Square Enix Disappointed by Sales Of Tomb Raider, Wants To Maximise Profits During Development

When Square Enix declared that the critically acclaimed Tomb Raider did not reach sales expectations, many were confused. The game sold 3.4 million in its first month. Those were incredible numbers, but Square Enix was expecting six million. Now there is a growing realisation within the company that the AAA retail business model must adapt to changes in the marketplace.

As reported by Games Industry International, Square-Enix has been discussing the different ways in which the company can adapt. At a briefing a couple of weeks ago Square Enix director Yosuke Matsuda claimed that the company had to move away from the rigidity of the packaged goods model and find new ways to profit from large scale productions while games are in development.

"I believe it is difficult to guarantee an appropriate return on our investments within the revenue model of purely packaged software," he said.

"There is a huge difference from the perspective of business risk between a model where no revenue opportunities take place for several years until the product is completed (upon which investments are recovered at one time), and a model where revenue opportunities exist in some form prior to product completion, even if the amount of money invested is the same."

But how will Square Enix profit from games in development? Is it about finding different ways to profit from the same IP? These are the questions Square Enix seem to be asking themselves. Square Enix seems committed to releasing big budget titles like Tomb Raider, but wants to maximise its profits during the long term development of quality products, which is fair enough — but what does that mean for consumers?

Time will tell I suppose.

Square Enix: "It is necessary to review the definition of 'AAA Title'" [Games Industry International]


Comments

    I'm a bit worried for the future of the rebooted Tomb Raider franchise. After playing it, and seeing how great it was, I fully expected there to be a sequel, but hearing how Square Enix consideres the game a failure sales wise and now seeing this has me worried that they're going to abandon the series altogether, or at least abandon the rebooted universe.

      Keep the engine and build upon it continuously, like Call of Duty, it results in good quality products while keeping profits up. Call of Duty is not the greatest franchise in the world but the technical quality is top notch because they keep building on it rather than rebuilding - the game keeps getting incrementally better mechanically while profits are maximised. Developing a new engine or new mechanics for every title is going to cost a lot more than tweaking gameplay and telling a new story using the same engine - rebuilding is a massive risk - ie new Tomb Raider was essentially built from scratch meaning it was really expensive to develop, but if they make a sequel it should be much cheaper to develop as they'll have a pre-existing foundation. Mass Effect did this pretty well, they didn't stuff with the engine too much between each game and they managed to get a successful trilogy out the door pretty quickly without making radical changes.

      nah that would be stupid.....if tomb raider was a failure the problem does not lie with the game or the IP but with squeenix....it hit the the ciritcal sweetspot..to abandon it would be stupid, people clearly liked it..it MADE money

        And this is why they "Want To Maximise Profits During Development". Looks like they budgeted the whole thing wrong, and it ended up costing close to as much as it made, instead of doubling that for some profit like they wanted.

    I have to wonder if the reason they needed Tomb Raider to sell so well was not because it cost so much but because it was meant to try and recoup some of the publisher's costs for other titles they've sunk ridiculous amounts of money on.

    Let's be honest, the relaunch of Final Fantasy XIV and the prolonged development of Final Fantasy XIII (and FFXIII Versus and whatnot) would probably sink most companies.

    The Western developers that were picked up after the purchase of Eidos are the most visibly successful parts of Square Enix. If the success they're having isn't enough to maintain themselves, let alone the other more expensive projects, then Square is going through another Spirits Within moment.

      I think it's this, but it's not FF that was the problem here - FFXIII was profitable and the sequels have probably not cost a lot to develop. Obviously XIV was a big red mark on their balance sheets, but it's actually been the western games that are underperforming. Sleeping Dogs didn't do the numbers they expected and Hitman Absolution disappointed as well. So Tomb Raider was expected to pick up the slack on a whole lot of their games and it didn't. I think that's a lot of where the 6 million target figure came from.

      Same sort of problem as THQ had with Darksiders 2. It was a really solid game which sold quite well, but they had banked the company on it doing better than what it actually did. Difference is that Squenix is able to weather a few of these failures, but THQ wasn't. EA also had a similar problem when they were complaining that Dead Space 3 didn't sell to their expectations: their expectations were way higher than they should have been because multiple other games released beforehand, esp. Medal of Honor, had not made enough sales.

