Square Enix’s situation is not good. Following the bombshell news earlier this week that a Japanese publisher is giving away more than 50 IP suites to the Embracer Group, it has been announced that it will retain three of its non-Japanese IPs for the time being. Just Cause, Life Is Strange, Outriders.
There’s no direct analysis of how the first two IPs on that list performed for publishers, but we can say they’re quite popular as legacy brands. Life is Strange has been carving out a niche since the first game was released in 2015, and Just Cause has always found a place in the gaming community since its first game in 2006.
But Outrider is a different story. Last year, we heard that developer People Can Fly were not receiving royalties from Outriders, and that the game was having problems with profitability.
today, new financial report People Can Fly confirmed that the game was not profitable in 2021, the year it was released. Despite being released in April, documents show that Square Enix has yet to generate revenues that exceed the development, marketing, and distribution costs of the title.
According to the documents, to date People Can Fly has not received royalties from the sale of Outriders because Square Enix has not been profitable enough to start that part of the development contract.
“The Group received no royalties from the publisher for the period through December 31, 2021. This means that, as of the reporting date, the net proceeds from the sale of Outriders are not sufficient to recover the costs and expenses incurred by the publisher in developing, distributing and promoting it. It means no title.”
Worse, People Can Fly has low enough sales that they don’t expect Square Enix to hit the threshold it needs to pay royalties.
There is no guarantee that the net proceeds from the sale of Outriders in the future will be sufficient to recover the costs incurred by the issuer and to pay royalties to the group.
It’s interesting to read this financial report, given that we recently heard reports that Square Enix lost about $200 million in its Marvel’s Avengers and Guardians of the Galaxy games… and that Square Enix retains its Outriders IP. Consider it. It may be that Square is currently unable to sell on IP, as the publisher still has a deal with People Can Fly. Whether the company will try other games in the series or pursue additional DLC plans remains to be seen. .
This will be an exciting future for Square Enix. We’ve already investigated why the company is selling the Tomb Raider, a series that has sold 88 million copies in its lifetime, at such a low price. And we thought about what Legacy of Kain and Gex would look like under new ownership (shock horror! – owned by a company that might admit its existence).
Outriders was released on April 1st for PC, PS4, PS5, Stadia, Xbox One, and Xbox Series X/S. The Worldslayer expansion, which comes with a new campaign, new subclasses and a new endgame, launches on June 30th.