Why Do Square Enix Develop So Many Social Games?

By Ishaan . December 17, 2012 . 11:50am

Square Enix sure make a lot of social and browser games these days. There’s Traveling Fairy for Mobage, Emperors SaGa for GREE, and Final Fantasy: Airborn Brigade to name just a few. Recently, Square also announced Star Galaxy.

 

Why so many social titles? Because they’re cheap to develop and more consistently profitable than console games, says Square Enix president, Yoichi Wada. The above chart shows the state of Square Enix’s social games, giving a glimpse of how many are profitable (blue bar), how many are unprofitable (red bar), and how many are still under development (green bar).

 

As you can see, the vast majority are raking in profits. If a social game flops, it doesn’t hurt Square as much, since these titles aren’t particularly expensive to make.

 

“In HD games, we usually have a mixture of profitable and unprofitable titles, generating profit as a whole,” Wada says. “As for our Social Gaming & Others [division], we only have very few titles that are unprofitable.” As a result of this, Wada adds, Square Enix will be increasing their investment in social gaming.

 

This doesn’t mean Square Enix are going to stop developing regular games, though. As we reported last week, their console and portable games output has been set back by the challenges of Final Fantasy XIV, which is a situation they’re looking to rectify, going forward. However, Square expect that they won’t see significant growth in console game earnings for another 2-3 years, after which Wada says he expects to see considerable growth owing to new business models.



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  • riceisnice

    That’s such an… Honest answer… I was expecting an excuse but… How am I suppose to respond to this?

    • Tony F.

      It’s thanks to social games that SQEX could hang on while (i.e.) Yoshi-P did an awesome job with A Realm Reborn. In fact, those cheap games helps a lot as resources for ‘bigger’ games.

      • AzuNo17

        Exactly. The situation wouldn’t change if they stopped releasing these. FFXIV is a priority for them at the moment. The rest of the revenue will be for the “next” big thing afterwards from Square. Whatever that might be.

  • James Beatty

    I see why they do it, it doesn’t mean i like it :l

    • alixraen

      inb4 “You don’t like SE making a profit?”

    • Ty Austin

      I don’t see why you wouldn’t want more Final Fantasy and to see SE take their franchise and try new things.

      I’m enjoying this game and a lot of others are as well.

  • Romangelo

    So they slapped in the face of true fans because of money?

    • neo_firenze

      It’s a company. They are in business to make money. If focusing on “true fans” was more profitable, they’d do that. Maybe the “true fans” just aren’t giving enough support to the games that are published for them.

    • Luna Kazemaru

      How ever you want to spin it i am sure you will still complain.

    • Ty Austin

      Say what you want, I’m a true fan and I’m enjoying this game so far.

      Oh! Carbuncle just sighted, gotta go!

  • TiredOfMyOldUsername

    So in short they are just greedy…

    • Luna Kazemaru

      In short you don’t understand how to run a company.

      • TiredOfMyOldUsername

        Nah i do understand that they need to make money, but is that a good reason enough to forget about all the fans that made them what they are today ?

        • Luna Kazemaru

          Where in there did it say.they where done with console or handheld gaming they aren’t leaving anything. They are making good profits from this which helps them i don t agree with the massive over flooding they are trying because that itself can back fire. I am not saying you got to like it but its better to understand why they are doing this other then always assuming greed

          • TiredOfMyOldUsername

            I didn’t mean it that way, i meant in the way that recently all they do is make game for IOS and games on consoles almost no1 asked for.

            How many years now peoples have asked for Kingdom heart 3 ?
            How many years peoples have waited for Versus XIII ?
            How many years peoples have asked for TWEWY 2 ?
            Theses are just a few examples.
            How many peoples asked for FFXIII-2 and Lighting returns ?
            How many peoples have asked for countless kingdom hearts spin-off ?
            I’m not saying they were bad games, i enjoyed most of them like many others, but still not many asked for them.
            They need to make money to run the compagny and there’s nothing wrong with making more money, but when they are releasing games only for the sake of money and slowly forgetting their fans, how is that not just being greedy ?

          • malek86

            I think you are making the mistake of considering the fans as the primary interest of a company. While fans are certainly good, they are only as good as the money they can bring. If new customers are gonna bring more money than previous fans, it’s hard to fault the company for changing their focus. Companies can’t only think about fans, there’s many more stakeholders around them.

            If you think that’s being greedy, look at it this way: before, they were only pleasing the fans for their money. They were just as greedy as now. It just so happened that theirs and your interests coincided, while now they don’t anymore.

