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'HD Games' profit dips at Square Enix following Marvel's Avengers launch

As a whole, Square Enix reported a year-over-year increase in sales and operating income but numbers for its HD Games business alone shows that Avengers sales have failed to balance out costs.

As a whole, Square Enix reported a year-over-year increase in sales and operating income half way through the fiscal year but numbers for its HD Games business alone paints a troubling portrait of its September launch, Marvel's Avengers.

For the company as a whole, Square Enix shows a 52 billion yen (~$503.6 million) increase in net sales year-over-year, marking down 172.7 billion yen (~$1.7 billion) in sales for the six month period ending September 30, 2020.

Operating income, or profit minus certain expenses, also saw a year-over-year increase, coming in at 31.6 billion yen (~$306 million) for Q1 and Q2, compared to 15.9 billion yen (~$154 million) the year before.

The digital entertainment business housing Square Enix's video game dealings reported 142.4 billion yen (~$1.4 billion) in sales, up from 85.4 billion yen (~$827.2 million), and 33.8 billion yen (~$327.4 million) in operating income, up from 16.6 billion yen (~$160.8 million).

Digital Entertainment is further broken down into MMO and HD Game categories, and that's where the seeming impact from Marvel's Avengers reveals itself. The MMO segment on its own looks to be going strong: it saw a slight decline in sales year-over-year due to competition from last year's major Final Fantasy XIV expansion launch, though operating income is up year-over-year due to strong subscriber numbers in FFXIV.

For HD Games, sales are up year-over-year, but seemingly not by enough to balance out development costs as operating income dipped into the negatives during Q2 as shown in the chart below. 

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