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News Business Analysis Square Enix Will Learn From Avengers Failure and Continue To Invest In AAA Games and New IPs

Nov 15, 2014
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"The company disclosed its financial results for the third quarter which saw the launch of games including Marvel’s Avengers. In the earnings call, the company president and CEO, Yosuke Matsuda shared some comments on their financial outlook.

Investors were interested in learning more about the failure of Marvel’s Avengers. In the first half of 2020, Square Enix had to write-down 11 billion yen due to the losses associated with Marvel’s Avengers. They failed to recoup the development and marketing costs with the game due to the lackluster sales.

“Absent factors associated with “Marvel’s Avengers,” the sub-segment would have been in the black. In addition to the amortization of that game’s development costs, another significant factor associated with the title was the fact that we undertook a major advertising campaign at the time of its launch to make up for delays in our marketing efforts resulting from the COVID-19 pandemic., ” said Matsuda."

"According to Matsuda, Square Enix will learn from their failure with Marvel’s Avengers. “We intend to leverage the lessons we learned from this experience in future game development efforts.” The company is also planning to continue to invest in its major AAA games and new IPs. “We have been working to shore up our base of stable recurring earnings so that we will be able to continue to invest in the development of major AAA titles and in the creation of new IP.”"
 

Harts316

Member
Dec 9, 2012
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"The company disclosed its financial results for the third quarter which saw the launch of games including Marvel’s Avengers. In the earnings call, the company president and CEO, Yosuke Matsuda shared some comments on their financial outlook.

Investors were interested in learning more about the failure of Marvel’s Avengers. In the first half of 2020, Square Enix had to write-down 11 billion yen due to the losses associated with Marvel’s Avengers. They failed to recoup the development and marketing costs with the game due to the lackluster sales.

“Absent factors associated with “Marvel’s Avengers,” the sub-segment would have been in the black. In addition to the amortization of that game’s development costs, another significant factor associated with the title was the fact that we undertook a major advertising campaign at the time of its launch to make up for delays in our marketing efforts resulting from the COVID-19 pandemic., ” said Matsuda."

"According to Matsuda, Square Enix will learn from their failure with Marvel’s Avengers. “We intend to leverage the lessons we learned from this experience in future game development efforts.” The company is also planning to continue to invest in its major AAA games and new IPs. “We have been working to shore up our base of stable recurring earnings so that we will be able to continue to invest in the development of major AAA titles and in the creation of new IP.”"

They want to have it both ways. Blame COVID and still "learn lessons". I wonder what lessons they are taking away from that game's failure?
 

wipeout364

Member
Jun 13, 2004
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1,590
Should be able to recover. Go free to play with microtranactions, new players have to grind for heroes, or buy them. Keep updating the gameplay loop. The Marvel name will attract enough support in a F2P setting. Sell the campaign as a transaction for 40 dollars. The game was obviously designed with many of these mechanics in mind anyway.
 

Revolutionary

Member
Sep 13, 2007
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Just like when it was initially revealed that Tomb Raider reboot missed projections, when all is said and done, this game will have recouped development costs and then some.
 

diffusionx

Member
Feb 25, 2006
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Just like when it was initially revealed that Tomb Raider reboot missed projections, when all is said and done, this game will have recouped development costs and then some.

It seems doubtful, considering the game was in dev hell for years, had a lot of marketing, and is built around GAAS that nobody is playing (or, presumably, buying content for).

Even if they did, recouping dev costs is still a failure. Companies don't spend $100MM on a game to make back $100.1MM.
 

Revolutionary

Member
Sep 13, 2007
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It seems doubtful, considering the game was in dev hell for years, had a lot of marketing, and is built around GAAS that nobody is playing (or, presumably, buying content for).

Even if they did, recouping dev costs is still a failure. Companies don't spend $100MM on a game to make back $100.1MM.
It's really not built around GAAS, though. At one point, I'm sure it was, but that was seemingly exorcised late in the development cycle because there is absolutely nothing worthy of real money in the game. They're not charging for additional characters (miraculously!), they're just charging for cosmetic garbage (with emphasis on the word garbage).
That said, you are correct that they don't spend 100mm on a game to make back .1mm, but that's not what's happening here. The projections were that first month sales would immediately recoup costs. First month sales, despite the negative word of mouth and lukewarm critical reception, was 3+ million. For context, that is (or was?) the second-biggest superhero game launch of all time. If 3+ million sales in the first month aren't enough to meet projections, that's more of a reflection on Square Enix's business divisions being a bit too optimistic in their immediate returns than the game being an outright failure or whatever people want to believe.

Edit: I almost forgot that Spider-Man is still coming to the game. Do not underestimate the selling power of Spidey. Oh and Black Panther, whom will probably get a lot of attention thanks to recent events...
 
