It appears that limited timed exclusives for Sony PlayStation aren’t translating into profits and sales for Square Enix.
Square Enix revealed its consolidated financial results for the fiscal year ending March 2024. While their “Digital Entertainment” segment sales, encompassing video games, increased by 2.6%, profit declined by 15.8%. Additionally, the company experienced a notable operating loss of ¥8.1 billion (approximately $51.9 million).
They also unveiled a new medium-term management plan covering the period from fiscal year 2025 to fiscal year 2027, which involves moving away from platform exclusivity in favor of multiplatform releases.
In the previous medium-term management plan, Square Enix Holdings commenced portfolio restructuring by divesting overseas studios and specific intellectual properties. Notably, they sold Crystal Dynamics along with the Tomb Raider and Deus Ex franchises to the Embracer Group for a mere $300 million. Furthermore, they expanded their MMO ventures to bolster revenue.
However, Square Enix is facing significant challenges, evident in their struggle to maintain control. They have terminated several mobile games and reported a loss of $140 million from canceled game projects.
Additionally, profits from full-scale “HD game” development have been steadily declining, with the last two entries in the Final Fantasy franchise appearing to perform poorly.
Final Fantasy XVI fell short of their expectations, and the recent release of Final Fantasy VII Rebirth appears to have performed even worse. Several factors likely contributed to their abysmal sales.
In recent years, Square Enix has prioritized exclusivity contracts, allowing them to sidestep concerns about raw sales numbers. Companies like Sony and Epic Games offer lucrative deals for limited-time exclusivity releases of their “hit” games on their platforms.
Over the past year both Final Fantasy 16 and Final Fantasy 7 Rebirth launched as “exclusives” for Sony’s PlayStation 5 console. Similarly, the previous Final Fantasy VII Remake was initially exclusive to Sony’s PlayStation 4 before later releasing on PC through the Epic Games Store one and a half years later.
It also pays to mention the fact that the PC release of Final Fantasy VII Remake marked the beginning of the now commonplace $70 price tag for AAA games, so thank you Square Enix.
The second reason for Square Enix’s failure lies in their poor management practices. Their games continue to deviate and damage the once-legendary franchise. Square Enix insists on prioritizing action RPGs over traditional turn-based combat, which was integral to the iconic Final Fantasy series.
Additionally, they have demonstrated a lack of care for their own product, evident in their action-oriented remakes of Final Fantasy VII, which often rewrite and detract from the original material when it suits them.
For example, the transformation of the Honeybee Inn from a brothel to a cabaret club featuring homoerotic dancers is just one such instance. But considering how Square Enix themselves are “embarrassed” by the original release regarding social problems and “cultural depictions” this makes a lot of sense.
Let’s not overlook the issue of censorship. The main reason why Square Enix are failing. They openly admitted to taking drastic measures to censor Tifa’s breasts in the Final Fantasy VII Remake, notably by significantly reducing her bust size and eliminating any traces of jiggle physics.
This decision was purportedly influenced by their “ethics department,” as the company has increasingly begun catering to the Western demographic, particularly aligning with the ESG funding and ideology prevalent in the West.
In addition to Square Enix’s apparent discomfort with feminine women and representations of breasts, they’ve consistently altered elements in the Final Fantasy VII Remakes that could be deemed “problematic” by modern standards. These changes seem aimed at enhancing their ESG (Environmental, Social, and Governance) value.
Final Fantasy 16 was banned in Saudi Arabia, due to Square Enix’s decision not to censor a gay kiss scene in the game. This is believed to be the first instance of such representation across the entire franchise.
I’d say dudos to Square Enix for standing firm against the Saudi government and refusing to compromise upon their artistic vision of their game if not for the fact that the same couldn’t be said regarding content favorable to those who aren’t gay.
Square Enix had an excellent free marketing campaign associated with Final Fantasy VII Rebirth prior to its release.
A canonical scene depicting Tifa and Aerith wearing conservative swimsuits without jiggle physics, trended on Twitter. Some individuals erroneously believed that Square Enix had backtracked on their ethical standards with this portrayal in their upcoming release.
