Square Enix Profits Drop On Eidos Acquisition

Tokyo, Japan-based Final Fantasy house Square Enix reported a net loss of ¥1.67 billion yen ($17.22 million) for the April-June quarter, down from profits of ¥2.88 billion ($29.68 million) for the same quarter a year ago. Revenues for the company were down slightly for the quarter to ¥29.4 billion ($303 million), or 1.2 percent year-on-year. But it wasn't necessarily poorer sales performance in the game sector from a year ago that led to the losses. Square Enix completed its $117 million acquisition of UK-based Tomb Raider developer Eidos during the quarter, costs related to the acquisition appear to have weighed the business down. In the long term, the publisher said there will be no adverse effect on Square Enix's continuous growth as a result of the acquisition. Square Enix's games segment specifically reported a 7.2 percent sales increase during the quarter to ¥8.51 billion ($84 million). Operating losses in the segment were ¥992 million ($10.22 million), down from an operating profit of ¥1.66 billion ($17.11 million) a year prior. During the quarter, Square Enix released in Japan the DS game Kingdom Hearts 385/2 Days, which the company said has shipped 490,000 units since its May release. The publisher plans to release the game in North America in September. The Kingdom Hearts DS launch helped Japanese game sales surge to 920,000 units in the quarter, more than double that of the previous year -- although North American sales were down slightly to 400,000 units and Europe also dipped slightly to 560,000 units. Square Enix's other business include arcade machines, comic books, mobile phone content, and merchandising, which all tie back to video game-based properties. Next quarter should reflect a boost in financials driven by the Nintendo DS RPG Dragon Quest IX, which drew long lines to retailers when it launched in July in Japan. Square Enix said it shipped over 3.5 million units as of August 5, and sold-through 3.39 million units as of August 2. The publisher has yet to set a date for Dragon Quest IX in other territories. [UPDATE: Also mentioned in its financials, Square Enix revealed that the PSP title Crisis Core: Final Fantasy VII has now shipped 840,000 units in Japan, 770,000 units in North America and 550,000 units in Europe -- for a total of 2.15 million units. The firm also made a historical note, ahead of Kingdom Hearts's DS launch, that the Game Boy Advance title Kingdom Hearts: Chain Of Memories shipped 410,000 units in Japan, 940,000 units in North America, and 200,000 units in Europe for a total of 1.55 million units.]