      Also actually the most successful parts of Squenix's business at the moment are mobile games. :(

      FFXIV's big screwup has set back everything in Japan I think. Developers that should have been on Versus ended up working on the reboot and stuff. And I suspect it's one reason why we're getting XIII-3 instead - less manpower needed to create it. Actually I expect to see a lot more quick sequels to their games from now on, iterating on the same engine and recycling assets.

        Sleeping Dogs was expected to sell 2-2.5 million copies, it sold 1.75 million.

        Hitman was expected to sell 4.5-5 million copies, it sold 3.6 million.

        Tomb Raider was expected to sell 5-6 million copies, it sold 3.4 million.

        Source

        These are all games that sold very respectable numbers and came just shy of somewhat unreasonable expectations. Sleeping Dogs was essentially a new IP (although I'm sure the remaining fans of the True Crime series were intrigued), Hitman was never the most successful series (Absolution is the best selling Hitman title to date) and Tomb Raider was a dead horse being beaten in a rather Croftian fashion for years before this reboot.

        I suspect some Hollywood accounting at fault here to try and cover the failures of Square at the expense of their newer acquisitions.

          Yeah, those are some very solid sales figures for games that aren't COD.
          Anyone got sales info for COD and BF3 for comparison? I'm too lazy to find them =P

          Just because the game didn't meet your expectations doesn't mean it's a failure. Just mean's your overheads or costs are too high or your expectations are too high.

          Honestly I think Tomb Raider could have been 20-30% shorter. It dragged on a bit towards the end and got quite repetitive. Great game, I enjoyed it, but the last few hours felt like a chore. Perhaps a slightly shorter game could have reduced production costs. Obviously it's a delicate balance. Don't want it too short.
          Same goes for Hitman actually. I was surprised when I found out I was only half way through.
          I'm a perfectionist when it comes to that game so I spend ages restarting levels when I make a mistake, but still, there is a ton of content in that game. I'm pretty sure it's the longest of the Hitman series.
          Dunno bout Sleeping Dogs, Haven't played it.

    I know 3.6 million sounds like a lot, but this was a quality reboot of one of the best known IP's on the market (with two hit movies as well!). I'm far from surprised they disappointed. Fingers crossed for a sequel.

      But it was also the best-selling. And that 3.6 was only retail, it didn't include digital - which is where I know most folks who I know have played it. c.c

        Have you got a source for "retail only"
        Seems like these numbers have resulted in major losses for SQEX. I would expect digital sales to be at least as much as the retail ones. At least on PC.

        Also those numbers to seem to be EU and NA only, You would think the rest of the world would scrape together another million or 2.

          I remember that bit from one of the tables which was getting bandied around when the story made news the first time - except now that I've gone to check it out, it looks like square enix's official document on their own site doesn't make the distinction.
          ( http://www.hd.square-enix.com/eng/news/pdf/explanatory_20130326en.pdf )

          So yeah, sorry, I read something wrong somewhere.

      Tomb Raider is really well known but is it really a bankable AAA franchise? The original games and movies got into the spotlight primarily because Lara was hot and they never quite gained that level of fame on the gameplay level.
      She reminds me a lot of Wonder Woman. Great character, lots of substance, super famous, but ultimately even though she's just as famous as Batman her adventures just don't have that superstar level appeal (same goes for Flash, Superman and pretty much everyone in the Justice League). That said, there's Wonder Woman comics everyone should read and Tomb Raider games that are must play.

        My guess is that based on the new direction, they probably looked at the sales of the Uncharted series rather than previous entries in the franchise. Based on that comparison, assuming the game reviewed well (which it did), six million copies would have seemed reasonable (each game in the uncharted series sold around 6 million copies, but was only available on one platform).

