Square Enix, once an iconic video game corporation, has faced tough times in recent years. Their latest big-budget releases, Final Fantasy XVI and Final Fantasy VII Rebirth, have failed to meet sales expectations.
This underperformance is attributed to several factors, including limited visibility due to Sony PlayStation timed exclusivity and a focus on progressive writing and revisionism, enforced by an “ethical department” that censors content, all wrapped in an action RPG format.
The company is in dire need of a financial win, having recently reported an operating loss of ¥8.1 billion in their HD games segment. Despite a rise in net sales, net profits plummeted by nearly 70%, causing their stock prices to drop significantly from ¥6,268 to ¥4,588 after just one month.
While I don’t expect Square Enix to make a complete recovery, they continue to produce action-oriented Final Fantasy titles mired in censorship. For instance, they retroactively censored Final Fantasy VII Remake Intergrade just a week before its sequel’s release, further altering Tifa’s Cowboy outfit to be even less revealing.
Square Enix is digging deep into their pockets to stay afloat until the next Final Fantasy installment. They have already started moving away from platform exclusivity deals. Previously, they received payments from Sony and Epic Games for timed exclusivity, releasing their games on PlayStation first before making them available on PC via the Epic Games Store.
Square Enix are to adopt a new multiplatform release strategy moving forward.
However, a recent shareholder meeting on June 21st raised some eyebrows. Square Enix CEO Takashi Kiryu made statements about the company’s stance on the use of generative AI technology.
One notable Square Enix title using AI-generated assets is “Foamstars,” a live-service game similar to Splatoon that features egregious microtransactions. Initially, the game was offered free to PlayStation Plus subscribers, but this was only temporary access.
Eventually, it required an upfront charge of $40. Few players were willing to pay this amount for what turned out to be a bland team shooter, resulting in 95% of its player base abandoning the game once the PS+ free access period expired.
AI-generated assets aren’t the reason the game failed. The real issue was that Foamstars simply wasn’t worth the investment, compounded by its desperate attempt to exploit users with microtransactions that matched or even exceeded the game’s cost.
As a publicly traded company, Square Enix is legally obligated to prioritize profits for shareholders. The concept of AI-generated assets in video games was brought up by their out-of-touch investors
Takashi Kiryu addressed this by stating that Square Enix would “change course” and adopt a more cautious stance regarding AI generation in the video game industry. This response implies that AI was behind Foamstars’ failures, which couldn’t be further from the truth.
According to independent JP reporter Michsuzuki, when asked by shareholders about Square Enix’s use of AI and concerns over intellectual property infringement, CEO Takashi Kiryu responded: “AI itself has tremendous potential. However, there are also many risks involved. We have introduced a flow whereby AI-related tools are used internally only after being properly examined.”
Kiryu further explained that Square Enix is proactively utilizing AI technology in non-creative fields to enhance operational efficiency, which is pretty much expected as the bubble that is artificial intelligence will eventually outpace and displace humans from the workforce.
Regarding the use of AI in creative fields, Kiryu acknowledged the matter’s sensitivity and emphasized staying in tune with public opinion. While his comments were somewhat ambiguous and did not provide a clear yes or no, they marked a significant shift from his past remarks on the topic.
During the event, various other questions were raised, including inquiries about shareholder benefits and how Square Enix plans to account for their substantial losses. Additionally, there were questions about the potential for an offline version of Gate of Nightmares, one of many Square Enix live service games shut down due to lack of profitability. Square Enix discontinued the fantasy RPG on November 30, 2022.
Kiryu’s response began with a non-answer, stating that each title has its own characteristics and management style. He emphasized that Square Enix aims to deliver services that reflect customer feedback. He then mentioned that the company has shifted its focus from content quantity to quality, stressing the importance of releasing titles that customers can enjoy for a long time with peace of mind.
Kiryu added that only after achieving this can they consider how to appropriately end a game’s service, ensuring players can maintain a connection with the game even after its services conclude.
While this answer may not offer hope for the return of Gate of Nightmares, it suggests that Square Enix might change its approach to live service titles. They may no longer opt to terminate a game’s services just a year or two after its release.
At the very least, they might provide a means of offline play for some of their expansive online-only titles, allowing players to continue enjoying the games as Square Enix have terminated more than several mobile gacha games over the past year.
Additionally, Michsuzu reported on other questions raised, such as why Dissidia Final Fantasy: Opera Omnia, which was supposed to implement new characters, had its services abruptly terminated on February 29, 2024.
When asked about the future of their HD game plans amid their shift from quantity to quality, and whether Square Enix would focus on smaller “indie” titles, as well as how many major releases they intend to release per year, Takashi Kiryu responded by stating that they are working hard on producing smaller and more casual titles. Although he couldn’t provide specific details, he assured that these projects are steadily in development.
