Square Enix, one of the leading game publishers and developers, recently admitted that the commercial performance of two of its biggest games, Final Fantasy XVI and Final Fantasy VII Rebirth, did not reach the expected targets. While both games were highly anticipated by the gamer community, Square Enix struggled with profitability and managing their game portfolio strategy. It's a reminder that even big developers like Square Enix have to adapt to the ever-changing market dynamics.
Big Game Profitability that Didn't Meet Expectations
In the financial report released on September 18, 2024, Square Enix President and Representative Director Takashi Kiryu expressed disappointment with the sales results of the two games. "We released some big titles like Final Fantasy XVI and Final Fantasy VII RebirthBut unfortunately, profits did not meet our expectations," Kiryu said. One of the main reasons cited was the internal game competition, also known as sales cannibalization, that occurred between the two games.
Square Enix released Final Fantasy XVI in June 2023, followed by Final Fantasy VII Rebirth in February 2024, just under a year apart. This causes the two titles to affect each other in terms of sales, thus reducing the potential profits of each game. In addition, the HD Games Square Enix has also recorded significant operating losses over the past few years, suggesting that there are greater challenges in maintaining profitability in the industry.
Another major issue was the management of Square Enix's portfolio of titles. According to Kiryu, the company failed to optimize a more thoughtful launch strategy, which ultimately resulted in missing important opportunities in the market. Challenges in HD game development that took a long time also exacerbated the situation. In response to these issues, Square Enix has decided to extend the development time of some of their ongoing projects, in order to produce products that are more mature and in line with consumer expectations.
Change Plan and Multi-Platform Future
Square Enix has announced plans to expand their release platforms in the future. Although Final Fantasy XVI and Final Fantasy VII Rebirth Originally launched as a PlayStation 5 exclusive, the company is now planning to release its upcoming games on multiple platforms, including PC, Xbox, and possibly next-gen Nintendo consoles. This strategy is expected to expand the market reach and boost sales for the upcoming big titles. As a first step, Final Fantasy XVI has been released for PC, signaling Square Enix's commitment to this multi-platform approach.
However, it's not just Final Fantasy that Square Enix is concerned about. Other games from the company have faced similar challenges. For example, Foamstars, which takes inspiration from SplatoonSquare Enix has seen a drastic decline in popularity and is now turning into a free-to-play game. This highlights how difficult it is for Square Enix to maintain relevance with game fans outside of their big franchises.
Looking ahead, Square Enix still has some big projects in development. Kingdom Hearts 4, the third game in the remake trilogy Final Fantasy VII, and Dragon Quest 12 are some of the titles that are still expected to bring the company back to success. However, producer Final Fantasy XVI, Naoki Yoshida, stated that it was time for the younger generation to lead the franchise. Final Fantasywhich may lead to new approaches to Final Fantasy XVI in the future.
With the challenges faced by Square Enix in recent years, it's clear that the company needs to take decisive steps to improve their business strategy. Through a multi-platform approach, a more selective selection of titles, and a focus on long-term development, Square Enix hopes to overcome these challenges and return to success in the gaming industry.
As gamers, we all hope that Square Enix can continue to produce games that are not only iconic but also of high quality. Their journey may be challenging, but with the steps they are taking now, the future of big games like Final Fantasy and Dragon Quest looks promising.
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