Former Square Enix Exec Sheds Light On Final Fantasy Sales Expectations & Budget Realities

A former Square Enix executive has shed light on sales expectations and budget realities of the Final Fantasy series.

[CrimsonWing69]

Yea, I love how so many on here did simple math like 3mill x $70 = they made a profit.
When that’s not even close to how this works.

They take the years spent and equate the ROI to the sum % of stock prices during the years of development to do a baseline ROI and then you have the 30% taken out of every sale on a platform EXCEPT for Steam, which is 12%.

Nobody factors in the cost for production of physical media, the cost of advertising, marketing, and the loss from discounts/used game sales and they wonder why selling 3 mill for FF16 isn’t profitable. Or they don’t understand amortization and how games are supposed to generate profit over a long period of time.

Instead, they say Square makes unreasonable expectations for a game to sell when it’s the reality of the cost of AAA development and ROI. I wish I could go back and reply to comments where people jumped down my throat telling me FF16 and FF7 Rebirth were financially successful and I had no idea what I’m talking about.

[EternalTitan]

3mil is not a flop. 3X70 means 210 million. That still made some profit because gaming industry does have a high profit market/product.
Its just that this was not able to cover their fiscal year and disasters like Forsepoken.
Also 16 wasnt even a JRPG let alone an RPG let alone a Final Fantasy game.

[CrimsonWing69]

This is exactly what I’m talking about…

[StoneTitan]

You are wrong about steam only taking 12%
Steam takes 30%
The Unreal store takes 12%

[CrimsonWing69]

Dang it, that’s what I meant. EGS only does 12% which is why exclusive deals for them are better for the devs in terms of getting more on a sale.

So with the 30% taken out of a $70 the pub/dev gets $49. Less for discounted sales and none for used game sales.

[Magic_Spatula]

I thought Epic takes 15% but reduces it to 12% if you use Unreal. Also again, 30% is the industry standard. No one talks junk about Nintendo, Sony, and Microsoft taking 30% oh but big bad Valve and Steam. Oh no, they take 30%. Boooooo. Also, Epic exclusive third party games have been proven to not make a profit for companies. Just do some research and you can find articles about mostly indies saying Epic exclusivity was not worth it. Not all, but some. Supergiant Games is one of the few positive stories about Epic exclusivity cuz they use that exclusivity as a beta to help improve their games (Hades) and then release it on Steam where there is a bigger install base. Remedy Entertainment confirmed that they didn't turn a profit from going Epic exclusive. Square was not happy about the sales numbers for Kingdom Hearts, Final Fantasy 7 Remake and Strangers of Paradise when they were timed exclusives. Which is one of the reasons they're finally releasing the Kingdom Hearts games on Steam.

[VersusDMC]

The problem is you assume it is simple math for FF16 and Rebirth. You don't know how much money Sony paid for exclusivity or if they reduced the 30% cut as well.

Both those games definitely made money and still have PC versions to be released.

[CrimsonWing69]

How can you say that when you don’t know?

Here just for context, Spider-Man 2 was $300 mill. In order to break even, that is no profit, they needed to sell 7 mill copies. That’s at full price, btw. So, we’re not saying 7 mill copies that could be $20 each or at a discount.

FF16 Selling 3 mill was probably a good sign in the beginning until sales stopped hard. You know what Square did then?
Something pretty drastic that plummeted their net profits by 65% and operating income by 78% and put them in the red. They paid the dev cost themselves. The reason was sales halted so badly that doing this would make every game sell at a profit moving forward and looks better to investors.

So, just to recap a highly expensive AAA game like Spider-Man 2 at $300 mill budget has to sell over 7 mill to make a profit and even more so for ROI. FF16 did 3 mill and sales slumped so badly they paid off the dev cost instead of allowing for amortization.

FF7 Rebirth was estimated at 2.5 mill and slowing down…

So, yea, those sales don’t even cover the dev cost. How are you coming to the conclusion that they sold well enough?

[VersusDMC]

I love how yearly profits drops are blamed on the PS exclusives that sell well enough to be best selling games of the month and of the year and not the multiple other multiplatform games that bombed. Like Valkyrie alysium, diofield, etc...

Also assuming Rebirth or 16 had the same budget as Spider man 2 is beyond idiotic considering Japanese game development is way cheaper than in the US and Sony has to pay Marvel licensing costs.

I am coming to the conclusion that the games sold well because Square said they sold well.

16 sold to expectations at launch but dropped more than expected but still expected to hit 18 month goal. Rebirth sold under expectations but still not bad. Those are their words.

[CrimsonWing69]

I’m not saying it cost 300 mill to make I was using that as an example. Say it was $100 mill and then another $100 mill for marketing and events…

Get where I’m going with this? It’s not like a game suddenly ramps up to another 3 mill units sold at full price a year later. Games are much like movies in the way that launch day sales and those few weeks are where the most sales happen and then it slows down big time.

