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Square Enix writes off entire dev budget ($16M) of EU made game, still in development

N

Nirolak

Mrgrgr
Mael said:
Anyone want to guess what they binned this time?
Click to expand...

No that's the crazy part.

They wrote off the *entire* development budget, but are still making the game.

I guess it could somehow be due to Nosgoth originally being tied to Dead Sun?

This would kind of make sense since what they were making in Europe will no longer be shipped, but Nosgoth (the multiplayer mode for the game) will still come out at some point, but is getting additional development time and perhaps is now seen as a separate budget.

That or they don't have much faith in something else they're making, which would be rather fascinating.
 
B

badcrumble

Member
Write-downs technically mean eliminating money already committed in the budget, so this is more like a budget cut. Is there any evidence that $16 million is what had been spent so far?

edit: Ah, right, 100% of the game. Uh. Weird.

So they're basically distributing the money spent on that budget to the current quarter as a loss, instead of spending that money during other quarters. I suspect that this is similar to some of the Q4/Q1 shuffles they've done in the past (I think it happened with Deus Ex: HR) so that they can basically get a lot of their losses out of the way before a more profitable year. Doesn't bode well for their expectations for FY13, I think.
 
V

Visualante2

Member
Hitman is meant to be an annual franchise but I don't think they've clarified if IO Interactive is working on it. They could just be going for the Treyarch/Infinity Ward tag team.
 
M

Mael

Member
Nirolak said:
No that's the crazy part.

They wrote off the *entire* development budget, but are still making the game.

I guess it could somehow be due to Nosgoth originally being tied to Dead Sun?

That or they don't have much faith in something else they're making.
Click to expand...

So in short they're remaking the game from scratch and restarting the project and binning everything they did on said project?

And which Eidos team's fault is that this time?
 
A

APZonerunner

Member
Visualante2 said:
Hitman is meant to be an annual franchise but I don't think they've clarified if IO Interactive is working on it. They could just be going for the Treyarch/Infinity Ward tag team.
Click to expand...

When they founded Square Enix Montreal (separate from Eidos Montreal, remember) they advertised for hiring for a next-gen Hitman experience, while IO was hiring for something different/new. After the restructure, the best we can tell is that Square Enix Montreal has been gutted down to a mobile studio, while IO has been significantly cut and is now working on a new, proper Hitman again. It's not really clear if IO took over the work Montreal had already began (though the studio was only on it for some 8 months) or is starting fresh. Either way, whatever their non-Hitman project was is now relegated to mobile or dead.
 
N

Nirolak

Mrgrgr
Mael said:
So in short they're remaking the game from scratch and restarting the project and binning everything they did on said project(s?)?
Click to expand...

It's hard to say. Usually you don't write off the entire budget unless you intend to cancel something, so it's possible.

Nugg said:
How can you cut money that's already been spent?
Click to expand...

They just recorded it as a loss as part of their Q1 earnings.
 
B

badcrumble

Member
Nugg said:
How can you cut money that's already been spent?
Click to expand...

It's a way of basically saying "we're losing/spending that money during this quarter instead of during that quarter." It's shuffling the books around, basically, in order to make one financial quarter/year stronger and another one weaker for whatever reason. And yeah, usually this sort of loss-dumping happens with actual cancellations, so, weird.
 
N

Nirolak

Mrgrgr
badcrumble said:
It's a way of basically saying "we're losing/spending that money during this quarter instead of during that quarter." It's shuffling the books around, basically, in order to make one financial quarter/year stronger and another one weaker for whatever reason.
Click to expand...

Yes, the writedowns all happened now to basically sink this year so next year looks better.

badcrumble said:
And yeah, usually this sort of loss-dumping happens with actual cancellations, so, weird.
Click to expand...

But yes, most of their write-downs were actual cancellations, so this is an anomaly.
 
M

Mael

Member
Nirolak said:
It's hard to say. Usually you don't write off the entire budget unless you intend to cancel something, so it's possible.
Click to expand...

Some management change might shed some light on this, because for a fuck up that size I don't imagine no one fell on a sword for that...

