Square-Enix's Annual Report Shows Financial Recovery in 2014

Square-Enix's annual report for 2014 has arrived. The document shows that things may be looking up for the RPG powerhouse.

What we can tell from the chart above is that Square-Enix made a moderate recovery from the losses of 2013, but still has considerable work ahead if they wish to exceed their performance from 2010.

In a letter to their shareholders. Square-Enix largely attributes these gains to ongoing reforms in their development policy and organization system. They also boast that sales figures for Final Fantasy X/X-2 HD, Thief,  and Tomb Raider: Definitive Edition were better than projected. The Company stated that other contributing factors to its recent recovery are its titles for smart devices and browser-based-games, which have become a hit in Korea and China.

MMO performance has also produced modest but steady income for Square-Enix, and its three largest MMOs, including Final Fantasy XI and XIV are maintaining a subscription rate of close to 1-million users. Indeed, the document seems to indicate that all segments of Square-Enix are showing growth and promise, including its arcades and merchandising efforts.

Recently appointed Square-Enix President and Director, Yousuke Matsuda, points to the following three-point strategy as a catalyst for this growth.

1. Revisiting long-term, large-scale development.
2. Focusing on smart devices as game consoles.
3. Developing product portfolios tailored to local requirements.

In the document, he continues to explain each point in detail, while also highlighting current challenges for the company. Matsuda states that, "There are serious structural flaws in the disc sales model that defines the current HD game business." As a means to combat this, it appears that Square-Enix will continue to implement and experiment with variable pricing models, such as free-to-play.

Matsuda looks to the cloud as a source of great potential and says the company is actively developing their cloud infrastructure. Obviously, the company's recently created cloud gaming business, Shinra Technologies, is going to be a big part of SE's future development, but how exactly is not yet clear. Square-Enix says to expect more news concerning their cloud investments around March 2015.

If you are unsure what the third strategic point means exactly — the document goes on to state that the company will be drawing away from world wide releases and will focus more on cheaper titles that are tailored to specific regions. To fans of Square Enix's AAA world wide releases, this may be cause for alarm.

What do you readers think about all this. Does Matsuda's strategy seem like a good plan to you? Does a focus on mobile devices alarm or excite you? Are promises of cloud-based services going to translate to more freedom for gamers, or as shackles that tie us and our wallets to a company that holds our save-files and games for ransom? Please let us know in the comments section below.