2009 Square-Enix Annual Finacial Rport (500K FFXI Accounts)

[hotpiercedguy]

http://www.square-enix.com/eng/pdf/ar/20090821_01.pdf

Pretty dry reading, but I didn't see anyone else had posted it.

[Zilong]

They probably don't fucking count the people that quits or something, I find it ironic that they say "Guys, we're still 500k account strong" and follow it like "Operation income is down 47.5% from last fiscal year" on the next paragraph.

[Pirian]

Does the 500k accounts include all the fucking rmt /t bots? That would explain the seemingly high number with the high declining income. After all, they're not making money on those free accounts =p

[Mistress Stowastiq]

http://www.square-enix.com/eng/pdf/ar/20090821_01.pdf

Pretty dry reading, but I didn't see anyone else had posted it.

Nice to see that others actually read it too, to be honest. Thank you for the post .

@Zilong, if you check pages 16-21 there is some info on how they gather their information for the report.

[Gergall]

Does the 500k accounts include all the fucking rmt /t bots? That would explain the seemingly high number with the high declining income. After all, they're not making money on those free accounts =p

...with approximately 500,000 paying subscribers in Japan, North America and Europe.

It does not appear to include free trial bots.

[Byrthnoth]

~15,500 accounts per server? 1/10 of the population logged in at any given time, I'd buy that. I bet half the accounts barely log in weekly.

[BRP]

They probably don't fucking count the people that quits or something, I find it ironic that they say "Guys, we're still 500k account strong" and follow it like "Operation income is down 47.5% from last fiscal year" on the next paragraph.

What is so ironic about it? SE sells more than FFXI(as a service.) Expect them to have high sells when FFXIV releases. (or an expansion for that matter)

[Vodou]

They probably don't fucking count the people that quits or something, I find it ironic that they say "Guys, we're still 500k account strong" and follow it like "Operation income is down 47.5% from last fiscal year" on the next paragraph.

I don't think you are taking into consideration that the dollar has dropped 18% in value to the yen in the last year. That makes the monthly fees convert into fewer yen in Japan.

Assuming that most of their operating costs are in Japan, that would have a major negative impact on revenues and an even larger impact on earnings.

If they restated this without foreign currency conversion changes, I doubt there would be a significant change.

[hotpiercedguy]

I don't think you are taking into consideration that the dollar has dropped 18% in value to the yen in the last year. That makes the monthly fees convert into fewer yen in Japan.

Assuming that most of their operating costs are in Japan, that would have a major negative impact on revenues and an even larger impact on earnings.

If they restated this without foreign currency conversion changes, I doubt there would be a significant change.

Keep in mind the yen-conversion quotes are all using March 2009 conversion % I believe.

[ringthree]

They probably don't fucking count the people that quits or something, I find it ironic that they say "Guys, we're still 500k account strong" and follow it like "Operation income is down 47.5% from last fiscal year" on the next paragraph.

Hmm... wasn't there something that happened in the last fiscal year? I can't remember exactly what it was but I remember something vaguely related to the potential collapse of the world economic system... but I could be remembering that wrong.

[Vodou]

Keep in mind the yen-conversion quotes are all using March 2009 conversion % I believe.

I wasn't relying upon their yen conversion quotes (I went to the net and found suitable yen dollar conversion sites). Comparing 3/31/07-3/31/08 to 3/31/08-3/31/09, there was a decline in the conversion rate of 10.7%. (relative values of US dollars in Japanese yen.) I wasn't using point to point metrics...I calculated average currency costs throught the period using daily currency exchange rates.

The point is, the dollar has taken a drastic hit relative to the yen during the last 18 months (the recent downturn only accelerated what was occuring) and as a result all enterprises receiving fixed payments in Japan in US dollars are suffering a currency loss compared to the prior year.

This assumes they are not hedged that is, which is highly reasonable, since they are not active commodity traders.

[Zilong]

I was under the impression that the "operating income" would be the monthly fees incurred from the active accounts, which should be constant considering that they have been throwing the 500k figures forever. Which would make it kinda weird to say that they are maintaining the same userbase yet losing 47.5% of the income from the same userbase.