Or they're pushing the cost of something big that is released next year to this year to make next year look better as you pointed out....
 
R

reptilescorpio

Member
Nirolak said:
No that's the crazy part.

They wrote off the *entire* development budget, but are still making the game.

I guess it could somehow be due to Nosgoth originally being tied to Dead Sun?

That or they don't have much faith in something else they're making.
Click to expand...

Seems like the most likely explanation.

Dead Sun :(
 
T

thetrin

Hail, peons, for I have come as ambassador from the great and bountiful Blueberry Butt Explosion
Nirolak, despite your explaining, I still don't really understand. This is probably why I don't work in finance.
 
N

Nirolak

Mrgrgr
thetrin said:
Nirolak, despite your explaining, I still don't really understand. This is probably why I don't work in finance.
Click to expand...

I guess the easiest way to put it is:

1.) Square Enix spent $16 million developing a game in Europe.
2.) In Q1 2013, Square Enix decided to value all the work they had done so far as worth $0, and thus took a loss of $16 million on their earnings results for that quarter.
 
M

mclem

Member
I can probably now say that Rebellion was working on a Square Enix title which fell through leading to layoffs (including my own!). Doubt it's that unless it's been resurrected - that was a few years ago, now (2010? 2011? something like that), but it does indicate that Squeenix were also looking outside their inhouse folks back then.
 
M

Mael

Member
Nirolak said:
I guess the easiest way to put it is:

1.) Square Enix spent $16 million developing a game in Europe.
2.) In Q1 2013, Square Enix decided to value all the work they had done so far as worth $0, and thus took a loss of $16 million on their earnings results for that quarter.
Click to expand...

In short they spent $16M but produced $0 as far accounting goes?
 
V

Vinterbird

Member
IO Interactive had other projects in development before they gutted half of the staff and killed/moved everything not Hitman.
 
S

StiLt

Member
Could it be due to a significant delay in projected delivery? Pushing the anticipated ROI beyond the financial year (budget) they were initially targeting?
 
M

Mael

Member
Nirolak said:
Yeah, financially they basically treated it like the project had been canceled, and whatever is going on now is a new thing.
Click to expand...

That would make sense.
If no cancellation has been done it means that they're re starting from scratch and they disregard totally what has been done before.
Someone in management fucked up....badly.
 
B

badcrumble

Member
Mael said:
That would make sense.
If no cancellation has been done it means that they're re starting from scratch and they disregard totally what has been done before.
Someone in management fucked up....badly.
Click to expand...

Eh, I don't know if it means they're discarding the previous work. It could just be cooking the books.
 
S

StiLt

Member
Mael said:
That would make sense.
If no cancellation has been done it means that they're re starting from scratch and they disregard totally what has been done before.
Someone in management fucked up....badly.
Click to expand...

Could also be a current gen project being shifted to next gen.

Wild speculation shoes on: if it was IO Interactive finally making a Freedom Fighters sequel and that's getting canned (again), I'll be a very sad panda.
 
I

ItWasMeantToBe19

Banned
I wonder how strongly people at SE and Eidos have to believe in the idea or the IP of the game to start working on it again after just going through this complete failure of an attempt.
 
L

lefantome

Member
I hope that what happened was justified by a crap management and an awful game, otherwise I hope SE will make room for other/new publishers soon.

Poor eidos btw, they had great games in the last years...
 
M

Mael

Member
badcrumble said:
Eh, I don't know if it means they're discarding the previous work. It could just be cooking the books.
Click to expand...

StiLt said:
Could also be a current gen project being shifted to next gen.

Wild speculation shoes on: if it was IO Interactive finally making a Freedom Fighters sequel and that's getting canned (again), I'll be a very sad panda.
Click to expand...

Could be cooking the book, but for a public company I'm not sure if it'd pass the next audit (if they have internal audit, if they don't that explains so much....)...
But realisticly if it was some project that were retrofitted on another platform it would only increase the budget and the production value wouldn't be null.
Heck if they consider all the work done being null in value, and it's upjumped project to next gen when it'll be done they'll have no idea how much it actually cost them to make the whole project.
They don't need this to make the accountants go crazy I mean.
 
