Square Enix Holdings Co. reported a sharp decline in gaming revenue as the Japanese publisher struggled to match last year’s major releases, highlighting the cyclical nature of the video game industry.
Sales of high-definition games dropped 37% to ¥27.5 billion ($183 million) in the six months through September, while operating losses narrowed to ¥1.2 billion from ¥3.6 billion a year earlier, the Tokyo-based company said Wednesday.
The developer of the Final Fantasy franchise saw its packaged software sales plunge 52% to 2.72 million units, reflecting a thin release schedule compared to last year when it launched Final Fantasy XVI. Digital downloads held steady at 9.39 million units.
Square Enix is banking on several upcoming titles to revive growth in the current quarter, including Dragon Quest III remake and Fantasian Neo Dimension. The company’s performance underscores the gaming industry’s dependence on hit releases to drive earnings.
The results come as Japanese game makers face increasing pressure to diversify revenue streams and maintain steady profits between major launches.