What is so ironic about it? SE sells more than FFXI(as a service.) Expect them to have high sells when FFXIV releases. (or an expansion for that matter)

That was based on the segment dedicated to FFXI though.

Well, it was Games (Online) portion of the report, but they only mention FFXI as an item in that particular part.

I don't know, maybe I'm just suck at reading this, or maybe everyone just decide to cut down on their gardening mules or something.

[Vodou]

I was under the impression that the "operating income" would be the monthly fees incurred from the active accounts, which should be constant considering that they have been throwing the 500k figures forever. Which would make it kinda weird to say that they are maintaining the same userbase yet losing 47.5% of the income from the same userbase.

Nope. That is referring to operating revenue. (And remember this is in being reported in Yen. SE would show less Operating revenue simply due to a currency translation loss even if the amount of US dollars paid was constant.)

Operating income is operating revenue minus operating costs.

Operating revenue = accounts x monthly fees in yen plus sales of software in yen (after translations of course)

Operating costs = costs to operate servers, communication fees, payroll, distribution costs, rent, manufacturing costs, R&D, etc. (This can vary depending on type of GAAP rules which are country specific and often industry specific) or SEC requirements (assuming SE follows SEC guidelines.)

Currency translation losses would reduce Operating revenue but not reduce operating costs to the extent the operating costs are local (Yen based.)

The most likely source of the income decline is both translation losses, reduced sales of FF11 and possibly increased costs for R&D or marketing for FF14. For competitve reasons, companies tend to bury project R&D costs.

[Aangeliceus]

Operating costs = costs to operate servers, communication fees, payroll, distribution costs, rent, manufacturing costs, R&D, etc. (This can vary depending on type of GAAP rules which are country specific and often industry specific) or SEC requirements (assuming SE follows SEC guidelines.)

Most companies that are based in Japan, that are publicly traded are required to file under the following rules: J-GAAP & Japan FSA (FSA = U.S. SEC). Square-Enix also follows IFRS (International Financial Reporting Standards). All this means is that their accounting practices are standardized in-line with other public companies.

And yeah... the dollar to yen ratio is absolutely wonderful for us socking money away in $USD back in America. Sucks for companies in Japan or tourists. Today's transfer rate for my bank was 90.58 yen to each $1 (compared to ~125 yen to a dollar when I moved to Japan).

[Spira]

i like how i can use this to further my understanding of finance (which im studying) and indulge in something related to FF somehow

[Ivana]

I wasn't relying upon their yen conversion quotes (I went to the net and found suitable yen dollar conversion sites). Comparing 3/31/07-3/31/08 to 3/31/08-3/31/09, there was a decline in the conversion rate of 10.7%. (relative values of US dollars in Japanese yen.) I wasn't using point to point metrics...I calculated average currency costs throught the period using daily currency exchange rates.

The point is, the dollar has taken a drastic hit relative to the yen during the last 18 months (the recent downturn only accelerated what was occuring) and as a result all enterprises receiving fixed payments in Japan in US dollars are suffering a currency loss compared to the prior year.

This assumes they are not hedged that is, which is highly reasonable, since they are not active commodity traders.

I would assume that they are hedged. I would expect any company that receives a significant portion of their revenues in a foreign currency to have some sort of program to reduce currency volatility.

[wipers]

Wait till after 14 comes out and see how many FFXI accounts still remain that is the true test.

[McGoonagle]

Wait till after 14 comes out and see how many FFXI accounts still remain that is the true test.

Wait a year. A lot of people are going to try XIV, but:

• some aren't going to like it;
• some will like it, but not get the progression system;
• some are not going to give up on characters they have invested so much in.

Numbers will be down, but I'm willing to bet a lot will have accounts for both games. If the numbers drop, but not to the point where SE can merge servers and generally lower operating costs for XI, it could cause them problems.

[Gergall]

Someone necro this in 2011. Dibs not it.