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Ten_Fold

Member
Jan 18, 2017
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Avengers was horrible, gaas is a wack model an the game just felt like a cheap cash grab because marvel is doing really well.
 

Elcid

Banned
Jul 27, 2018
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Kate Bishop is coming out on the 8th, then Hawkeye shortly after. Game is going to be thriving once they release Black Panther and Spidey in 2021. They’re still patching it weekly too.
 
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VictorVectors

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Nov 24, 2020
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I want to play this still! Maybe that's the problem. Waiting seemed easier.

A) Like Destiny, a year down the road it will be an improved experience. The audience is wise to Gaas titles in 2020.
B) It doesn't look worth $60 - who are these actors they hired?!?
C) Season Pass for EVERY CHARACTER? You've got to earn the first one. Per character is just completely soulless.
D) They got rid of Hawkeye and put in... who IS this new girl with the DC inspired color scheme suit?!? Where's the quality control?
E) I was excited for next gen.
F) EVERY preview used "down the road" in the body somewhere.

Playing as Iron Man still looks rad as hell though. Despite all the reasons to play; no. The subtext attached to most SE games these days is wait and see. Final Fantasy XVI and Bravely Default 2 look PHENOMENAL! Why are they capable of hitting such highs and such lows?
 

Rikkori

Member
May 9, 2020
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Avengers can absolutely turn it back around. The game is meant for next-gen consoles & PC most of all, so once those go up in numbers so will the game. It has significantly fewer (and not fundamental) issues than Anthem in terms of what they need to do to fix them, so they can do it if they want to. The game mechanics are solid, the tech foundation is solid, now they gotta fix metagame progression and pump more content & diversify it. Plus I'll take the CD + assisting studios over current day Bioshit any time, they have more pride & competent people on their teams. And don't underestimate interest picking back up once Marvel goes back in theatres either (just like how Witcher 3 sales got boosted by the TV show). It's a Marvel lull atm, and people are just taking a break from it.

This is not at all an insurmountable obstacle. We'll have to see if they have what it takes to do it in 2021.
 
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GymWolf

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Jun 11, 2019
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They learned the lesson while blaming covid

 

Elcid

Banned
Jul 27, 2018
3,076
4,902
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I want to play this still! Maybe that's the problem. Waiting seemed easier.

A) Like Destiny, a year down the road it will be an improved experience. The audience is wise to Gaas titles in 2020.
B) It doesn't look worth $60 - who are these actors they hired?!?
C) Season Pass for EVERY CHARACTER? You've got to earn the first one. Per character is just completely soulless.
D) They got rid of Hawkeye and put in... who IS this new girl with the DC inspired color scheme suit?!? Where's the quality control?
E) I was excited for next gen.
F) EVERY preview used "down the road" in the body somewhere.

Playing as Iron Man still looks rad as hell though. Despite all the reasons to play; no. The subtext attached to most SE games these days is wait and see. Final Fantasy XVI and Bravely Default 2 look PHENOMENAL! Why are they capable of hitting such highs and such lows?
Correction on C. The current plan (and likely subject to change) is a "premium pass" for each character.
You get the character and standard character card for free, but certain unlocks on the card, likely more ingame credits/special costumes will require premium levels.
I think they said it's 10 dollars?
If you farmed the base cast, you'll have enough for like 5 characters, plus each card would give you enough for another character after.
D - They used Miss Marvel as a reason to tie the other characters together and introduce Inhumans. It's actually well done in the campaign. Hawkeye is coming and his story looks AMAZING.
Hawkeye is basically Old Man Hawkeye and Maestro is in the future so I'm personally hype for that.
 
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Mentat02

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Jun 29, 2020
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were these guys expecting avengers box office type numbers? they probably thought the avengers movies are only being watched by sweaty nerds so they must all play video games as well. what they don't know is more middle aged suburban Karens watch those avengers movies than actual nerds.
 

Certinty

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Oct 28, 2012
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I mean there’s a lot very good in Avengers. Salvage the gameplay and the good single player levels and make a proper story only game and it could be amazing just like Insomniac’s stuff.
 

Elcid

Banned
Jul 27, 2018
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I mean there’s a lot very good in Avengers. Salvage the gameplay and the good single player levels and make a proper story only game and it could be amazing just like Insomniac’s stuff.
No way! The online is the best part. Playing with 3 friends is a freaking blast. They need more heroes, enemies, and levels. Really that's it. Eventually expanded character talents.
 

Gods&Monsters

Formerly 'InTheLandOf'
May 11, 2018
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I loved the single-player portion besides Kamala Khan personality. Her moves were cool but she's a terrible and annoying character.