        Everything you said there was true except for Superman's popularity.
        He's not making as much bank as Batman (no superhero is) but he's a top seller :)

        He still supports multiple titles and various spin-offs.

        if tomb raider isnt a bankable franchise there is somthing seriously wrong with the world

    The question that this begs is how much did it cost to develop? From reading some stuff, the team working on it sounded relatively small (I can't remember exact numbers, but the art team also handled scripting on environmental assets, and it was quite a small team), so were there high costs higher up, or were Squeenix just expecting to make a booming profit out of this?

    I know this isn't really related to what they're talking about here, but I still can't get my head around it.

      Its probably something like, they wanted 200 million profit but only got 80 million.

      I would say that they made at least 150 million on this game so unless it cost over 150 million to make they are still better off.

    Perhaps they shouldn't have dumped so much money into a multiplayer mode that no one ever wanted, asked for or actually played?

      Went from my favourite video game company to the most frustrating & hateable. It's clear that they've been giving zero f**ks about the fans for several years now. The FF franchise right now is like a smart and pretty girl who you used to love being pimped out and made a drug addict, and there's no way to save her unless someone kills the pimp....

      I hate thinking this but I actually wouldn't mind SE going under with their franchises being sold off to different companies (Atlus gets FF, Level-5 gets DQ....a man can dream!)

        I agree with this comment mostly except I don't think they don't care about their fans, I think they genuinely no longer understand them.

          I think there's also a massive, massive split between what their Japanese fans tell them and what their Western fans tell them, and they tend to try and please both crowds with FF games and end up pleasing neither.

    The game sold 3.4 million in its first month. Those were incredible numbers, but Square Enix was expecting six million.

    Was this an "expectation" or was it a "required to see ROI"?
    I think that publishers need to reassess their business models for sure. When games started reaching AUD$100 per title on release, I pretty much gave up on getting new titles upon release, its just not realistic.

    Whats better, 3.4mil @ AUD$100 or the "expected" 6mil @ AUD$60?

      Tomb Raider was never $100, even while new. I'm fairly certain I picked it up from JB Hi-Fi the day it came out for $69.

    Hate to say it but for the consumers it probably means paying twice. Every time we hear these 'we're looking for alternative ways to generate profit' statements the word alternative always seems to mean additional. They're too scared to let go of the traditional model because it will remove an entire slice of the pie graph.
    The funny thing is I think it's that inability to let go of maximum profit that's killing them. If EA released a micro-transaction driven Dead Space 3, where spending $60 total unlocks a full, micro-transaction free version of the game where you get a hamburger with the lot, the game probably would have been more successful. Instead of making two payment options they made you pay twice. That runs up some money short term but you're essentially cutting your sales down to just the people who are happy being fleeced.

    I'll be interested to see what they can do while the game is in development though. Best I can figure is episodic content but that's never been a particularly healthy way to release a game. I guess you can make animations, comics, etc and try to sell those to gauge interest, but that doesn't seem like it'd be hugely profitable beyond building support for the game pre-launch.

      Especially when everyone else and their dog are releasing those webisode/comics/whatevers free as a way of generating interest.

        Yeah, unless you're going to go all out with a half dozen 22 minute TV quality episodes it'd be like asking people to pay for marketing material.

        Last edited 29/05/13 2:06 pm

      That's the way I read it too. Don't try to reduce production/advertisement costs, or increase the appeal to sell more - just try to get more money out of the suckers we know will cough up more if we push them.

    Here's a thought... Release tomb raider single player campaign for $50 at launch. One month later release standalone Tomb Raider multiplayer for $15 ($10 for those with a copy of the single player). You'll get a lot of cheapskates who buy in for the MP who might not pony up for the SP.

    I recon this game is gonna be a slow burn for sales, I only picked it up recently when it was on sale.

    I think the important thing to note here is it's a business person spitballing on the business side of things and noting that games don't really 'work' as a typical business.

    People have said elsewhere, "Why aren't developers getting a bigger slice of the pie on sales?" and the answer is: "They're taking none of the risk. They get jobs and wages for sometimes years at a time, while they aren't actually making any money. They're all cost, no revenue, until the project is completed. IF it is complted, with little indication during the project of how much it will make, based on market predictions made years ago when the project started."

    When you look at that as a publisher, that's... well, it's insanity. Insanity which sometimes pays off like you wouldn't believe. So. They keep doing it.