Q

Quentyn

Member
So does made in EU mean that the game is actually developed in the EU or did he just say that to make the distinction between Square Enix Japan and Square Enix Ltd. (Eidos)?

If it is the second it is also possible that the game is in development at Crystal D or Eidos Montreal because they both are technically a part of Square Enix Europe.
 
N

Nirolak

Mrgrgr
Quentyn said:
So does made in EU mean that the game is actually developed in the EU or did he just say that to make the distinction between Square Enix Japan and Square Enix Ltd. (Eidos)?

If it is the second it is also possible that the game is in development at Crystal D or Eidos Montreal because they both are technically a part of Square Enix Europe.
Click to expand...

Hmm, good question.

stargateheaven said:
wait.. how are they going to continue making the game with a budget of... 0?

Is thief 4 developed in EU?
Click to expand...

Thief 4 is in Canada.

That said, they aren't giving the game a budget of $0, they're just valuing what they have made so far as being worth $0.
 
S

Samir Sedlar

Member
Nirolak said:
I guess the easiest way to put it is:

1.) Square Enix spent $16 million developing a game in Europe.
2.) In Q1 2013, Square Enix decided to value all the work they had done so far as worth $0, and thus took a loss of $16 million on their earnings results for that quarter.
Click to expand...

Thanks alot for putting it this way, I too was having bit of hard time getting it.

well back in 2012 Crystal D was going to announced a new IP, but so far we didn't hear anything about it ((http://www.computerandvideogames.com/330940/tomb-raider-dev-to-reveal-new-ip-this-year/))

Maybe this is it ?!, cause I can't see this happening to Hitman 6 to be honest.
 
N

Nirolak

Mrgrgr
Samir Sedlar said:
Thanks alot for putting it this way, I too was having bit of hard time getting it.

well back in 2012 Crystal D was going to announced a new IP, but so far we didn't hear anything about it ((http://www.computerandvideogames.com/330940/tomb-raider-dev-to-reveal-new-ip-this-year/))

Maybe this is it ?!, cause I can't see this happening to Hitman 6 to be honest.
Click to expand...

Well, this was back in Q1, and the rescoping of that project just happened last week, so it's not extremely likely, but something similar at another studio is possible.
 
V

Vinterbird

Member
Samir Sedlar said:
Thanks alot for putting it this way, I too was having bit of hard time getting it.

well back in 2012 Crystal D was going to announced a new IP, but so far we didn't hear anything about it ((http://www.computerandvideogames.com/330940/tomb-raider-dev-to-reveal-new-ip-this-year/))

Maybe this is it ?!, cause I can't see this happening to Hitman 6 to be honest.
Click to expand...

Hitman 6 is/was being developed in Montreal. IOI is working on another Hitman product.

Other then Crystal, it could be IO as they had to kill at least one project a few months back.
 
S

Servizio

I don't really need a tag, but I figured I'd get one to make people jealous. Is it working?
So, how long (or maybe how much?) before comparisons to THQ start to seem appropriate?

I'm starting to think Square Enix won't make it through this next generation. And Eidos is already sounding gutted, sadly.

Edit: Get out of my head, Lambda.
 
C

ComputerMKII

Banned
H5UWvgx.jpg
 
W

witchedwiz

Member
StiLt said:
Could it be due to a significant delay in projected delivery? Pushing the anticipated ROI beyond the financial year (budget) they were initially targeting?
Click to expand...
This.
On a of note this kind of stuff is not so rare in the it industry as a whole..
A department of ours had a cumulative budget of 7m euros over 5 years (a 12 PERSON department on the top of that) and the project delivery was postponed 1 more year (causing 1.5m addition) with a LOT of loud talk near my ear about CUT, firing and a LOT of nice terms..
What really baffles me is that no One knew offici alla of this se project and no One has red anywhere SE posting of job offer so it was all done internally with available studios/people...
Accepting a plain 16m waste and trashing what was made so far sounds a bit extreme, even by SE standards...
But then again.. Dead Sun....
 
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