Square Enix just can’t seem to catch a break. After recently acknowledging that both of their major AAA titles, Final Fantasy XVI and Final Fantasy VII Rebirth were commercial disappointments, the company is now on the verge of releasing the censored Dragon Quest III 2D-HD Remake.
On top of that, Square Enix’s stock has plunged over 10% following a disappointing Q3 2024 financial report, further cementing its ongoing decline.
The company’s operating profit has been steadily decreasing over the past few years, with the H1 2025 financial report showing significant drops across several key metrics. These results underscore the challenges Square Enix continues to face.
Square Enix reported ¥157.5 billion ($1 billion) in net revenue for the six-month period ending September 30, 2024, marking an 8.4% drop from the previous year. On the upside, their operating profit was ¥21.17 billion ($137.8 million), up 22% from the same period last year, although their ordinary profit took a 30.6% hit, down to ¥18.14 billion ($118 million).
The Digital Entertainment segment, accounting for 63% of total revenue, pulled in ¥98.1 billion ($638 million), down 19.6% year-over-year. Although operating income in this segment grew 8.5% to ¥16.8 billion ($109 million), revenue from mobile and browser games tanked, dropping by 29.7% to ¥38.2 billion ($248 million), with operating profit cut by over 50% to ¥4.8 billion ($31.2 million).
This downturn was fueled by weakness in older titles and a lack of royalty revenue compared to the same period last year.
In the HD Games subsegment, which includes PC and console titles, revenue nosedived by 37% to ¥27.5 billion ($179 million). The subsegment also posted an operating loss of ¥1.2 billion ($7.8 million), though this was an improvement over last year’s ¥2.4 billion ($15.6 million) loss. In response to these lackluster results, Square Enix’s share price has dropped a hefty 10.66%, from 6,244 JPY ($40.29) to 5,541 JPY ($35.75).
Square Enix claimed that new releases, including the launch of Kingdom Hearts on Steam, didn’t bring in the same revenue as last year’s hits like Final Fantasy XVI and Final Fantasy Pixel Remaster. They’ve chalked up narrower losses to reduced development cost amortization and lower advertising expenses. Still, it seems there’s more to the story than they’re letting on.
In the last fiscal year (April 2023 to March 2024), Square Enix faced considerable losses due to the underperformance of high-profile console titles like Final Fantasy VII Rebirth and Foamstars, along with extraordinary losses from canceled projects still in development. Looking to the future, the company has outlined a mid-term business plan for 2025–2027 that emphasizes a shift toward multiplatform releases and a focus on quality over quantity in game development, although the impact of this strategy remains uncertain.
Square Enix’s two major AAA releases this year, Final Fantasy VII Rebirth, the second of three planned remake installments of Final Fantasy VII, and Final Fantasy XVI, a new mainline entry both performed poorly in the market, despite their exclusive releases on Sony’s PlayStation 5.
Notably, Final Fantasy VII Rebirth saw a steep decline, with sales in Japan dropping by 90% in its second week, even lower than Final Fantasy XVI’s earlier numbers.
The shift to multiplatform releases, including simultaneous launches across consoles and PC, aims to reach a broader audience and improve initial sales. This approach could help Square Enix attract fans on Xbox, PC, and other platforms without the delay of exclusivity, potentially increasing sales. However, given the current lukewarm interest in some of Square Enix’s recent titles, there are concerns about whether this strategy will be enough to reverse the trend.
Square Enix has aligned itself with Western social values, including Diversity, Equity, and Inclusion (DEI) initiatives, a move that’s stirred up conversation and debate amongst gamers. This commitment to inclusivity has led to adjustments in some classic titles, like the upcoming Dragon Quest III 2D-HD, which replaces traditional sex terminology with more neutral body type descriptors.
Additional adjustments have been made to Akira Toriyama’s iconic illustrations in the Dragon Quest III HD-2D Remake, including reducing the visibility of female character features, adding more coverage to their outfits, reducing breast sizes and cleavage alongside and removing religious symbols from the Priest class.