As for your assumption, I don’t know how to break this easily to you, but they told investors it failed to perform and again paid off the dev cost instead of waiting for amortization. I’m not trying to insult your intelligence, but do you know how amortization works in terms of sales and expenses?

Also, can you link me where they said FF7 Rebirth sold “not bad?”

[VersusDMC]

Here is where square enix president says Rebirth sales aren't necessarily bad.

https://www.reddit.com/r/FF...

They told investors FF16 will reach the 18 month goal in the link above and amortization of the costs of FFXVI meant future sales a profitable according to the analyst in the link below

https://www.tweaktown.com/n...

"Rather than follow the trends, Square Enix has instead chosen to pay off FFXVI's costs outright, which means that all future subsequent game sales will be profitable."

[CrimsonWing69]

Yea that’s the drastic move I was mentioning that out then in the red. They paid off the entire dev cost for FF16 so that any game moving forward is technically profit… lets be real, you put your company in the hole like that those copies while, technically profit by definition, isn’t recouping things. He believes that can make the 18 month goal, which I don’t know what that means… are they talking sales of the game or the point in time that the game should be at in terms of profit?

Foamstars lost 95% of its playerbase as a free-to-play game. Are you telling me the amount of microtransactions it sold werent “necessarily bad?”

It sounds kind of like PR talk. I mean, if you’re promoting or discussing a product you tend to go politician when speaking. Y’know, like when the Xbox President gets asked questions and words them in ways not to reflect negativity… or in her case completely shift the discussion.

The reality of the situation is these games didn’t sell and are actually selling worse with each entry. It’s not just with Square, but this is hitting the industry as a whole.

A lot of Games just aren’t selling and the cost to develop is too much. My other point was to show you can’t say game sold 1 mill x $70 = profit made and dev cost covered when there’s so much more to it than simple math like that.

[Michiel1989]

ff16 has been worked on since 2015, that was preproduction so I'm not sure if we know when full production began, but that is a long time for a studio to be working on anything.

So I'm not sure if I believe it has made profit (already)

[Elda]

More than likely FFXVI cost 100 million or more to make, then giving 30% of the sales to Sony means they made a very small profit if it only sold 3 million copies.

[shinoff2183]

We don't know how much Sony paid square though either

[Elda]

@shinoff2183. There's a possibility Sony didn't pay S-E anything as far as exclusivity. Maybe S-E thought that FFXVI would be better off being exclusive on PS5 instead of putting it on XB as well because FF sales are not really all that great on XB. No one knows how business was handled between Sony & S-E of the exclusivity of FFXVI but the 2 companies.

[neutralgamer1992]

Crimson

When you do exclusive deals platform holders can decide to take less than 30%. Most games make the most money in initial 12-18 weeks (most not all) because that’s when game is selling for MSRP

And square enix does stupid things to make less money on yearly basis they release complete and utter failures like Forsaken

[CrimsonWing69]

Can you show me where you found the info that platform holders take less than 30%? You’d think if you paid for it to be exclusive to your platform you’d want to get as much money out of the deal as you can.

And yea… I mean Forspoken definitely put them in the hole and they dissolved that entire studio. But look at FF7 Rebirth, what could easily be considered the best game they’ve done in ages, it’s selling even worse than 16. If it sold “good enough” you wouldn’t see them cease all exclusivity and aggressively pursue multi platform releases.

[neutralgamer1992]

crimson

first of al that deal is very different. SE didn't want to remake FF7 because of the cost so sony helped them with actual development costs upfront. without sony there would be no FF7 remake. Just like without sony there wouldn't be silent hill 2 or MGS3 remake

[InUrFoxHole]

You're absolutely right. You're the only one figured that out. Congratulations 👏 👏 👏

[CrimsonWing69]

Awww cmon man. I’m trying to just have a discussion on this because I’m legit curious on how this all works. Like toss the ol’ pig skin back and forth with me, here.

I'm not trying to brag, but when this all went down and I linked articles stating otherwise I got dogpiled by fanboys.

Seriously, let’s flip the script and actually have some civil discourse here instead of going straight for the throat punches.

[InUrFoxHole]

I'm all for that but you know other people have factored all that in. Ivan Drago that game... if it dies... it dies

[shinoff2183]

You forgot to mention Sony paid handsomely for these to be exclusive also. It's not like Sony just asked and square did it. Sony paid

[CrimsonWing69]

I did mention it in the comments. I have to do my best not to drop novels on here trying to be as articulate as possible.

What was the total Sony paid? Because if it’s as “handsome” as you say it is why is Square pulling away hard from exclusivity?

