Analyst: Single Player IPs Will Cause Problems for Square Enix in the Year Ahead

Veteran analyst Billy Pidgeon says that games like Tomb Raider need 5 – 10 million sales to be successful for Square Enix and that IPs that cost hundreds of millions of dollars need a minimum Metacritic scores of 8.5 and the aforementioned range of sales. Pidgeon sees a difficult year ahead for Square Enix, who predicted earlier this week a very tough year of losses despite decent sales of its latest Hitman title and the new Tomb Raider game.

"On the positive side, the company has made investments in online, social and mobile games including free-to-play games," said Pidgeon in a note passed to GII. "Many of these, such as the browser based games, won't bring in significant income for a year or more."

"Some of these have done well in Korea, which is a very competitive and mature market, but Square Enix's micro-transaction-based role playing and collectible card games haven't performed well in Japan or in the West," he added.

Pidgeon says that the current console market is extremely competitive especially with games that don't offer a multiplayer component because the sector faces strong competition from competitors like Bethesda, Capcom, Xseed, Atlus and Level 5.

Finally he says that newer iterations of Square Enix's popular franchises require larger budgets, which in turn means they have to have sales larger than what would normally be considered a successful sales target.

"But for games with development budgets approaching $100 million to be truly profitable, [Metacritic] ratings have to be above 8.5 and sales need to be in the five to ten million unit range."

Source: GII


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