          • Tien Ron

            i agree with this statement people seem to forget that it’s not all about what the fans want since when did company owe it’s fans anything? they make games you buy them simply trade. it’s out of order that fans thing their the big picture in a company heart. plus when they make their games it’s more focus on JAPANS market the rest of the world comes afterwards…

          • http://s932.photobucket.com/ usagi_san

            The same fans thinking that Sakaguchi returning would make any difference to the fortunes of SE?
            The same fans that have lost faith in the FF series after PSX era or FFX?

            If they can maximise their profit through social gaming to fund other titles, what’s wrong with that?

            The goal of a business vary from company to company, market to market is to: Maintain, maximise profit margins; maintain market share; tapping into viable markets and/or continuing to expand where possible are a few reasons. To an extent, all companies are greedy and look out for their own best interests. Why patent if sharing with their competitors is more important? Imagine Apple not suing Samung, or SEGA not suing Level-5 for infringement for patents?

    • http://gamgambit.tumblr.com/ Thespian Treasure Hunter ♢

      That or they’re seeking for money to fund their current grand and delayed projects, I think making games nowadays needs much more work, material and employees, meaning more money or I dunno lol.

      Anyway, while I do hate these hyped iOs games I guess we’ll just have to deal with em, now we know SE needs to release these as a big source of money.

  • doubletaco

    This is why any company makes social games. It costs next to nothing to make and people have no qualms about spending $1 at a time on some virtual item. Even small startups can get into the field and then sell their stuff for large sacks of cash.

    Makes me wonder if we’ll see a dot com-style bubble burst with them at some point in the near future.

    • surakian

      I doubt a bubble burst, but I imagine it all just fading into obscurity as developers shovel out more of the same and oversaturate the market. At that point, companies will move on to the next big, cheap thing.

  • ReidHershel

    Cool, I didn’t want a game with great gameplay and not for ios anyways.

  • http://twitter.com/DarrylThinks The Letter D

    Well that’s no surprise. From a business stand point, it makes a lot of sense. Social games are cheap to develop and even if they fail, it doesn’t affect SE at all. Whether gamers like it or not, the gaming industry is a business and each studio is in the business to make money. Nobody can deny that console and handheld gaming is kind of in a slump, so in the mean time, studios can make these social games in order to stay afloat.

  • Seizui

    ….You know, I wouldn’t have any issues with the social games if they did not look like shitastic flash games.

  • ragingmerifes

    The games may be cheap, but Square Enix is even cheaper.

  • http://www.facebook.com/magius.necros Magius Necros

    It’s a smart business decision. Companies want to make money, their fanbase are mere tools to achieve that end.

  • Nicolas Vasquez

    the problem is that social games are getting oversaturated, to the point you can find free alternatives to any game you want, this model can be great for the japanese market where fans get to the point of beign blindly loyal to a brand, but over here things are a little different we can see how many social game and indie developers are starting to struggle over the oversaturation of the market.

    • M’iau M’iaut

      Few of these titles are making the cross to the western market. Yes, in time the Japanese market may act differently — although mobile games still find an audience here — but for now, I don’t think it can be said the target audience is not being given ‘what they want’.

  • Barrylocke89

    I’d actually be very curious to see what specific social games are the most/least profitable. But generally, companies tend to only parade their “biggest winners”, not their “biggest losers”.

    I imagine the ones that are losing money are either a. Old (and thus stale and less supported), or b. Not based on a series that has a lot of fans.

  • $24431191

    Yeah, of course it’s profitable but it’s killing gaming.

    • shogunknight

      i agree, but game development cost arent getting any cheaper too. I just hope they dont go full social gaming only.

    • Luna Kazemaru

      Trying so hard not to laugh at this comment

      • $24431191

        Okay, “killing gaming” is a bit exaggerated but still, it’s not exactly helping it. I understand they need the money but it wouldn’t kill them to try a give their fans a game they want. Then again, Versus is in development but it’s taking quite a long time.

    • malek86

      I would argue that, with the number of new players now playing with social games, if anything, gaming is in a much better state than before.

  • Go2hell66

    you think it will ever get to a point where square stop making console games completely? obviously that won’t be any time soon but in the distant future

  • Monsley

    I hate social games with a passion, but if they contribute (financially) to the development of regular games, it’s okay.

  • Lunarian Angel

    You know, reading this really got me thinking. Square Enix has been the source of a lot of complaint recently, due to the focus being taken away from more popular projects like Versus XIII and being pushed onto XIV A Realm Reborn and Social games. While it is unpopular, think of what this means for the company. Social gaming has become a huge wave since they are convenient, simple to make in small groups, and cheap. It doesn’t bring great profit to a company, but it keeps it afloat and gives fans small increments of enjoyment to hang onto between main titles. And with A Realm Reborn, imagine what it means for the company in the long run. They’ve stated that XI is their most profitable Final Fantasy to date, and that is because of monthly payments I presume. With all the effort they’re putting into A Realm Reborn, XIV shows promise on this subject as well. It’s a steady income for the company and would aid greatly in the workings of future titles.

