Square Enix Confirms Operating Loss of $67 Million Over Marvel’s Avengers, Will Attempt to Recuperate with DLC

Image: Crystal Dynamics

Developing a game based on one of the world’s most profitable franchises seemed like a win-win situation, but unfortunately for Square Enix, Crystal Dynamics’ Avengers game has turned out to be a disaster of monumental proportions.

Some of you might have already read about the game’s terrible sales and withering player base over the past few weeks, but now, a newly published transcript of Square Enix President Yosuke Matsuda’s remarks to investors has confirmed the publisher’s epic losses.

When asked by one participant as to whether there were any other factors that contributed to the Square Enix’s operating loss of 7 billion yen ($67 million), Matsuda admitted that the company “would have been in the black” if it weren’t for Marvel’s Avengers.

Q: I estimate that the HD Games sub-segment booked an operating loss of around ¥7 billion in 2Q. Would the sub-segment have turned a profit if sales of “Marvel’s Avengers” had covered the amortization of its development costs? The loss seems too great to be explained solely by costs associated with that title outweighing its sales in 2Q. Are there any other factors we should assume contributed to the operating loss? Also, should we assume that there is still a fair amount of that title’s development costs to be amortized in 3Q?

A: 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. There is a certain amount of development costs still to be amortized in 3Q, but we want to recoup it by growing our sales going forward.

Despite the massive losses, Square Enix isn’t giving up on Marvel’s Avengers, however. Matsuda confirmed that he plans to save the action-adventure game and recuperate its development costs by releasing lots of DLC.

“The HD Games sub-segment posted an operating loss as initial sales of ‘Marvel’s Avengers’ were lower than we had expected and unable to completely offset the amortization of the game’s development costs,” Matsuda noted. “In the second half of the fiscal year (‘2H’), we hope to make up for slow initial sales by offering ample additional content to grow our sales.”

Crystal Dynamics recently announced that Kate Bishop, the female Hawkeye, would be joining Marvel’s Avengers in a new DLC package dubbed Taking AIM. You can check out the trailer for that below.

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