[fr0sty]

The physical media barely costs anything to make, I know because I make blu-rays for a living. You can buy them by the disc for way less than a dollar per disc. Case and all, I dont spend more than $1.50, and I'm not even buying them in the bulk numbers Square is.

[CrimsonWing69]

Right but then you have to factor in how much do distributors take for selling the physical media. So, how many discs gets manufactured at $1.50, how much are the physical distributors taking? So keep in mind platform holders also take a percentage of physical media and then the actual stores/distributors take a percentage. People wonder why there’s a larger push for digital only… well, that’s a pretty big reason.

The point though is all this gets factored in. How much do the devs/publishers take from a physical media sale?

[Magic_Spatula]

Square has always had astronomically high profit expectations. I saw a report where they expected to make anywhere from 400 - 500 million last fiscal year and they only made half of that (a little over 200 mill). They expect to make hundreds of millions of dollars and tens of millions of sales on a single game and when it doesn't meet their high expectations, they consider it a failure. Yes, gaming is their biggest money maker, but they do have other avenues of revenue. I believe they have owned a manga publishing company and a figurine making company for decades now.

[EternalTitan]

Stop making terrible game like 16 and it will be fine.

[andy85]

Bit of a stretch

[VersusDMC]

The 3 million plus selling, 87 metacritic game is definitely the problem and not the mediocre bombs like diofield, harvestella or Valkyrie alysium...

[EternalTitan]

Its 3 million shipped(including digital) which was the first sales announcement. Its been 10 months and there has been no sales update. Game fell off like a cliff.

[FinalFantasyFanatic]

That whole shotgun approach of mediocre games really did back fire on them.

[franwex]

Hard disagree here. It’s not a terrible game. Not being YOUR cup of tea is different. Some people don’t like Tetris, and that doesn’t mean it’s a terrible game.

[Terry_B]

Yeah...and more than "some" people want to play a Tetris if the product is named Tetris.

If a game is called Tetris 16 but it plays more like Lumines or Collumns its not what "some" people wanted.

You get what I mean.

[franwex]

@Terry

It’s expected that every FF will be different though. I do agree that the combat itself was lacking compared to previous entries. But it’s not a bad game at all. It’s not even a bad final fantasy either.

[shinoff2183]

It barely felt like an rpg though. That turns of alot of people. Far as 7 tmremake trilogy they made a dumb decision with 3 parts, rebirth may have suffered from alot of other jrpgs coming out at the time where as far as rpgs or jrpgs ff16 had no competition. Also not sure how true it is or was but I read that the ff7 remake double pack wasn't being counted as a sale

[FinalFantasyFanatic]

I just don't get excited for FF games anymore, I've been disappointed with the franchise for a long time now.

[Elda]

The gameplay & the story in FFXVI was awesome.

[EternalTitan]

16's story is poorly written. Characters are forgettable.

[Killa78]

XVI was incredible.

[shinoff2183]

I can get behind this

[repsahj]

Speak for yourself, I like both FF16 and FF7Rebirth.

[Elda]

Clearly your opinion, opinions are not at all facts.

[Vithar]

great read!

[INMATEofARKHAM]

Found the bot account! /s

No one reads more than the headlines, Mr. Robot. 😉

[Vithar]

LOL :P

[Lionsguard]

This honestly does not bode well for the final part of the FF7 series. It often makes me wonder why they ever bothered to remake it at all if this is the thanks they get for making one of the greatest RPGs to exist. All that hooting and hollering at conventions for nothing.

[ziggyzinfirion]

I'm sorry I keep seeing this but what exactly is the concern for Part 3? Aren't they already announced that they are already working on it?

[Lionsguard]

Yeah but who knows what they will cut to save money knowing that sales are low.

[shinoff2183]

Lionsgard I don't think they will cut anything tbh. It's still gonna get a pc release. Possibly Xbox if it's still around to.

[shinoff2183]

I was alright with it but they may have turned some people off the last 10 years with ff. Unless their remakes I won't be buying a new ff game.

[AndrewM]

No one ever asked for 3 parts back then.

[Lionsguard]

No, but if it weren't 3 parts it would have been 100% cut content and been a worst off product in the long run. So far, Remake and Rebirth have been phenomenal.

[TheColbertinator]

They should have released a PC version too. And no not EGS but Steam and maybe someday GOG

[gold_drake]

thats good and all, but we dont lknow how much sony invested for exclusivity. if that 100 mil. that was used here is cut in half or even to 60. the outcome is quite different.

im sure this is part Square having ridiciously high expectations

[repsahj]

They release tons of mediocre games together with FF16 and FF7, what do you expect.

[SubtilizZer]

3mil first week is good…. It’s the fact that that’s basically the only figure we have…. Which is normally a bad sign.

Unless someone can link me to more… it’s safe to assume this game didn’t perform well for Square.