Why did they gave her the first role? Muslim representation or something? No one cares about her. Another sjw failure. I wanted Thor and Captain America fine ass instead.
 

sublimit

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Aug 28, 2009
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I wish they also learn that Crystal Dynamics is a mediocre developer and give the Tomb Raider series to another studio.
 
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MrMephistoX

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May 18, 2007
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I snagged it on sale haven’t really had a chance to play it yet but for $30 it’s okay so far.
 

VictorVectors

Member
Nov 24, 2020
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Correction on C. The current plan (and likely subject to change) is a "premium pass" for each character.
You get the character and standard character card for free, but certain unlocks on the card, likely more ingame credits/special costumes will require premium levels.
I think they said it's 10 dollars?
If you farmed the base cast, you'll have enough for like 5 characters, plus each card would give you enough for another character after.
D - They used Miss Marvel as a reason to tie the other characters together and introduce Inhumans. It's actually well done in the campaign. Hawkeye is coming and his story looks AMAZING.
Hawkeye is basically Old Man Hawkeye and Maestro is in the future so I'm personally hype for that.
OK. You beat me with sound logic. Fair. You're not wrong.

I won't admit to liking Miss Marvel though. I felt like this was supposed to playing through the first Avengers movie with all the basic uses of the color wheel. They character swapped on the front of the box confusing everyone, obliviously myself included.

Now hear me out. Mass market bird's eye view. Anthem felt like Iron Man meets Avatar's Pandora with guns. Awesome, but the engine needs loads of work. Destiny felt like Halo Reach meets World of Warcraft. Awesome, but needed more to do. This looks like Avengers meets a budget constraint. Boo.
 
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Elcid

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Jul 27, 2018
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OK. You beat me with sound logic. Fair. You're not wrong.

I won't admit to liking Miss Marvel though. I felt like this was supposed to playing through the first Avengers movie with all the basic uses of the color wheel. They character swapped on the front of the box confusing everyone, obliviously myself included.

Now hear me out. Mass market bird's eye view. Anthem felt like Iron Man meets Avatar's Pandora with guns. Awesome, but the engine needs loads of work. Destiny felt like Halo Reach meets World of Warcraft. Awesome, but needed more to do. This looks like Avengers meets a budget constraint. Boo.
Did you play the campaign? It's actually the opposite. This is supposed to be a reunion after the falling out of the Avengers. You can assume they already had their movie adventures from this point.

I understand why you think it looks like that, but I'm telling you it's a different experience when you play it. I actually thought the same thing when I first saw the game announced. I was like "ew, that looks like garbage" and had ZERO excitement for it. Then I played the beta and it ended up changing my perception entirely. That's probably why they spent so much money on marketing, but I'll agree with you, their box art/cosmetic focus for marketing has been incredibly weak. The actual cast/voice actors in game look and feel like the characters, more from the comics than the movies, which is why I ended up loving it.
 
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Nikana

Go Go Neo Rangers!
Jan 26, 2016
11,159
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I feel like the lesson was written on the wall and they chose not to follow it.

Its amazing that these types of games all come out to the same issues which is a fundamental misunderstanding to what this type of game needs to offer the consumer to make them a satisfied customer. It always feels like the satisfaction is placed secondary after the monetization.
 

KingT731

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Jan 9, 2018
611
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It's really not built around GAAS, though. At one point, I'm sure it was, but that was seemingly exorcised late in the development cycle because there is absolutely nothing worthy of real money in the game. They're not charging for additional characters (miraculously!), they're just charging for cosmetic garbage (with emphasis on the word garbage).
That said, you are correct that they don't spend 100mm on a game to make back .1mm, but that's not what's happening here. The projections were that first month sales would immediately recoup costs. First month sales, despite the negative word of mouth and lukewarm critical reception, was 3+ million. For context, that is (or was?) the second-biggest superhero game launch of all time. If 3+ million sales in the first month aren't enough to meet projections, that's more of a reflection on Square Enix's business divisions being a bit too optimistic in their immediate returns than the game being an outright failure or whatever people want to believe.

Edit: I almost forgot that Spider-Man is still coming to the game. Do not underestimate the selling power of Spidey. Oh and Black Panther, whom will probably get a lot of attention thanks to recent events...
After a full read it came down to this "We spent way too much money on marketing"

I hope the lesson they learned is to make more Tomb Raider and Deus Ex and forget about this crap super hero game. Either that or sell Eidos Montreal and Crystal Dynamics to Xbox.
Do you go to every thread for games you don't like to say the same thing?
 
