The news coincides with Square Enix announcing further major revisions to its fiscal year forecasts, which the company attributes to its decision to implement major restructuring in the wake of "the rapidly changing environment of the game businesses." Square Enix expects the changes, which it noted as affecting development policy, organizational structure, and business models, to incur a total "extraordinary" loss of ¥10 billion, or around $106 million.
However, Square Enix says the primary reason for the company's lower-than-expected results is the "sluggish" sales performance of its major games in western territories. When Square Enix announced its nine-month fiscal year net loss of just over ¥5 billion, the company said then it hadn't recovered the losses from earlier in the year because of "the increasingly difficult condition of the worldwide console game market."
Today's forecast revisions show a dramatic turnaround for the company's yearly financials. For the fiscal year ending March 31, Square Enix is projecting now a net loss of ¥13 billion, or around $138 million, compared to initial forecasts of a net profit of ¥3.5 billion, around $37 million. The previous fiscal year, Square Enix posted a net profit of just over ¥6 billion.
Update: GamesBeat is reporting Square Enix sold a number of its free-to-play games to privately funded start-up Sleepy Giant, with sources "familiar with the matter" saying four unannounced games were included in the deal. Neither party has announced the deal, with a Square Enix representative telling GamesBeat it doesn't "comment on any details for external development deals."