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[Link316]

Online Games Power Square Enix Profits

Online gaming is now the "one pillar" of Square Enix, director Yosuke Matsuda said in the company's recently-released half-yearly financial report, and the figures back him up. The publisher's operating profits jumped by more than 155% compared to the same period in the previous fiscal year, to 5.9 billion yen ($56.7 million), primarily on the strength of increasing profits from online games.

Sales in Square Enix's online game division, supported primarily by Final Fantasy XI, neatly doubled compared to the same period last year, from 3.8 billion yen ($36.5 million) to 7.6 billion yen ($73 million). The company realized a hefty profit margin in that area of its business, too, with an operating profit of 3.2 billion yen ($30.7 million), which is nearly four times what it earned in the first half of its last fiscal year.

More than 550,000 paying users now subscribe to Square Enix's online games, and that figure is expected to continue to rise now that Final Fantasy XI is gaining popularity in Europe. In Japan, meanwhile, two more online games -- the MMO action-RPG Fantasy Earth and the mecha action game Front Mission Online -- are expected to launch next year.

http://www.1up.com/do/newsStory?cId=3136736

after some number crunching,
- 54% of their profits came from the online division, so FFXI essentially made more profit than all of Square Enix's other games combined
- the profit margin for the online division is 42% versus 16% for the rest of the company
- revenue in their online division grew by 100% vs 5% for the rest of the company

good for Square, they took risks and now they're reaping the rewards

 

[soundwave05]

Cool. Good for them.

FFXI has sorta flown under the radar, but it seems to be turning a nice amount of coin for them.

What else did Square-Enix release last year though?

 

[Mrbob]

This is funny. All those haters who did nothing but complain about FFXI PS2 Japan launch and how it was a failure just eating some major crow.

More than 550,000 paying users now subscribe to Square Enix's online games, and that figure is expected to continue to rise now that Final Fantasy XI is gaining popularity in Europe. In Japan, meanwhile, two more online games -- the MMO action-RPG Fantasy Earth and the mecha action game Front Mission Online -- are expected to launch next year.

Does this make FFXI the most successful MMORPG? I always remember Everquest being hailed as number one for a long time but that only had like 400K subscribers at its peak.

 

[mrklaw]

online gaming is profitable for the 5 companies that can make games that persuade people to pay $10 a month to play them. Thats not many people, and not many games, and not many companies.

 

[mumu]

It's a MMORPG, what else is new?

 

[radioheadrule83]

I'd like to know whether they're playing on PS2 or PC.

 

[Son of Godzilla]

online gaming is profitable for the 5 companies that can make games that persuade people to pay $10 a month to play them. Thats not many people, and not many games, and not many companies.

Wasn't Microsoft taking a hit on XBL?

 

[mrklaw]

MS is supposed to not make money on the $50 or however much it is for XBL (£40 in the UK). But thats their fault for spending too much money on servers. If they truly have 1 million subscribers to live, thats $50m a year coming in. That pays for a lot of infrastructure. As all they mostly do is matchmake/friends list stuff, I'd expect them to start making money soonish - at least with live2 on xbox2.

 

[Lionheart]

online gaming is profitable for the 5 companies that can make games that persuade people to pay $10 a month to play them. Thats not many people, and not many games, and not many companies.

Online gaming can be very profitable when the costumers don't even pay a monthly fee though.

Think about Blizzard's Battle.net: I think a lot less people would have been willing to buy the games if they didn't include online play. And Blizzard is very profitable IIRC, while WoW is the first game you had to pay to play online from them.

Many PC FPS games sell mainly because of the online play as well and those companies don't even set up (a lot of) their own servers, so they do not have a lot of extra costs after development is done of an online game.

 

[Meier]

- 54% of their profits came from the online division, so FFXI essentially made more profit than all of Square Enix's other games combined

Except FFXI isnt the only part of PlayOnline. You're ignoring CrossGate which in all likelihood is the cause for the majority of their profits. I dont think anyone has claimed that MMORPG's arent a means to make money if they're successful -- how else would NCsoft become such a huge force in PC gaming worldwide?

 

[Gattsu25]

online gaming is profitable for the 5 companies that can make games that persuade people to pay $10 a month to play them. Thats not many people, and not many games, and not many companies.

this statement would be true if the PC games market never existed...Blizzard's and Epic's successes shit all over you console minded idiots whenever you talk about online

 

[Mrbob]

MS is supposed to not make money on the $50 or however much it is for XBL (£40 in the UK). But thats their fault for spending too much money on servers. If they truly have 1 million subscribers to live, thats $50m a year coming in. That pays for a lot of infrastructure. As all they mostly do is matchmake/friends list stuff, I'd expect them to start making money soonish - at least with live2 on xbox2.

Well that's the thing. The money they have spent is an investment in XBox Live! towards the future. Sure it may be a huge upfront cost but when you look long term it's a worthwhile investment.

 

[Scott]

Does this make FFXI the most successful MMORPG? I always remember Everquest being hailed as number one for a long time but that only had like 400K subscribers at its peak.

It's either the 3rd or 4th most successful MMORPG worldwide, nobody is sure which.

Basically, going off available subscription numbers, it's behind Lineage (1st) & Lineage II (2nd). However, Gravity has recently been claiming they have 17 million (!) users worldwide for Ragnarok Online, but they haven't released any statistics to back that claim up... So it may or may not belong in the top spot.

Anyway, if you want a good MMORPG subscription breakdown, go here.

I'd like to know whether they're playing on PS2 or PC.

