Square Enix reports $48M loss following release of underperforming Marvel’s Avengers An image from the video game Marvel's Avengers. The superhero Black Window is breaking an AIM Agent's arm.

Driven by weak sales of Marvel's Avengers, Square Enix has posted an operating loss in its HD Games segment of more than ¥5 billion, or $48 million, for the second quarter of the current financial year. This information comes from the latest release of financial results, for the six month period of April through the end of September 2020. Marvel's Avengers, a live service game developed by Crystal Dynamics, was heavily advertised and expensively produced, but was panned by both critics and the broader gaming audience.

It's the second high-profile failure of a live service game in as many years, following BioWare's Anthem in 2019.

Square Enix's HD Games division is responsible for its big games releases, but not its MMOs or mobile games. Despite the losses, the HD games division did do more business in both quarters of 2020 than in comparable periods in 2019. The MMO division, responsible for games like Final Fantasy XIV, posted profits in both quarters this year. 

Square Enix hasn't reported sales numbers, though Tokyo-based games industry analyst David Gibson said in a tweet that the sales volumes were lower than Square Enix had planned—something like 60% of the expected total. Gibson further noted that based on Square Enix's reported numbers the game likely cost upwards of $170 million to make.

The sales performance of Marvel's Avengers looks even weaker when compared to the release of Final Fantasy VII remake in April. The delay of the PS4-exclusive game and the boost in game sales due to Coronavirus bolstered that quarter's numbers. Marvel's Avengers, available on all platforms, did not nearly replicate its success.

Much like the gaming public, PC Gamer's reviewer was less than enthused about Marvel's Avengers at launch. Reviewer Robert Zak called it "A well-told campaign and story," but noted that they were a thin veneer over "a rather scrawny service game beneath." 

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