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Square-Enix Restructuring due to sales slump

Developer and publisher Square Enix has changed its positive predictions for the current financial year from a healthy profit to a crippling loss, and announced plans to bring in expensive reforms and restructuring. Sleeping Dogs, Hitman Absolution, and Tomb Raider all failed to meet high sales expectations. The company had forecast a net profit of around $37 million for the fiscal year, which ends March 31, but has now revised that to be a whopping $138 million loss. Ouch.

In the announcement [pdf], it said actual sales "substantially fall below" its predictions, "primarily due to slow sales of major console game titles in North American and European markets."

In an accompanying presentation, Squeenix said that sales of Sleeping Dogs, which it picked up after Activision dropped it, Hitman Absolution, and the new Tomb Raider all fell short of expectations, "despite the high critical acclaim."

Excluding digital sales, the three games are currently predicted to sell 1.75 million, 3.6 million, and 3.4 million copies respectively by the end of March. Evidently, that’s just not enough. North American sales are singled out as particularly low, compared to expectations.

Square Enix resolved, "In view of the rapidly changing environment of the game businesses, the Company has decided to implement major reforms and restructuring in its development policy, organizational structure, some business models, and others."

This process is expected to cost ten billion yen, or around $105 million dollars, which accounts for a huge chunk of this year’s new projected loss.

Company president Yoichi Wada is to bow out, with his replacement yet undecided. How exactly reforms will affect games in development and future games remains to be seen.