How wrong they were. Just before the release of Final Fantasy VII Rebirth on Sony’s PS5 console, Square Enix made the surprising decision to retroactively censor Tifa’s cowboy outfit in the previous Final Fantasy VII Remake through a new game update.
The timing of this decision appears almost vindictive. The update occurred four years after the game’s release, it’s almost as if Square Enix wanted to make up for any wrongdoing from those sharing Tifa’s bikini scenes on Twitter, the result was a staggering drop of sales for Final Fantasy VII Rebirth.
It’s as though they felt compelled to take action to prevent any potential stress or discomfort for their ethics department staff. Because the censored patch itself was apparently done for the sake of “continuity” which means absolutely nothing given how the outfit itself had been censored to be less revealing from one title to another regardless.
This is precisely why Square Enix is facing financial struggles. Their major games are underperforming, primarily because they are restricted as “exclusives” to a console platform that itself is underperforming by Sony’s standards.
The refusal to release Final Fantasy games across both major consoles and PC severely limits sales potential, especially if Sony isn’t offering sufficient financial incentives with their “exclusivity” contracts.
With each new release by Square Enix, which are becoming increasingly more progressive, more and more consumers are abstaining from Square Enix’s censored content.
While Square Enix refuses to back down on their ESG agenda, they are however looking to change their ways in terms of platform availability of their games.
- “Productivity improvement through optimization of digital entertainment business development structure”
- “Diversification of revenue opportunities through strengthening contact points (customer touchpoints)”
- “Introduction of various measures for further stabilization of management foundation”
- “Capital allocation considering the balance between growth investment and shareholder return”
In terms of the strategy focusing on “Productivity improvement through optimization of digital entertainment business development structure,” the objective is to shift from quantity to quality, delivering “solid entertainment.”
It’s baffling; even their cherished Final Fantasy franchise is struggling. What aspect of Final Fantasy XVI and VII Rebirth could possibly not be considered as quality large-scale products?
Nonetheless, the focus remains on maintaining and growing the fan base by delivering consistent “entertainment” for large and medium-sized HD titles. For new IP titles, the emphasis is on cultivating new fan bases through innovation and originality in “entertainment.”
Moreover, they aim to strengthen the catalog title lineup by tapping into their extensive library of IPs.
Furthermore, they aim to establish a development structure that creates unique “entertainment” specific to Square Enix. This involves enhancing in-house development capabilities through the revitalization of internal development structure and transitioning to a development promotion structure that harmonizes individual creativity with organizational management.
As part of this effort, they plan to redefine the mission of producers and associated roles, as well as establish an “internal support system.”
Under the strategy of “Diversification of revenue opportunities through strengthening contact points (customer touchpoints),” Square Enix has announced a shift to a multi-platform approach.
They intend to vigorously promote multi-platform deployment for their HD titles, mentioning Nintendo, PlayStation, Xbox, and PC platforms as viable release avenues, additionally, they will consider launching SD titles on platforms such as iOS/Android and PC.
Moreover, Square Enix plans to enhance digital sales pathways in promotional strategies for new releases, capitalize on revenue opportunities from their extensive catalog title library, and undertake various initiatives aimed at attracting PC users, considering how the Final Fantasy 14 MMO is pretty much keeping them afloat at the moment, I’m not really surprised.
Drawing from this new medium-term management plan, the company aims to establish a development structure that consistently delivers title launches “exceeding consumer expectations.” They also seek to generate and cultivate new IP and businesses that will drive further growth in the next generation.
I’m clearly skeptical. I have no desire to see Square Enix thrive after everything they’ve done. They wholeheartedly embrace Western ESG agendas and DEI initiatives, resulting in their games being censored right from the source or even four years after release in some cases.
There’s no doubt in my mind that they would make much more money per individual sale if their games weren’t arbitrarily restricted to a single console platform. However, if this means that their future titles from 2025 onwards will have a PC release on day one, I’m almost certain it will be exclusively on the Epic Game Store, just so they can rake in extra cash for minimal effort.