  • http://s932.photobucket.com/ usagi_san

    Good to see that the social games are providing a steady amount of profit for SE.

    I hope for their sakes, that, FFXIV: A Realm Reborn is a success. Can’t wait to see the beta version.

  • monkey

    I wish wada were fired

    who cares if they are more profitable, THE FANS DONT WANT IT.

    There company is loosing money overall because of this

    • M’iau M’iaut

      Loud fans demanding only Versus or KH3 are not Squares only fans. The target audience for these titles is domestic Japan where the mobile and social gaming culture is a major activity. Currently they still provide quick access to spendable cash which can still be used throughout the company.

      • monkey

        who says thats what I am demanding?

        I am demanding localizations for dq x, bravely default, slime 3, and most of there games

        I want them to work on console and portable titles like alot smaller companies than them are working on really great things actually gaining fans and not being in the red

        companies like nis japan, atlus, namco are running laps around them

        • Tien Ron

          japan don’t really care if america gets it or not they center is within their own country, fans are apart but as for any company they want more people to come in and with smart phones being the common thing everyone has nowadays it seems smart to cater to that crowd.

    • http://www.siliconera.com/ Ishaan

      I see your nickname is representative of your posting habits.

      • monkey

        It was actually suppose to be representative of something else………

  • Marcelo Henrique Chaves

    You know what else make money, SE?
    * Releasing long awaited games;
    * Releasing HD versions( which i think is a good investment) and HD collections;
    * Keeping your reputation high with fan-base WHILE release these social games;
    * Improving/reinventing a game even when the previous one sold a lot [ FF XIII ](Learn from Ubisoft, AC IP);
    * Using your arsenal of IPs and Characters on new games and sequels ( the list is so damn long that is exhausting just thinking about it).

    • http://s932.photobucket.com/ usagi_san

      1. FF Versus XIII guarantees making money? Hype =/= success.
      2. HD titles depend on much work is needed to make the necessary updates.
      3. Console and portable titles require more time in development than a social game.
      4. That’s very subjective, as it depend on what a person feels is an “improvement”.
      5. Theatrhythm and some social games have taken advantage of previous IPs’ characters.

      • Armane

        4. I think the point is, FFXIII-2 and FFX-2 before it, were these weird sequels that don’t really fit in with their predecessor. If you asked people what they liked about XIII or even X, I don’t think their response would be “I liked the outfits so I want more, even if I have to pay for them.”

        • http://s932.photobucket.com/ usagi_san

          Well in X-2′s case, after the events of the final scenes in X… it would be hard to continue the series with the same intensity as its predecessor as it wouldn’t really make sense to. The fan service of X-2 wasn’t to everyone’s taste, but they wanted to show that the atmosphere between the two has changed.

          I haven’t finished XIII-2 so I can’t really express a proper view on the other one.

  • http://www.facebook.com/jefriputra Jeff

    You already get enough profit SE, Now bring Type-0 and Bravely Default to US~

  • Ladius

    I can only hope FF14 RR is successful enough to give SE the confidence and resources to step up their game in terms of development, both on home consoles and handhelds (I don’t think I’m the only one to have noticed they scaled down that sector a bit, too, compared to the slew of games and even new IPs seen on DS and PSP).

    Relying on social games is fine as a backup or side business, but no one should ever forget that the ones they develop are popular because they’re mostly spin-off of series that have became well known thanks to their iterations on traditional platforms. Scaling down your consolehandheld output means your brands will be less relevant in the future, and then even their social spin-offs won’t be able to be as profitable as they’re now.

    Thankfully, it seems they understand the situation and know that they are relying so much on them only because of the issuses they’ve faced with FF14.

  • SirRichard

    Fair enough, really, and given all the antics their main game developers have been up to (Versus’ ridiculous dev time, making up for the cost of Final Fantasy XIII’s engine, XIV’s failure and overhaul, developing the new engine and the Agni’s Philosophy tech demo) it also makes sense that they’re pumping out as many as possible to get as much profit as they can.

    Doesn’t quite stop the exasperation at their continued social game reveal streak, but it makes sense at least.

  • http://twitter.com/class_zero Rohan James

    “If a social game flops, it doesn’t hurt Square as much, since these titles aren’t particularly expensive to make”.

    the problem is they struggle to make a quality game on console,even more badly than other Japan developers, can anybody here give detail of development team inside square enix japan?it’s nice to know what Hiroyuki Ito working now

  • epy

    Isn’t this a little short-sighted though? Sure, it’s making money for them now and that’s all good but who buys these social games when there’s a TON of options out there? Fans of the social game’s respective franchise. A good part of SE’s current fans come from the days of Squaresoft and Enix and we’re getting old. People stop gaming as much when life gets in the way. The new fans are not replacing all the ones that leave or become disechanted with SE. What I mean is something like Circle of Mana gets its people from fans of the Mana series but new fans of SE either don’t know the Mana series at all or have played one of the recent (poor) entries and will not be interested in it.

