Square Enix announced in a press release today that it had booked an extraordinary loss in the financial results for the six-month period ended September 30, 2018.
The loss that amounts to 3,733 million yen (about $33 million) comes from Square Enix’s subsidiary Luminous Productions, led by Final Fantasy XV director Hajime Tabata and staff, which was established back in March of this year with the purpose of developing new AAA titles and innovating game content to a global audience.
Square Enix shared information on the nature of the loss and impact on financial results in the press release:
Square Enix Holdings Co. Ltd. (the “Company”) announces today that it has booked the following extraordinary loss in the financial results for the six-month period ended September 30, 2018.
1. The cause and nature of the extraordinary loss
Having conducted an in-depth review of the business strategy for Luminous Productions Co., Ltd., a wholly-owned subsidiary (the “Subsidiary”), the Company had decided to focus the Subsidiary’s development efforts on large-scale, high-quality AAA game titles, which best leverages the Subsidiary’s strengths. This decision has resulted in the booking of an extraordinary loss amounting to 3,733 million yen, including the disposition of the portion of the content production account related to the game titles under development at the Subsidiary and impairment losses on intangible assets, in the Company’s financial results for the six-month period ended September 30, 2018.
2. Impact on financial results
The aforementioned extraordinary loss has been fully reflected in the financial results announced today as the “Consolidated Financial Results for the Six-Month Period Ended September 30, 2018 (Japan GAAP).”
Keep in mind that this is a notice from Square Enix explaining a part of its financial results and where a substantial amount of money is going into. We don’t know what games Luminous Productions has been working on since its establishment, but when the development studio was announced in late March, Square Enix noted that more information regarding the studio’s “new projects” would be revealed at a later date. For now, we know that they’ve been putting in some good money into the studio’s development.