Despite switching to a new style of product curation, Square Enix will at the very least continue producing smaller to medium titles.
However, one of the most amusing questions raised during the event concerned the Canadian consulting company Sweet Baby Inc. This company specializes in boosting a game’s ESG score by promoting inclusivity, such as incorporating more diverse characters of non-White ethnicities and LGBT representation.
Sweet Baby Inc. infamously worked on Square Enix’s Forspoken, a game criticized for its poor writing, cringeworthy dialogue and unlikable Black female protagonist. The game flopped commercially, leading to the downfall of its developers shortly after its release.
Sweet Baby Inc. is also notorious for including racist Spanish localization in Marvel’s Spider-Man 2 by removing gendered language in favor of a more inclusive “Latinx” derivative.
Despite their mission to “improve gaming,” and representation, Sweet Baby Inc. doesn’t appreciate being associated with some of the most critically panned narratives and commercial failures, such as the Saints Row Reboot or titles that have racially swapped their protagonists.
Recently, Sweet Baby Inc. was accused of attempting to coerce Chinese developers Game Science into paying a $7 million consultancy fee for Black Myth: Wukong. When rejected, journalist publications pushed baseless accusations that the founders of Game Science exhibited sexist behavior in the past.
Given that Square Enix is publicly listed as a partner of Sweet Baby Inc., and considering their recent releases are the most inclusive in the company’s history, Final Fantasy XVI featuring a same-sex couple and Final Fantasy VII Rebirth continuing to remove problematic content and heteronormative character designs, such as reducing the size of Tifa’s breasts and eliminating jiggle physics.
It’s understandable why a wary investor would question Sweet Baby Inc.’s involvement with Square Enix. Specifically, the question raised was about the nature of the organized deal between Square Enix and Sweet Baby Inc. and whether Square Enix plans to continue working with this controversial consultancy group moving forward.
When confronted with a legitimate question that could potentially damage their reputation with not only wary shareholders but also gamers, should they discover what was discussed, Kiryu responded cautiously. He stated that he wished to refrain from commenting on individual clients.
He then reiterated that Square Enix is shifting its focus from quantity to quality in terms of game content, emphasizing their commitment to producing content that is both enjoyable and “safe” for their customers.
“Safe” is the crucial word here. Square Enix has been adamant about purging problematic material from their Final Fantasy VII remakes for years, such as removing the ability to collect Tifa’s underwear. The producer of Final Fantasy VII Rebirth also expressed embarrassment about how the original game handled social issues and cultural depictions.
Oh, and who could forget how the Final Fantasy VII remakes have essentially transformed the original game’s Honeybee Inn sequence? What was once a brothel has now become a mandatory requirement to experience in the remake, reimagined as a spectacle featuring a crossdressing dance festival.
Stepping away from their big-budget HD titles that censor the female figure, Square Enix has also given Dragon Quest Monsters 3 a censored makeover and has been adamantly censoring re-releases of retro titles like Chrono Cross to prevent the “disgusting” male gaze from looking up low-poly skirts.
This response indicates that Square Enix will not be changing their stance on censorship anytime soon. By refusing to speak out against their partners, such as Sweet Baby Inc., despite the failures of Forspoken, which led to Luminous Productions being dissolved months after release, it seems highly probable that Square Enix will continue their partnership with Sweet Baby Inc.
Their goal appears to be producing games that are “safe” or, in other words, unproblematic and unlikely to spark the ire of Twitter activists over sexism.
This certainly doesn’t bode well considering Square Enix’s recent announcements during Nintendo’s latest Direct presentation, including the DRAGON QUEST III HD-2D Remake, a reimagining of the iconic prequel with modernized features and a self-proclaimed “refined narrative,” set to release on November 14, 2024.
Additionally, the rest of the Erdrick Trilogy, in the form of the DRAGON QUEST I & II HD-2D Remake, is slated for release next year. Alongside these, there is Romancing SaGa 2: Revenge of the Seven, a full HD remake of 1993’s Romancing SaGa 2, rebuilt to be as modern and inclusive as possible. With revised strategic gameplay and 3D graphics, it aims to delight both fans and newcomers.
Square Enix is going above and beyond to change the company’s perception, at least externally. However, their continued efforts at self-censorship and the desire to make “safe” games suggest that these remakes will likely deviate from the originals in ways that only longtime fans will notice.
Younger audiences like myself may not recognize the stark differences between these remakes and the originals regarding content censorship or abrupt English localizations. Square Enix has committed to producing “safe” games for the masses, as stated by their CEO during the latest shareholder meeting.
However, investors are beginning to notice that gamers despise consultation companies that deviate from Japan’s own culture, leading to monumental losses for games made in collaboration with such companies. It’s only a matter of time before their entire operation collapses.
Will Square Enix ditch the prospect of pandering to Western audiences? Probably not.
