Square focuses on singleplayer titles and that's an "extremely competitive" market to be in, he says. They've got competition on all sides, big and small, meaning development costs rise.
Boss Yoichi Wada's departure from Square Enix was predicted by analyst Billy Pidgeon. This coming fiscal will be telling for Square as they see if investments payoff.
"The AAA market is extremely competitive," he said. "Most of Square Enix's franchises are single player games, which are less popular than multiplayer. Square Enix has been a leader in that sector, but now faces stronger competition from multiple publishers, both large and small, including Bethesda, Capcom, Xseed, Atlus and Level 5."
"Square Enix's franchises are well established and require ever-higher production budgets to match and surpass past performance. The latest Hitman and Tomb Raider sold in the three million unit range and got Metacritic ratings above 8. Those numbers would rate as successful for JRPGs that earn more from vendors as exclusives and have manageable budgets," he continued. Sleeping Dogs, a new hit IP from United Front, sold around 1.75 million.
"But for games with development budgets approaching $100 million to be truly profitable, ratings have to be above 8.5 and sales need to be in the five to ten million unit range." Square Enix has been pouring investment into online, social and mobile markets which include free-to-play models.