within the studio is largely irrelevant; they either will have agreed with SE's conclusion or disagreed, made their argument and failed to persuade SE. Either way it doesn't matter, tbh, unless the disagreement were to cause a crisis of confidence in general, which I doubt would happen.
 

Palette Swap

The Fallen
Oct 25, 2017
11,197
Is that write down "just" accounting formalism or did they effectively commit this much to peripheral projects and finally decided to take a loss and can them?
 

Nirolak

Member
Oct 25, 2017
5,660
This is semantic wank. Square Enix owns the controlling stake in the studio and has the final say. Square Enix clearly looked at what they were doing and decided that a chunk of it wasn't going to be a good return on investment; that's the very definition of a lack of belief corporately. So they canned them to focus on the stuff they think will make money. It's pretty simple really. The fact they were willing to accept a 30 million plus write-down indicates they really didn't think this stuff was going to make money, too. That's fine. Not everything works out. Who knows if even the game will - only time will tell.

The level of belief in whatever was canned within the studio is largely irrelevant; they either will have agreed with SE's conclusion or disagreed, made their argument and failed to persuade SE. Either way it doesn't matter, tbh, unless the disagreement were to cause a crisis of confidence in general, which I doubt would happen.
Right, like, I think they way they announced this studio confused people, but the legal structure is identical to the way Square Enix owns Crystal Dynamics and Eidos Montreal, or the way EA owns DICE and BioWare.

They're just fully owned studios at the publisher. This isn't a different company in any meaningful sense.
 

PshycoNinja

Game Developer
Verified
Oct 25, 2017
3,223
Los Angeles
There's a blog that keeps track of active characters over time using the lodestone achievements and filtering trials/people who haven't gotten stuff in a while so it's relatively accurate(not necessarily as a raw sub number, but to compare between patches and such), and numbers seem fairly consistent.
Launch of SB 663k, October 2017 798k(peak of FFXIV said Yoshida), Jan 2018 606k, May 2018 622k, Sept 2018 627k. They tend to go down between patches though.

If anything, numbers seem up compared to HW.

Gonna need the receipts for this. As I recall, A Realm Reborn had peak numbers for XIV.

This is semantic wank. Square Enix owns the controlling stake in the studio and has the final say. Square Enix clearly looked at what they were doing and decided that a chunk of it wasn't going to be a good return on investment; that's the very definition of a lack of belief corporately. So they canned them to focus on the stuff they think will make money. It's pretty simple really. The fact they were willing to accept a 30 million plus write-down indicates they really didn't think this stuff was going to make money, too. That's fine. Not everything works out. Who knows if even the game will - only time will tell.

The level of belief in whatever was canned within the studio is largely irrelevant; they either will have agreed with SE's conclusion or disagreed, made their argument and failed to persuade SE. Either way it doesn't matter, tbh, unless the disagreement were to cause a crisis of confidence in general, which I doubt would happen.

I agreed with you. No need for the nastiness. You stated the studio itself didn't believe in the projects. That's fine if SE didn't, as they wholly own the studio, so its up to them at the end of the day, but to insinuate the teams didn't believe in their own projects is a bit of a stretch. If that is not what you meant, that's fine, because as you say, its up to SE anyways and they clearly don't want to invest more into anything other than AAA games when it comes to Luminous. I'm not even really fighting you on anything you've said.
 

DarkLordMalik

Member
Oct 27, 2017
1,624
This is semantic wank. Square Enix owns the controlling stake in the studio and has the final say. Square Enix clearly looked at what they were doing and decided that a chunk of it wasn't going to be a good return on investment; that's the very definition of a lack of belief corporately. So they canned them to focus on the stuff they think will make money. It's pretty simple really. The fact they were willing to accept a 30 million plus write-down indicates they really didn't think this stuff was going to make money, too. That's fine. Not everything works out. Who knows if even the game will - only time will tell.