Unfortunately, Square Enix hasn't tallied the totals for each platform... However, there is a good breakdown of character counts, levels, job types, etc available here, if you want to check that out. It's a little outdated, though.

Except FFXI isnt the only part of PlayOnline. You're ignoring CrossGate which in all likelihood is the cause for the majority of their profits.

Just to nitpick here: CrossGate isn't a part of PlayOnline.

PlayOnline so far includes Final Fantasy XI, Tetra Master, and a Japan-only Mahjong title. Soon it'll also include EverQuest II, Front Mission Online, Ambrosia Odyssey, and Fantasy Earth.

 

[DonasaurusRex]

Tell NC Soft , SOE, and Vivendi these games dont make money.

 

[Meier]

Just to nitpick here: CrossGate isn't a part of PlayOnline.

PlayOnline so far includes Final Fantasy XI, Tetra Master, and a Japan-only Mahjong title. Soon it'll also include EverQuest II, Front Mission Online, Ambrosia Odyssey, and Fantasy Earth.

Ahh my bad -- I know CrossGate is a part of Square-Enix's online division and thought they were all grouped under the moniker PlayOnline.

 

[Link316]

Well that's the thing. The money they have spent is an investment in XBox Live! towards the future. Sure it may be a huge upfront cost but when you look long term it's a worthwhile investment.

yup, XBL is like AOL, Paypal, Amazon, eBay, etc in that regard, the most important thing is to build up your brand/marketshare while the market is still in its infancy so that you become the dominant player once it takes off

 

[Gattsu25]

yup, XBL is like AOL, Paypal, Amazon, eBay, etc in that regard, the most important thing is to build up your brand/marketshare while the market is still in its infancy so that you become the dominant player once it takes off

what market? The already mature online games market?

 

[mrklaw]

are you in a pissy mood today Gattsu?

Sure, there are lots of people playing lots of online games on teh (sic) mature PC, but there aren't many companies making money out of online right now. Any company not making a MMORPG even thinks about charging for something and the PC guys would have their eyes out with pitchforks in a second.

All that is being talked about is making money. The sort of thing that is constantly promised, but never seems to actually happen. IMO MS have the best chance with xbox2 and live2. I don't see that happening on PC anytime soon. MMORPG company excepted, but that is the exception that proves the rule.

 

[Mrbob]

Lets also not forget that the money MS spent on Xbox Live! is going to waste.

It is by far superior to the PS2 online experience. I'd mention Gamecube too but their online presence is so miniscule it isn't worth the effort. Although Nintendo has a blueprint to copy now and that is Xbox Live!

Besides, Xbox Live! is just going to continue to grow.

2 million subscribers X 50 bucks a year = 100 million dollars/year

Long term.

 

[Son of Godzilla]

are you in a pissy mood today Gattsu?

Sure, there are lots of people playing lots of online games on teh (sic) mature PC, but there aren't many companies making money out of online right now. Any company not making a MMORPG even thinks about charging for something and the PC guys would have their eyes out with pitchforks in a second.

All that is being talked about is making money. The sort of thing that is constantly promised, but never seems to actually happen. IMO MS have the best chance with xbox2 and live2. I don't see that happening on PC anytime soon. MMORPG company excepted, but that is the exception that proves the rule.

It has the best chance because you don't even acknowledge the online capabilities of non pay for use services.

 

[mumu]

2 million subscribers X 50 bucks a year = 100 million dollars/year

That's really not much. I'm sure XBOX Live! marketing and promotions alone eat that up. In the end it's not about money anyway, but offering additional value for their games.

 

[acklame]

i'm still playing FFXI, so SQEX has gotten $13 x 6 months = $78 from me this year.

 

[ManaByte]

It's a MMORPG, what else is new?

Most MMORPGs don't make money. The only PROFITABLE company that is 100% MMORPG is Mythic. Square came up with a very profitable model for FFXI/PlayOnline, which is now working quite well and other games (EverQuest II) are using some of the ideas that worked out well for Square (PlayOnline Plus and StationPlayers have similar premium features). That shouldn't be a surprise as Square Enix and SOE have a pretty good relationship (SOE handles all the FFXI GMs in the US).

 

[paul777]

Although Nintendo has a blueprint to copy now and that is Xbox Live!

I doubt Nintendo will fall into that trap. Xbox Live is too niche for its own good. Online needs to be implemented in a mass-market-friendly way if it is to become a significant part of gaming. If Iwata's juxtaposition of Live and consoles is anything to go by, I'm sure Nintendo agrees, and will act accordingly in the future.

 

[Cubsfan23]

Lets also not forget that the money MS spent on Xbox Live! is going to waste.

It is by far superior to the PS2 online experience. I'd mention Gamecube too but their online presence is so miniscule it isn't worth the effort. Although Nintendo has a blueprint to copy now and that is Xbox Live!

Besides, Xbox Live! is just going to continue to grow.

2 million subscribers X 50 bucks a year = 100 million dollars/year

Long term.

Plus Xbox Live carries over to the Xbox 2

 

[Great Wasabi Man]

I dunno I thingk SoE, Cryptic/NC Soft, MS and soon Blizzard would also disagree.

 

[Mrbob]

That's really not much. I'm sure XBOX Live! marketing and promotions alone eat that up. In the end it's not about money anyway, but offering additional value for their games.

Well I fully expect Xbox Live! to go much higher than 2 million but I guess I was just using it as an example. I'd like to know what the yearly cost will be to keep xbox live! infastructure going.