For the fiscal year that ended on March 31, 2024, the company’s Digital Entertainment section, which covers video games, experienced a 2.6% increase in sales.
However, profits decreased by 15.8%. This decline occurred despite releases like Final Fantasy 16, Final Fantasy Pixel Remaster, Foamstars, and Final Fantasy 7 Rebirth. Particularly in the HD games category, which includes all these titles, Square Enix reported a substantial operating loss of ¥8.1 billion (around $51.9 million).
Final Fantasy 16 and Final Fantasy 7 Rebirth were both released exclusively for the PlayStation 5. Square Enix has shared sales numbers for Final Fantasy 16 but not for Final Fantasy 7 Rebirth, which is the second installment in the company’s three-part remake of Final Fantasy 7. In its financial statement, Square Enix mentioned it is struggling to achieve better profit margins in HD game development.
The company noted that despite launching several games, some did not meet profit expectations, particularly those that were outsourced and some high-budget games. It’s likely that Final Fantasy 7 Rebirth is among those games.
Due to falling profits, Square Enix has introduced a plan called “Square Enix Reboots, and Awakens.” This three-year strategy aims for long-term growth and includes reevaluating every part of the company. A key part of this plan is moving to a strategy that embraces multiple gaming platforms.
Square Enix plans to focus on developing games for Nintendo platforms, PlayStation, Xbox, and PCs. Notably, they refer to “Nintendo platforms,” with anticipation of Nintendo announcing a new console to follow the Switch by April 2025.
As part of its new multiplatform strategy, Square Enix announced it will “create a setting where more customers can enjoy our main series and big-budget games, including previous releases.” This implies that main Final Fantasy games may no longer be exclusive to PlayStation in the future.
However, Square Enix has only confirmed that Final Fantasy 16 will be released on PC soon, with no further details given.
Square Enix is focusing on improving quality over quantity and aims to ensure games are more enjoyable. The company has faced criticism for releasing too many Final Fantasy games too quickly, so this might mean future releases will be more spread out.
Currently, Square Enix is going through a challenging period, having already faced ¥22.1 billion (about $140.9 million) in losses from canceled or scaled-down projects, as reported in today’s financial update. The company did not specify which projects were affected.
Looking forward, the new expansion for the MMO Final Fantasy 14, called Dawntrail, is set to release at the end of June. Additionally, Square Enix is developing Kingdom Hearts 4, the third installment in the Final Fantasy remake series, and Dragon Quest 12.
In February, Square Enix’s director and president, Takashi Kiryu, discussed with analysts the need for a new organizational structure due to declining sales in the digital entertainment sector, despite Final Fantasy 16 launching in June.
The game, a PlayStation 5 exclusive, sold three million units in its first week. A version for PC is being developed. In January, Final Fantasy 16’s producer, Naoki Yoshida, suggested that it might be time to pass the leadership of the Final Fantasy series to a younger team for the next installment, Final Fantasy 17.
What we think?
Square Enix is making big changes because they are not making as much money. They are planning to put their games on more game systems like Nintendo, PlayStation, Xbox, and PCs. This means more people can play their games.
They want to make better games and not just more games. They are also working on new games like Final Fantasy 14 expansion, Kingdom Hearts 4, and Dragon Quest 12. I think these changes are good and will help them.
