Square Enix, one of the biggest names in the gaming industry, recently faced disappointing sales figures for two of its highly anticipated titles, Final Fantasy 7 Rebirth and Final Fantasy 16. In a financial report released by Square Enix president Takashi Kiryu, it was revealed that these games did not perform as well as expected in terms of sales. The report, which was made public in May 2024, highlighted the company’s struggle to meet profit targets despite the release of several new titles.
Strategic Failings and Cannibalization:
Kiryu pointed out that one of the main reasons for the underperformance of Final Fantasy 7 Rebirth and Final Fantasy 16 was the company’s own strategic failings. Square Enix’s publishing strategy inadvertently forced its new releases to compete with each other for sales, leading to what Kiryu described as “opportunity losses due to cannibalization between our own titles.” With a plethora of high-budget Final Fantasy games like the three-part Final Fantasy 7 remake, ongoing Final Fantasy 14 expansions, and the release of Final Fantasy 16, Square Enix found itself in a position where its own games were vying for consumer attention.
New Multiplatform Business Strategy and Downsizing:
To address these issues, Square Enix introduced a new multiplatform business strategy aimed at winning over PC users. This strategy, which was unveiled in May 2024, also involved downsizing the company’s studio portfolio and workforce. Following the sale of Crystal Dynamics and Eidos Montreal to Embracer in 2022, Square Enix underwent layoffs at its US and EU offices, reflecting the broader trend of job losses in the games industry. The company’s internal restructuring in Japan was also highlighted by Kiryu as an effort to combat the “siloization” of its development teams.
Reorganization Efforts and Increased Communication:
Kiryu detailed the reorganization efforts within Square Enix, which took effect on April 1, 2024, to promote greater collaboration and communication among its development and publishing functions. The new flat structure aimed to facilitate the discovery of untapped talent within the company and foster dialogue between different teams. Kiryu emphasized the importance of establishing a regular forum for studio heads and himself to discuss upcoming projects, ongoing developments, human resource allocation, and other key topics. This centralized approach aimed to streamline operations and enhance coordination within Square Enix.
Looking Ahead:
Despite the challenges faced by Square Enix in the wake of disappointing sales figures for Final Fantasy 7 Rebirth and Final Fantasy 16, the company remains committed to its vision for the future. With a renewed focus on strategic planning, collaboration, and communication, Square Enix aims to revitalize its game development and publishing efforts. The release of Final Fantasy 16 on PC and ongoing expansions for Final Fantasy 14 are expected to bolster sales and revenue in the coming months. As the gaming industry continues to evolve, Square Enix is poised to adapt and thrive in an increasingly competitive market.
In conclusion, Square Enix’s recent financial report sheds light on the challenges faced by the company in meeting profit targets with the release of Final Fantasy 7 Rebirth and Final Fantasy 16. By addressing strategic failings, promoting collaboration, and implementing a new multiplatform business strategy, Square Enix is taking proactive steps to enhance its future prospects. With a renewed focus on innovation and communication, the company is well-positioned to navigate the complexities of the gaming industry and deliver compelling experiences to players worldwide.