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Halo is Dead

Member
May 20, 2018
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How about stop making terrible loot based games that come out half baked with a promise "Live service content will fix everything" mentality. If there is one thing I hate Destiny for, it's starting this trend.
 

hussar16

Member
Nov 4, 2019
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good its ben hapening everywhere, players first got tired with mmo cash ins then loot boxes ,money making schemes wont work all the time its time to invest in actuall creative games without using players as your personal allowance
 
Jun 2, 2017
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Voting with your wallet. EA and the FIFA series could do with a kick up the arse too.

Toss in Madden and NBA 2K and you got the post of the day bro. 100% facts

The heat EA was getting for Madden this year had me hoping they'd have to do something...then the sales came in and they still killed it. I was like yup...footballs fucked for 5 more years :messenger_tears_of_joy:
 
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Valentino

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May 30, 2020
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I hope the lesson they learned is to make more Tomb Raider and Deus Ex and forget about this crap super hero game. Either that or sell Eidos Montreal and Crystal Dynamics to Xbox.

Ewwwwww.............those games deserve better than Microsoft. Mircrosoft did dog shit for Tomb Raider when they snatched it up for the year exclusive
 
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Woopah

Member
Jun 15, 2019
1,470
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I hope the lesson they learned is to make more Tomb Raider and Deus Ex and forget about this crap super hero game. Either that or sell Eidos Montreal and Crystal Dynamics to Xbox.
Unfortunately the last Deus Ex game did badly too so I don't think that's the lesson they take.
 

FALCON_KICK

Member
Mar 19, 2020
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What was the main reason for the game's failure? Going Woke or less content or both?

Did making the main storyline centered around shoe-horned female POC character Kamala Khan help the game? Was she included because she shares the same name with potential American vice-president candidate when it was released?

Did they market the game to potential 200M pakistanis to buy the game?

SE should be evaluating their next game, Project Athia which ticks the checkbox of SE ethics department of SJW/Feminism mandates of Anita Sarkesian.
 

Ixion

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Sep 18, 2010
2,092
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What was the main reason for the game's failure? Going Woke or less content or both?

Did making the main storyline centered around shoe-horned female POC character Kamala Khan help the game? Was she included because she shares the same name with potential American vice-president candidate when it was released?

Did they market the game to potential 200M pakistanis to buy the game?

SE should be evaluating their next game, Project Athia which ticks the checkbox of SE ethics department of SJW/Feminism mandates of Anita Sarkesian.

Yeah, Project Asthia is written by a rabid anti-Trump westerner (going by his twitter). That game will be full-on SJW. Meanwhile, FFVII Remake I thought was a brilliant compromise. Something that simultaneously appeals heavily to both the left and the right. And FF16 looks to be similar. As long as Final Fantasy doesn't go off the rails, I'm good.
 
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Lunarorbit

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Oct 28, 2020
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What was the main reason for the game's failure? Going Woke or less content or both?

Did making the main storyline centered around shoe-horned female POC character Kamala Khan help the game? Was she included because she shares the same name with potential American vice-president candidate when it was released?

Did they market the game to potential 200M pakistanis to buy the game?

SE should be evaluating their next game, Project Athia which ticks the checkbox of SE ethics department of SJW/Feminism mandates of Anita Sarkesian.
The game failed cause it sucks. They learned nothing from Anthem for a reason.

Kamala khan has been a character for awhile and has nothing to do with kamala Harris. To think it was a grand conspiracy is beyond idiotic
 
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FALCON_KICK

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Yeah, Project Asthia is written by a rabid anti-Trump westerner (going by his twitter).
Can you share his twitter handle?

The game failed cause it sucks. They learned nothing from Anthem for a reason.

Kamala khan has been a character for awhile and has nothing to do with kamala Harris. To think it was a grand conspiracy is beyond idiotic
Even if game sucked, if a highly marketed huge budget game with an intriguing character driven storyline and addictive gameplay loop centered around loot, it has the potential to remain at the top 5 charts for few months.

I know about Kamala Khan has been a comic character for quite sometime, I specifically mentioned whether a conscious decision was made to risk having a story centered on a female POC character named Kamala for such an expensive game with budget more than US$170 Million.

American politics wont be affected by such initiatives but if the game end up being a disaster, SE might have to close down studios which will not only affect their brand and output of their next game but also negatively impact the talent employed in that studio.

I don't care about subtle political commentary in games rather I welcome it but there is too much of US politics and ensuing policies resulting from it bleeding into games nowadays and these mandates have to be followed even by Big Japanese devs.
 
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Dec 29, 2014
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Square Enix is a failure of a company. They have become so greedy they have forgotten that they are sitting on a vault full of what most people consider the greatest RPGs (Chrono Trigger, Xenogears, Valkyrie Profile, Star Ocean, etc.) of all time. All we get from them these days is shovel ware, ultra monetizable garbage games like the Avengers or half-assed RPGs with shallow stories. Their only decent games in my opinion are FFXIV and FFVII Remake.
 
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