The level of belief in whatever was canned within the studio is largely irrelevant; they either will have agreed with SE's conclusion or disagreed, made their argument and failed to persuade SE. Either way it doesn't matter, tbh, unless the disagreement were to cause a crisis of confidence in general, which I doubt would happen.
The point is, that they are still allowed to make large-scale games. Whatever projects that they had will continue aside from the small-scale stuff.

There was a CG Documentary from them and at one point, it looked like they wanted to pursue into this field seriously, but it is all likely removed by now and their focus should be on games, which is what matters for most of us. There is no point in delving into this matter without knowing what their 'loss' entails here since the wording never states it clearly, and just dodges around it by saying the focus is now on AAA projects.

Don't forget this is the same company that announced FFVII Remake in 2015 followed quickly by a demo gameplay shown the same year. All the work done following it was scrapped or retooled and the remake is nowhere to be seen until next year, making a mockery of their work and bringing back flashbacks of how they have handled such stuff in the past. Kingdom Hearts 3 is another example where they had to retool or scrap the content made under Luminous Engine and start with Unreal Engine 4. I don't think they are learning anything from their past as time and time again has shown them repeating the same mistakes.
 

APZonerunner

Features Editor at VG247.com
Verified
Oct 28, 2017
1,725
England
That's fine if SE didn't as they wholly own the studio, so its up to them at the end of the day, but to insinuate the teams didn't believe in those own projects is a bit of a stretch. If that is not what you meant, that's fine, because as you say, its up to SE anyways and they clearly don't want to invest more into anything other than AAA games when it comes to Luminous. I'm not even really fighting you on anything you've said.

It's a fully-owned subsidiary, so I think the term "they didn't believe" is pretty interchangeable between SE and Luminous because in the end, like I said, the result is the same - the projects are gone, and the one(s) that survive is that which they think will make money. It doesn't matter. Point is these projects weren't up to whatever scratch they had, so they had to go.

There was a CG Documentary from them and at one point, it looked like they wanted to pursue into this field seriously, but it is all likely removed by now and their focus should be on games, which is what matters for most of us. There is no point in delving into this matter without knowing what their 'loss' entails here since the wording never states it clearly, and just dodges around it by saying the focus is now on AAA projects.

Don't forget this is the same company that announced FFVII Remake in 2015 followed quickly by a demo gameplay shown the same year. All the work done following it was scrapped or retooled and the remake is nowhere to be seen until next year, making a mockery of their work and bringing back flashbacks of how they have handled such stuff in the past. Kingdom Hearts 3 is another example where they had to retool or scrap the content made under Luminous Engine and start with Unreal Engine 4. I don't think they are learning anything from their past as time and time again has shown them repeating the same mistakes.

Well, the 'loss' is just because a bunch of work and resources already committed has gone into the bin. That's all. It's not difficult to parse.

To your second point - possibly this demonstrates a continued lack of ability to control wastage and stuff, but they do appear to be doing better in other senses. They can't keep up with the wastage, though - as games get more expensive, the damage this sort of meandering can inflict is becoming more profound, so hopefully they can continue to learn and lock it down.
 

PshycoNinja

Game Developer
Verified
Oct 25, 2017
3,223
Los Angeles

I did additional research, too, and it seems you are correct. I wonder where I read that launch subscriber numbers were the highest for XIV. I thought it was this year but its possible it could've been back before Stormblood.

Edit: Yes, I read it incorrectly. I interpreted the comments as "highest since launch" thinking the launch itself was the highest active subscribers. But its clarified that its the highest since the game released. https://www.dualshockers.com/final-fantasy-xiv-paying-subscribers-stormblood/amp/
 
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DarkDetective

Banned
Oct 25, 2017
4,906
The Netherlands
$33 million is a very sizable amount of money. What kind of projects would these have been? Multiple mobile tie-ins to FFXV that were all cancelled due to a chance to focus/strategy?
 

SageShinigami

Member
Oct 27, 2017
30,454
I think if anything this is Square realizing how much work developing AAA next gen projects will be, and they can't have their new studio dicking about with other projects, so they've all been shelved.