Square Enix released the official transcript of its latest financial results briefing, and the information contained in the article a useful account of the sales and the future of some of the publishers western studios.
The statements were made during the Q&A session by Yosuke Matsuda’s CEO.
First, Matsuda-san was asked, when the investors saw indications of improved profitability due to the acquisition of the studios and explained that expectations will be fulfilled over the medium and long term, as it can get more selective in allocation of resources, particularly related to Japanese games.
We don’t expect that a transaction leads to a better profitability in the long term. Instead, as we can focus more on our resources, particularly Japanese titles, on the longer term as the profit is rising.
Masuda-san was also asked why publisher should focus on diversification of its investment strategy for studios.
He explained that the company intends to adopt alternative approaches, like joint ventures and acquisition of minor stakes in developers.
The cost of development of a single title is on the rise. Owning studios thus means that despite being able to anticipate large returns, the downside risk is big. The result is that the earnings were above expectations. We also want to adopt other approaches, such as cooperatives and minority stakes so that we can hedge our investment risk in controlling our volatility, and thus achieve the optimal balance sheet profile.