    Sure, a social game based on FF or KH will always be profitable but I don’t think this business model is sustainable. There’s also the damage “image of the company” . For the current “mainstream” gamer, SE is the butt of the “lots of zippers” and “spiky hair” jokes. Even a CoD fan “knows” (I’m using quotes for a reason here, mind you) that FFXIII “sucks” even if they don’t know anything about FF as a whole. Add to that the whole FFXIV catastrophe, the constant botched countdowns and teasers, the almost vaporware status of Versus, and the notion that “all they do is iOS ports and social games” and you have yourself a shadow of a brand that used to evoke that “must buy” feeling from many of us. The “real” games they DO release (again, quotes) are either mediocre, good but not great, or just never leave Japan. I also hate the way they did DLC in FFXIII-2 and fear for its future implementation, but that’s a personal thing.

    This would all be moot if this is just a temporary strategy but they’ve been doing this for a while now and I don’t think they’ll stop. Now, I don’t consider myself a business analyst like many do over here but on the current track, I see a dimished SE limited to releasing stuff mostly for Japan, a lot of western angry people wanting stuff localized, and some success from their western branch. You know, like now, only worse.

    tl;dr: In my amateur opinion, this strategy is short-sighted.

    • Ty Austin

      How’s this damaging the image of the company? People are talking like NOBODY plays this game.

      I’m a fan of one of the more popular types of these games called “Rage of Bahamut.” I’ve always wanted a Final Fantasy version, now I do.

      Square (along with nearly all companies) like to take their franchises and bring them into new territories (fighting/rhythm games for example) why shouldn’t they expand it into this territory?

  • http://www.cubiz.tk/ Auragar

    “Because they’re cheap to develop and more consistently profitable than console games, says Square Enix president, Yoichi Wada.” <— Because we are cheap… butts… who don't care about making decent games for our fans. Be we are lazy, and just want make a quick buck. <— EIther of those work in replacement for the line.

  • Göran Isacson

    I wonder what these new business models will be (and what challenges with FFXVI there were that prevented other teams from doing work on THEIR games because why do you even have multiple teams if one game can weigh ALL of them down but I digress), and if people would not be so mad if the social games weren’t based on existing franchises that they want to see make a Big Format-return.

    Like, seeing Secret of Mana and TWEWY return in social games who do nothing to advance the stories and worlds that we fell in love with is like watching big-name, talented actors do bit-parts in schlocky slashers just to foot the bills, and that is a bitter darn pill to swallow, I think we can all agree on that. But would these games not be as profitable if they weren’t tied to big name-franchises? Would they make Squenix any cash then? Food for though.

    Of course I’m working from the notion that Squenix making money is a good thing and not just feeding their already present bad habits, but bear with me here, I’m optimistic like that.

  • CirnoLakes

    It’s basically admitting what we all know. A quick cash grab.

  • Lester Paredes

    Social games usually are portable games, and portable games are huge in Japan, where most of these come out. While I’m glad the social games keep Squeenix afloat, I’d personally like to see more on the console front. Or at least a few more games for 3DS and Vita (preferrably Vita. C’mon Squeenix? How much would it cost you to allow KH:BBS and Einhander and FF7: Crisis Core and FF Type Zero for digital download?)

  • Elvick

    Personally, I have no issue with social games/mobile games if the IP that they’re using for these (essentially) cashins are actually being supported outside of that mobile/social space. ie; Final Fantasy, it’s perfect for it. They support FF all the time, tons of spinoffs, main series is never in question of development future.

    So some social games don’t really matter, and is a nice bonus to the support elsewhere.

    Seeing social games in a series that doesn’t get any proper support outside of these games is like salt in the wound of having nothing. “Oh, well we can’t give you a legitimate sequel or anything… but have this quick cash in on the IP! :D”

    Capitalizing on an IP you don’t support properly is so distasteful.

  • echokanon

    Still, I wished SE will develop more games not named DQ/FF/KH and made them as series

  • Suzaku

    No surprise. As console games become higher definition and more technically demanding, they become more expensive to produce and take longer to develop. For a long time companies like Square-Enix were able to balance this out by developing lower resolution games for handhelds, but now the gap between handheld and console is narrowing, leaving the social and mobile markets as two of the few outlets for cheap and speedy game development.

  • Cullen McDufford

    SE stopped making decent games after Final Fantasy IX, so I don’t care if they fuck their consumer base for money. They already sold out to rabid anime fans and rely on generic character designs and badly-written stories that undereducated high-school kids will lap up because they don’t know any better.

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