    This is just a business person pointing out that it's insanity.

      Which in my head leads to the following discussion between a gaming enthusiast (developer or otherwise) and a business person/investor.

      "This is insanity. We need to do things to make this more stable and reliable as a business investment."
      "Stop doing these things! They're ruining the games!"
      "But if we DON'T do these things, there's no way this is a sensible business investment!"
      "It's not MEANT to be a sensible business investment, it's meant to be an art form!"
      "An art form which keeps generating stupid amounts of money in places we can't predict. Someone has to control that money and it shouldn't be artists, it should be us."
      "I wonder if anyone would notice if you 'disappeared'."

    Didn't MW3 sell more than 26 Million? I don't reckon 6 million is a ludicrous goal for a AAA target as some people say, definitely some enterprising errors were made, wrong timing? wrong Genre? hype issues? ineffective advertising to target audiences? product awareness? wrong franchise?

    Whatever the problem was I honestly don't think it was a high expectations problem.

      To be fair, at least 25 million of people who bought MW3 aren't gamers :P

      Call of Duty is probably the biggest franchise in the world. It's completely unreasonable to compare those sales numbers to any other game.

      Bioshock Infinite has shipped 3.7 million copies and the latest Gears of War only managed about half a million (in its first month, can't find better numbers).

      6 million is a big number.

      No MW3 sold a little over 9 million copies, The numbers they needed were nuts.

        Oh? Sorry I was going by a VG Chartz article I guess was incorrect.

    How much of that money was spent towards multiplayer and multiplayer DLC that nobody was expecting, asked for or even continued to play after one or two matches or after they got all multiplayer achievements?

    This is why fans are scared about the recent announcement for Dark Souls 2 where they stated it will be recieving the same advertising and extending the market appeal as any other triple A title. Even though Dark Souls 1 sold over 2 million copies over the course of a year and became extremely favoured and praised by the niche community it was appealing to.

    Games need to become more episodic in nature. Why can't a developer bring the engine and polish now for an immediate sale and then deliver campaign or DLC extensions every month. Sort of like Halo 4 and Spartan Ops but with high quality campaign style missions along with the CGI and perhaps a slower cadence of release.

    Developers can then sell early missions/story to the early adopters, bring more content for an already paid up front price, release a retail version later and also provide greater post release content or updates.

    To me this seems to be the cornerstone of Xbox One cloud strategy in that this sort of development process can be made easier and with smooth transitions for the gamers too.

      ...because that's not how production works. Episodic (and serial) TV works that way due to its nature in broadcast. Film and music and other art forms don't really work that way well. While TellTale's the Walking Dead may work, all or at least most of the content was already created at that point. When the first The Lord of the Rings films was being released, the other two were already in production and being shot at the time. Also, people like consuming their content in more overall amounts. I really would hate it if my next game was released only in chunks, where I would have to wait anywhere between a week and a month to play the next section. Only add-ons and alternative branching narratives work well that way, where a narrative arch is stopped (at least temporarily) at a good position before it picks up again later.

      It is about basic narrative structure (in writing and creating/designing), audience reception and general production.

    Maybe they're looking at maybe an episodic model for their games. Similar to what Telltale have done with The Walking Dead, Back To The Future, etc. They can release the first 2 hours or so, see how it does and then adjust their expectations accordingly. If it doesn't sell well they don't spend millions creating more content for the rest of the game. If it does do well it can generate buzz for a whole year as everybody waits for the next episode rather than just being a big deal for a week or two then forgotten. Or, if it's really huge, they can even stretch it out, squeeze a couple of extra episodes out of it and rake in the extra revenue that would generate.

    Of course that'd only work for single player, not so well for multiplayer. But who is actually still playing Tomb Raider multiplayer anyway?

    Hmm.. sounds to me like they are looking into some sort of publisher version of the Kickstarter or Star Citizen model?

      Yeah this is exactly what I thought when I read "a model where revenue opportunities exist in some form prior to product completion, even if the amount of money invested is the same." Squenix have seen the amount of money gamers are willing to part with on Kickstarter for a game that hasn't even started development in some cases, and they want themselves a piece of that pie.
      *edit* for spelling and grammar.

