How's Final Fantasy TCG for Business? A Brief Look at Square Enix's Annual Reports

As players, we all love this game and have a personal interest in wanting to see Final Fantasy TCG grow. Sometimes, when things don't happen the way we think they should, we get understandably frustrated. I decided to look at the public information available to investors from Square Enix's head office, and see if that helps answer some questions and alleviate some of my own frustrations.

Before we jump in, let me get a few things out the way. I do not work for, nor do I personally know anyone who works for Square Enix. I am not a financial advisor, and I do not own any stock in Square Enix. None of the information on this page is intended as investment advice whatsoever.

Final Fantasy TCG is in its second year. The first year, players and store owners dealt with distribution issues, and those seem to have been resolved. As the game grew in popularity, fans demanded other things, too. Large tournament support? A judge program? Better constructed play support, like more promos? I've seen a lot of complaints around that stuff. I totally get why, and it comes from a place of love. Some of the overarching frustrations I've witnessed all seem to come from a fundamental place: "Square Enix is a giant company, and much smaller companies run card games more effectively, so why are we waiting around for what we want?"

I do not know the answers to why we're on the timeline we are with judge programs, etc. However, I think it's an unfair comparison to make when it comes to the size of Square Enix.

Annual Reports

Companies that are publicly traded must disclose specific financial information to the public on an annual basis. There are limits to how much information they must disclose, just as there are strict minimum requirements that must be met. Companies, more or less, get to choose how they portray their business and profits / losses. If you want to see a full history of Square Enix's Annual reports, use this link. For our purposes, we're just going to look at the 2017 and 2018 annual reports, as that covers the timeline of FFTCG's history.

Four Segments of Business

Square Enix divides its business into four core categories: digital entertainment, merchandising, publication, and amusement. FFTCG is under the "merchandising" segment, so we're going to pay special attention to that group. 

In 2017, Square Enix provided a snapshot of each segment, outlined below.

This tells us a few things, mostly that sales were really great by volume in their digital entertainment section, and we saw a significant increase in net sales in the merchandising section. Was this due to FFTCG? The report does not explicitly say.

In fact, we get almost no information in 2017 about FFTCG from the annual report specifically. A staggering amount of attention is given to the digital entertainment section, and for good reason: digital entertainment represented 77% of the total business. 

Here's the only mention anywhere of FFTCG in the 2017 report.

An annual report does not tell us any of the strategic dialogue happening behind the scenes, or the secrets of the decision makers at Square Enix. But, it does give us some context. A majority of the company's focus is on their digital media, such as video games. For fans of FFTCG, this should make perfect sense. We only have FFTCG because the Final Fantasy games are so dang good and memorable.

Now, imagine you are a Square Enix employee. What is your argument that the company should invest resources and employees into a footnote of 2.5% of their total business? Even an amazing argument would be hard to deliver, just based on the size. It isn't a big focus of a big company.

Let's look forward, to 2018. Recall that we're in the second year of FFTCG. Here's an update on the numbers:

Square Enix had a pretty good year, just looking at a few of these data points. The one we most care about is the Merchandising line, which I have circled above. That's a nice increase of 1.1 billion yen, which is just over $10 million USD. I know a few folks personally who may have been responsible for a few million dollars in FFTCG packs by themselves ... but do not forget that FFTCG is one part of the Merchandising segment. 

Luckily, we get one more piece of direct information. The presentation was transcribed this year, and the transcription was published. Chief Financial Officer Kazuharu Watanabe spoke about the graphic above, and mentions FFTCG specifically. "At the Merchandising segment, net sales rose thanks to brisk sales of the figurines included with “FINAL FANTASY XIV” expansion packs, and of the “FINAL FANTASY TRADING CARD GAME.”

This means two things, for sure. The first is exactly what it says: FFTCG had a good year, which is great! The second, and more anecdotal but more compelling bit of information is that FFTCG had such a good year, the top executives at Square Enix wanted their shareholders to know about it. 

What does that mean for the players? Nothing, exactly. But it tells us that the decision makers are paying attention to the game. Perhaps this adds some more context to the gains we had over the past year, with the Crystal Cups, National qualifiers, and strong reasons to believe a formal judge program is in creation.

This is all just my opinion. If you've made it this far, hopefully you do not disagree entirely with my reasoning behind the business decisions around FFTCG. My final takeaway is that I think this game is going in a really encouraging direction and big things are in store. I think the momentum is in FFTCG's favor and it is only a matter of time, perhaps less than more, before all of our wishlists are filled. Thanks for reading!