Posted by Dean on
June 25, 2008
The question of whether Final Fantasy XIII will be rented online rather than off was recently brought up at the end of a rather bleak Square Enix 28th stockholders meeting. During this time Yoichi Wada, the current president of Square Enix, took part in a quick Q & A. Here he also mentioned that Square Enix wants to release more mobile games overseas, however they are dependent on better mobile phones outside Japan.
But what does renting online mean for the future?
It was always a dream that far away into the future; games, video and music’s physical appearance would become obsolete to downloading bytes from online. Music so far has been the first to experiment with download services such as i-tunes and media sharing torrents such as limewire. Now it seems Yoichi Wada’s Square Enix has the same vision to do it with Final Fantasy XIII. Whether this will be avaliable for download via the Playstation Network is another question, but by producing less physical game disks and packages costs will decrease which is great for Square Enix’s shareholders.
Therefore don’t be surprised if other games follow suit. Xbox Live has a few games that can be downloaded already but is a 50GB+ download possible?
The full Q&As can be found below:
Q: Square Enix currently has 111.5 trillion yen [approx. $1 billion USD], but is this “good”? Companies should get a return on their investments, but we’re short 100 million yen ($925,000 USD) on the returns. Are there any plans for a merger? There aren’t enough shares either…
Yoichi Wada: If we intended to keep the available cash on hand, the best course would be to repay everything quickly. However, to maintain company maneuverability we’d like to use the money for development and expansion. If we paid everything back at this critical point, we would find ourselves constrained trying to gather funds.
Currently we’re aiming for shares up 30%, which will continue to affect performance in the second half. Our goal is to maintain this level going forward.
Q: Even adding together the sales from each of the segments mentioned in the meeting notice, the figures don’t match up. How do you explain the variation?
Yoichi Wada: Any business handled between [our internal] segments is not shown, so there will be differences. For example, Dragon Quest Monsters: Battle Road was an internal dealing between Taito and Square Enix.
Q: What are your thoughts on the current slump all companies in the Amusement Center/Arcade business seem to have fallen in?
Yoichi Wada: The Amusement Center market, at 900 trillion yen [~$8.34 billion USD], is greater than the home console market. More than that, it’s managed a constant growth rate of about 3% every year. The AM industry is not on the decline. So, why are the companies slumping? It’s because the facilities and locations of operation have undergone a drastic change.
Twenty to thirty years ago game centers were in downtown areas, on busy streets and beside movie theaters…but recent trends have shown a tremendous increase in game centers inside shopping centers. Along with that you have kids’ card games dominating the current generation, and the introduction of integrated amusement centers in suburban areas.
This is why we’re now in the middle of a shifting of location. It’s certainly possible to see how tough conditions will become if the current state of things continues. But the truth is there is growth happening amidst all the changes, and we’re focusing on grasping the new trends that come about.
Also, it’s been said the synergy between Taito and Square Enix is like water and oil, but that’s not the case. For example, there are limits to the controller interface of home consoles, but in a game center you can freely realize concepts and expression.
Dragon Quest Monsters: Battle Road is looking very promising, and also last week we sent out Lord of Vermilion. That is something we can’t make for home use. We anticipate that achieving this kind of synergy will improve sales more and more.
Q: How much of the business is currently focused overseas? Also, how is the migration to the newer systems being managed?
Yoichi Wada: Offline games are an even 1:1 ratio between Japan and the West. We realize this is not ideal, and want to increase the percentage overseas.
For online games, 60-70% seems to be a good amount [overseas].
The great majority of mobile business is in Japan. Overseas that’s been a very rough market, we’re waiting on things like the iPhone. Publishing is almost entirely Japan only, we’re beginning work on launching abroad.
AM [Amusement Center market] is solely Japan, though our target is to get 10-30% overseas. Looking at our business segments together as a whole, 20% is outside Japan.
As for an indication of our status after becoming a holding company, we’d like to use our profits as a market. That, along with considering the connection between our investments and returns, is our Return on Equity [ROE].
We’re aiming to reach profits of 50 trillion yen [$460 million USD]. We believe as a company Return on Equity should be 10% or more.
Q: Final Fantasy 13 is on its way, but in the current game market the more you ship the more your titles end up in used game stores, returning no profit to the developer. Given that, would it be possible for you to rent games out similar to movies?
Yoichi Wada: Your opinion is very important, thank you very much.
The current generation of games all incorporate some type of network connectivity, which means almost all need online resources. Even titles without online play have online rankings, leaderboards and so on.
In correspondence with the online component, we believe the restrictions of physical media leading to the used game sales problem can be worked out.
Rather than renting out the physical media of titles, we’re thinking more along the lines of an online solution.
Q: With Square Enix becoming the subsidiary of a major holding company, a portion of the employees will no longer be members of a stock listed enterprise. What are your thoughts on the risks of losing staff motivation, talented workers, and employment methods?
Yoichi Wada: This is a company entirely of its people. Moving forward by the strong will and desires of our members is everything.
The reasons why we’ve restructured in this fashion, and the impact it will have, have already been explained to each employee. At present, no one is quitting or suddenly losing motivation over this.
General concensus is that recently half of all game companies have come to have the stock controlled by the company, so this situation is no longer out of the ordinary.
Q: I’ve attended these general meetings for some years now, and as always [the company] has more than 100 billion yen in cash [$925 million USD]. The acquisition of Taito is already a done deal, and yet…is this really necessary? I want to buy stock in my company, and see that stock price go up. I think this expanding of operations is late.
Yoichi Wada: This will sound like the first question asked, and it’s not that we should leave the matter of its lateness undecided…but we are humbly asking for your vote in support of today’s resolutions so that all our board members can pick up their speed in proceeding forward.
Q: Every year the amount of profit on game sales is going down. I’d like to see the 30% stock increase go even higher, and increased return on those shares. Further, the company’s director Mr. Naruke doesn’t even hold any shares in his own company. Year by year profits go down, are the board of directors properly discussing this? Are they up for handling this?
Yoichi Wada: Stagnant sales leading to lower profits is unfortunate, but at the current moment sales are up. Sales are based on production capacity and its ties to the marketplace. Profits come in based on the efficiency of our production.
Entering into this new market means we start with production ability, and once that is maintainable sales go up. From there, it’s a matter of shaping up [the process] and profits should increase.
The board of directors has had a lot thrust on it with little warning, and the members have had a lot of pressure put on them. In actuality, we’re been discussing things outside the directors’ meetings as well.
Q: In 2006, Dragon Quest 9 was announced for a 2007 release. It’s now 2008. When is it coming out?
Yoichi Wada: As a first for portable systems, and a first for the types of communication being included, the creators have asked us to please hold out until every last detail is finished to their satisfaction. I realize it’s been a difficult wait for everyone, and I would dearly like to see it released this year.
Source: I-Mezzo/ Translated by Forever Fantasy.