      Last edited 29/05/13 4:01 pm

    3.6 Mil for a new IP (I know its not really a new IP, but it sort of is) is exceptional. Dead Space, Bioshock, Mass Effect all sold similar amounts with their first entry into the franchise.

    As of 2011, the entire Tomb Raider series (counted as 9 games) had sold 35 million copies, so say an average of under 4 million each.*

    The reboot sold phenomenally well, especially considering the Tomb Raider brand has been tarnished by increasingly lacklustre games. I don't know why they picked 6 million as their aim - if it was just their target, then they obviously miscalculated. If it was their break-even point - well, that's disturbing from an industry POV.

    * http://www.webcitation.org/66QfthNsj

      I don't remember where I read this, but supposedly the reason why Square Enix chose 6 mil was because of the critical reception of the game and its Metacritic score. A certain score is supposed to show a projected sales figure. It's pure conjecture and projection of figures and calculations into hoping something will be what you believe it is.

      This so hard... Tomb Raider hasn't been that relevant since the PSone games, the games haven't been all that great since, so returning to the fold and expecting sales (IN THE FIRST MONTH) of 6 Million, which practically eclipse the lifetime sales of almost all of the previous titles is just nuts!

      Lifetime Sales -> http://www.bit-tech.net/news/gaming/2009/04/24/eidos-shows-lifetime-sales-for-tomb-raider/1

      If they dropped the MP, reeled in the budget abit, the 3.4 Million they did sell could have seen a massive profit!

    Dear Square Enix, give us Kingdom hearts 3, all your money issues will be solved

    I think they should make tie-in mobile games that don't suck.. I'm thinking a Tomb Raider endless runner type game.. If its really well made, sells for 99c a pop and unlocks things in the main game this could be another revenue stream.

    I still truly believe the reason we may be heading towards a crash in this industry is because there are actually TOO many great games vying for our money and our time. But we don't have the time and money to get to them all.

    I think there needs to be a massive shift in game design where games are PROPERLY designed with DLC in mind, and less games of a high quality are released and then further enhanced with DLC. In the same way Nintendo just continued to sell copies of Mario Kart and New Super Mario Bros.

    Games with high replayability are the key.

    I am totally in love with the new reboot Lara, I hope they get their act together and do a justifiably good sequel...

    It's a shame because Sleeping Dogs was a great game, and Tomb Raider is absolutely fantastic so far. Hopefully Squeenix can sort themselves out because they've published some great games. It's pretty obvious this industry is on its way towards a crash, and not even the new consoles are safe given the huge backlash Microsoft have had with the Xbox One. Now that I think about it, I'm starting to think the newly released game, Fuse, symbolizes what's wrong with this industry.

    We had a great, well-known developer with an idea for a sort of light-hearted, unique, squad-based game with some cool gameplay elements called Overstrike, which was announced at E3 2011. Then they teamed up with the scummiest publisher in the industry and the game got stripped down to a generic, bland, brown and bloom cover shooter to "appeal to the mass market". Overstrike looked like a very interesting and quirky game, it would have gotten much more appeal had EA not dumbed it down into Fuse.

    I should stop before I start to think about Dark Souls 2... :(

    When a game sells over 3 million copies and isn't successful enough then there's something going wrong over at Square. Same story with Sleeping Dogs- ridiculously high expectations. They were expecting it to sell better than than industry staples like Gran Turismo, Call of Duty and Metal Gear Solid.

    "Money from games during development" surely means episodic content, yes? You develop the engine and a couple of hours worth of content, and sell it, and use the revenue to power the development of the rest of the content, which goes much faster now that you have an engine. It's the Telltale model. Unless, what, they're going to sell the concept art in art books?

    I told those dummies via twitter that they were doing it wrong, but they kept doing it- Releasing all those gameplay videos like that killed the sales. But no, they want to blame anything and anyone but themselves.
    They have no idea how to reboot a series. I think maybe it's time that the games publishers and developers acknowledge that they are far from 'always right'.

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