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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12 Comments

  1. The game has a long road ahead of it if it plans to regain enough players to sell DLC to.

    That said, if any publisher can do to, it’s S/E. They have some experience turning poor releases right side up.

    1. Game was sold with the promise that all the content DLC is free. They are only charging for battle passes and cosmetics.

      I can’t see any situation that this game turns around. Even free-to-play needs good incentives to continue playing and this game has none.

  2. From what I’ve read this game has a lot of the normal grind and repeat stuff you see in multiplayer games where they’ve shoehorned a single-player campaign into. Basically good for one playthrough and that’s about it. It’s a shame. On the online side you basically need to provide enough content, and then everyone with nickel and dime purchases, to keep drawing players back while funding it. Meanwhile, most publishers, including SE, ought to know better about making a much more involved campaign for replay value. Saying they’re going to release DLC to ‘recoup’ only feeds ideas that the game was released w/o its content to make money which has been a common argument against DLC for many years. DLC can be an awesome thing but it shouldn’t be leveraged to ‘recoup’ costs. It should be to enhance and add to a property vs ‘fixing it’. I haven’t bought this game yet and it looks like I’ll be holding off a while longer, if ever, which is a bit of a surprise considering what a huge fan of the Marvel universe I am.

  3. The gameplay is actually pretty good. There was a bit of imbalance between the main heroes powersets, but it wasn’t drastic and was tuned pretty quickly. The heroes feel like their namesakes when you play them.

    The single player story was … ok. It was compelling and made you want to finish it. It made you care about the heroes, and put them in a very human light. It has a decent dose of SJW to it, but isn’t as overbearing as, say, Bioware has been lately.

    I keep teasing about not licensing the actors. I do think it’s an issue though – they look ~close enough~ to the actors that it’s distracting. I keeping thinking “They really screwed up Chris Evans”… You can tell it was just a minor texture adjustment and it would be spot on, but they moved it off just enough to avoid having to secure the likeness rights. It would have been better had they either got the rights (which would have just sunk them further into the hole, as the rights aren’t want make this game suck in the long run), or had went further enough away – go closer to an artist comic source.

    The end goal was to get to the loot treadmill, similar to Destiny. You run missions, earn better loot, run harder missions, get better loot. The problem was they didn’t really have enough varied content to make that loop viable. There are only four or five maps, and three or four mission types. There are a couple of factions to deal with, but you never care about either of them, and before a patch fixed it it was horrible to try to earn reputation with them.

    The game dumps you right into this endgame mode after completing the campaign (you don’t have to finish the campaign if you want to jump in early, but why on earth would you want to), and the transition is pretty jarring and left me wondering why the game just stopped, with nothing to do but repeat the same few missions over and over. Sure, I got better gear, but all better gear did was make the same missions scale a bit harder – it didn’t let me do anything new.

    Could it be fixed? Yeah. I guess it could. It suffers from almost exactly the same problem Anthem did: the gameplay was good, the core game loop just wasn’t quite there. Once you finish the story out, there’s no reason to keep playing other than to grind up a meaningless gear score number.

    The story and gameplay make this worth $10 or $20 on a sale, just like Anthem was worth a few bucks. But it has a long road if they want to turn it around, and would likely take a huge endgame overhaul to make it. That said, S/E has done that before (Final Fantasy 14), but I don’t know if the Avengers IP is worth the same level of investment / same risk of failure as the FF IP is to that company…. it’s not like they had 13 previous titles to live up to, but they may have an entire franchise-worth of sequels in the works that make the investment worth while.

  4. I wonder how much investment square Enix had sunk into this ip and game. I’m thinking over a billion at this point. Ffxiv is a cash cow for them. Will be interesting to see.

  5. $1B for a single title would probably be a world record, by a decent margin. I could imagine low-mid 8 figures – $200-$300M would be my ballpark, and in line with some
    other high profile AAA releases.

    [URL unfurl=”true”]https://www.google.com/amp/s/www.businessinsider.com/the-most-expensive-video-games-ever-made-2014-7%3famp[/URL]

    If you read the OP article – the $68M loss was just for development costs amortized over this quarter. So that may not be the final figure.

  6. [QUOTE=”Grimlakin, post: 24421, member: 215″]
    I wonder how much investment square Enix had sunk into this ip and game. I’m thinking over a billion at this point. Ffxiv is a cash cow for them. Will be interesting to see.
    [/QUOTE]
    [QUOTE=”Brian_B, post: 24422, member: 96″]
    $1B for a single title would probably be a world record, by a decent margin. I could imagine low-mid 8 figures – $200-$300M would be my ballpark, and in line with some
    other high profile AAA releases.

    [URL unfurl=”true”][URL]https://www.google.com/amp/s/www.businessinsider.com/the-most-expensive-video-games-ever-made-2014-7%3famp[/URL][/URL]

    If you read the OP article – the $68M loss was just for development costs amortized over this quarter. So that may not be the final figure.
    [/QUOTE]
    I agree $1B would be a bit high but they probably did pay a high price for it.

  7. How is dlc going to fix a game nobody plays – if they don’t want to pay for base game, they’re not going to want to pay for dlc! And dlc is free on pc so……

  8. Watch the Angry Joe review on this game . Warning – NSFW language… just like every Angry Joe vid, LOL

    [MEDIA=youtube]Hxa7JarZAhg[/MEDIA]

  9. Based on the game play, it was lackluster at best. Filled with quick time type events and repetitive gameplay. Add to it that looter shooter type mechanics and the game just feels like a collection of half baked ideas that don’t pan out. It would need significant retooling to achieve the potential of the license.

  10. That is the most tragic thing about this ordeal. A game based on this license should have been able to print money for Squeenix. Crystal Dynamics is certainly able to pump out good games, but instead of focusing on making a good game it seems they tried very hard to make it into a grindy GaaS to monetize the hell out of. I was very much excited when this game was originally announced it was being made, but the more that came out about it as we approach released the more that excitement waned.

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