Considering that the overwhelming majority of Square Enix’s sales comes from international markets, it’s perhaps unsurprising that the company has adjusted its content to appeal to a perceived “broader audience.” This has included removing male and female terminologies and altering character designs to provide more coverage for female characters. Ironically, a recent study has shown that women appreciate seeing attractive female characters in games, which has led some to question whether these adjustments truly resonate with the intended audience.
A recent example of Square Enix’s Western favoritism was Forspoken, which featured a Black female protagonist and was promoted with a progressive message. This game’s approach sparked online criticism for what some saw as an overemphasis on representation rather than narrative quality. Ultimately, Forspoken received mixed reviews, had disappointing sales, and led to the closure of its development studio only months after launch.
Some fans feel that these changes signal a shift in Square Enix’s philosophy, which they believe is diluting the original spirit of its games. DEI-driven adjustments to classic titles for a broader global audience are seen by some fans as a way to appease modern sensibilities at the expense of artistic and cultural integrity.
Prior to the release of Final Fantasy VII Rebirth, the game went viral when footage showed iconic characters Tifa and Aerith in bikinis. Square Enix’s response was to update Final Fantasy VII Remake Intergrade, a four-year-old game, retroactively covering Tifa’s cleavage to ensure “continuity” with Rebirth.
Square Enix is barely staying afloat thanks to Final Fantasy XIV, the MMO carrying the entire company. Their MMO sector saw a 35.5% increase in sales, up to 32.4 billion yen, with operating income rising 40.8% to 13.1 billion yen.
Sure, Dragon Quest X Online helped a bit, but to be honest it’s all Final Fantasy XIV’s doing, especially after the Dawntrail expansion dropped on July 2, 2024. While Dawntrail made bank, fans absolutely hated it for its flimsy story and Wuk Lamat, the expansion’s unbearable lead character.
Even though the MMO’s main story ended with the destruction of the world, the expansion had players hoping for a repeat of the intensity. But due to poor decision-making and YoshiP pushing his own “furry” obsession to the forefront, the expansion felt like a missed opportunity. Wuk Lamat, the main character of the latest expansion, has English voice acting so bad it feels like it could drive you mad.
Despite the character being presented as female, the English voice actor was a “trans woman” with zero acting experience, leading to a performance that lacked emotion and depth to an already insufferable character. This resulted in Wuk Lamat becoming one of the least liked characters in the game.
Additionally, with the abundance of unskippable cutscenes in the expansion, many players opted to switch to alternate languages to avoid the poorly received voice acting. As the main character, players felt they were reduced to a supporting role, constantly following an irritating central figure with little agency.
The real issue is you can’t remove Wuk, she’s everywhere. The entire damn expansion is all about her, with more lines than every other character combined, and YoshiP running defense for the character and its woeful English voice acting. The bitch won’t stop talking, won’t leave your side, and your character just blindly agrees with everything she says, for no fucking reason.
She’s a Black Hole Sue, and to make this expansion work, she’d have to be removed completely to make the expansion worthwhile, but seeing as how Dawntrain is all about her this isn’t possible.
A 322-page forum thread full of backlash toward Wuk Lamat shows how unpopular Dawntrail has been. Given the long development time needed for expansions, it’s possible that Square Enix’s last big revenue driver might start fading away in the next few years if Dawntrail is any indication of the game’s future.
Square Enix’s Q3 2024 report reflects both the rewards and challenges of being a leading gaming company. The disappointing sales of Final Fantasy VII Rebirth and Final Fantasy XVI signal that the company can’t solely rely on Final Fantasy or stay bound to a single platform.
Moving to multiplatform games could expand their reach, but in aiming to appeal to Western ethics and values, the company is risking its core audience through censorship and shifts in storytelling. Each release now seems to perform worse than the last as Square Enix, and the Final Fantasy franchise struggle to maintain relevance as the company continues adhering to ESG policies resulting in censored, inclusive and inoffensive products.
