Square Enix is in crisis: Too little profit, too much PS5 – Gaming giant fires employees, kills new games

Square Enix is in trouble. Profits have dropped by 70%. It is believed that the focus on exclusive titles like Final Fantasy XVI or Final Fantasy VII Rebirth for the PlayStation 5 was too strong. Now, a new strategy is being planned. This begins with layoffs.

This is the crisis: Square Enix has presented a new business plan (via square-enix) and showed the numbers for a disappointing year which ran from April 1, 2023, to March 31, 2024:

• Profits have dropped by 69.79%
• The sales for Final Fantasy VII Rebirth and Final Fantasy XVI were strong but below expectations (via pushsquare). Apparently, the problem identified was that the games were released exclusively for PS5.
• With a new business strategy, they intend to counteract this. Square Enix speaks of a reboot and seems to be serious about it. New games are now set to be released for Switch, PC, Xbox, and PlayStation. Mobile titles are also an option.

Layoffs in the USA and Europe

These are the direct consequences of the crisis: Square Enix has announced layoffs in Europe and the USA. They plan to “rebuild their overseas divisions from the ground up.”

In a statement, it is mentioned (via pcgamer) that unfortunately, the restructuring will involve a reduction in the total number of employees in Europe and America. They are grateful to the talented team members leaving Square Enix.

The exact extent of the layoffs is not yet known.

Square Enix cancels games planned for 2027 and beyond

Additionally, Square Enix will halt the development of several unannounced projects that no longer fit the new strategy. This cancellation of projects reflects in the business balance sheet and contributes to the poor numbers.

They are writing off 38 billion yen in Q3 2024, which is about 230 million euros.

The write-off is largely due to the cancellation of games that were scheduled for release from 2027 onwards.

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Games for Nintendo, PC, Xbox; Mobile and PlayStation

What is the new strategy? The new strategy is described as an “aggressive multiplatform strategy.” Furthermore, they want to focus on “quality over quantity.”

It is stated that they want to focus on the “core franchises,” regularly develop AAA titles, and also release profitable mid-tier titles.

As platforms, they are targeting Nintendo, PlayStation, Xbox, and PC. They also plan to develop mobile titles, with the option to bring them to PC.

At MeinMMO, we primarily focus on Final Fantasy XIV. Here, Naoki Yoshida is the mastermind: The savior of Final Fantasy 14 is about to make perhaps the biggest mistake of his career