Square Enix Reports Q2 2022 Earnings - MMO Segment Reports Record Revenues Thanks to FFXIV Subscriptions

August 7, 2022 Omer Altay Comments

Square Enix reported their Q2 2022 earnings on Friday with total revenue coming in at 53.5 billion Yen ($396m USD). More interestingly though, revenue from 2 of the 3 major games segments showed declines while only 1 segment showed growth. HD Games (think buy to play games) and Mobile games were both down over the last 2 years while only MMO games increased. Square Enix chalks up the strength of MMOs to "paying subscriber numbers for Final Fantasy XIV rose YoY (year over year)"

Revenue for MMO games (Final Fantasy XI, Dragon Quest X, and Final Fantasy XIV) came in at 14.1 billion Yen combined (~$104m USD) with the vast majority of that coming from FFXIV. This is the first time in the company's history that MMO revenue surpassed that of traditional game sales (HD Games). While mobile game revenues remain significantly higher than any other category, it's worth mentioning that these revenues are typically much lower margin than PC games, which means that Final Fantasy XIV is currently by far Square Enix's most important title.

Square Enix mentioned that while they have no expansion packs planned for any of their current MMOs they will focus on retaining users through a 'variety of operational initiatives' (which just means regular content updates).

Square Enix stock surged on Friday after these results were published. The primary cause of the rise was the company telling analysts that they planned to sell a stake in many of their remaining development studios (they already sold Crystal Dynamics and Eidos to Embracer Group). The company did say they plan on keeping 100% ownership in some studios, but investors should expect stake sales in the future. The reason behind the move is to lower the company's own cash costs of launching new games. If a studio is 50% owned by Square Enix, they only need to put up half the costs of a new game (while also only keeping half the profits of course).

Further Reading: Square Enix Q2 2022 Presentation