An investor accuses Square Enix of a whole range of issues, which he shares with the public in over 100 pages.
What kind of investor is this?
- In April 2025, the Singaporean investment fund “3D Investment Partners” took a stake in the Japanese game developer and publisher Square Enix.
- The company now owns 10.01% of Square Enix shares, making it one of the three largest shareholders.
- 3D Investment Partners is also an investor in companies like Toshiba, Fujisoft, and Nippon Steel.
The investment fund has now released a presentation over 100 pages long, explaining how Square Enix has been mismanaged in recent years and what needs to change (via 3dipartners.com).
The MMORPG Final Fantasy 14 is currently one of the most important games from Square Enix. Here you can see the trailer for the upcoming update “Into the Mist,” which will be released on December 16:
Deficiencies and costs are the reasons for stagnating development
What does the investor criticize? 3D Investment Partners elaborates on various issues at Square Enix, presenting them with numbers and graphics. The investors particularly criticize the current management of the company and how it handles current problems.
Problems include a sluggish revenue growth rate and slow profit margins due to insufficient performance in the HD (High-Definition) and SD (Smart Device, PC Browser, etc.) gaming business segments.
As the basis for this stagnation in revenue growth, the investors cite the following aspects:
- Fragmentation of the development portfolio
- Deficiencies in platform selection
- Deficiencies in product design
- Deficiencies in advertising and promotion
- Falling sales of legacy titles from core IPs
- Exceeding the peak of DQW (Dragon Quest Walk), a significant revenue driver
- Revenue dependence on the domestic market
- Insufficient utilization of licensing opportunities
- Lagging cross-media revenues
- Lack of regular media releases
- Lagging merchandise revenues
- Insufficient development of merchandise based on intellectual property
The stagnating profit margins are justified by the investors with:
- Excessive development costs
- Excessive spending on advertising and promotion
- Excessive personnel costs for SG&A (Selling, General and Administrative expenses)
- Excessive other SG&A costs
- Excessive development and operating costs
- Excessive platform fees
In addition, the investment fund criticizes the insufficient synergy between Square Enix’s gaming business and its non-gaming businesses. The company’s analysis shows that due to these missing synergies, there is no justification for holding both business areas.
What needs to change? The investors believe that concrete countermeasures are needed to address the critical management problems at Square Enix. They lament: “The current mid-term management plan from Square Enix seems to justify its lackluster performance under the slogan ‘Restarts’ while failing to formulate a forward-looking vision.”
Furthermore, it is stated that they fail to propose concrete measures for individual management challenges. The current mid-term management plan only outlines vague directions and lacks any disclosure of KPIs, quantitative targets, or implementation plans, rendering it insufficient as a solution.
Square Enix has been facing problems for some time. We reported, for example, in May 2024 that the gaming company reported its worst numbers in over a decade: Square Enix reports worst numbers in 13 years: Attributes even Final Fantasy as the reason
