Square Enix is frequently criticized for setting unrealistic expectations for its products. Now a former manager of the publisher has spoken out about the criticism and explained the real reasons why games like Final Fantasy XVI and Final Fantasy VII Rebirth fall short of expectations.
Who spoke out? Jacob Navok is currently the CEO of Genvid Technologies. Previously, he was the Director of Business Development at Square Enix. In several posts on X, the manager addressed the often-expressed criticism (for example, on Resetera) regarding the allegedly unfair expectations of Square Enix.
- The criticism that Square Enix set arbitrary high sales expectations for its games has existed, according to Navok, for about a decade and a half.
- From his own experience, the manager knows that these sales expectations are not defined arbitrarily. Rather, they arise from the necessity to cover development and marketing costs as well as return on investment.
- Navok’s example: If a game costs 100 million US dollars and is in development for five years, one must account for what the company could have earned if it had invested 100 million US dollars in the stock market over those five years.
- In the five years leading up to February 2024, one could have achieved a return of about 201 million US dollars from 100 million US dollars, according to the industry insider.
- Additionally, it must be considered that games sold for 70 US dollars only bring in 49 US dollars after platform fees are deducted. Early discounts and other deals (like exclusivity) would worsen the equation, Navok added.
- So, if Final Fantasy XVI sells three million units at launch, that looks good at first glance. However, upon closer inspection, only about 120 million US dollars actually reach Square Enix. However, they would need more than 254 million US dollars for the publisher to make a profit.
According to Square Enix president Takashi Kiryu, Final Fantasy VII Rebirth, Foamstars, and Final Fantasy XVI fell short of expectations.
The video game industry is cannibalizing itself
What is the real problem according to Navok? The manager explains that budgets for AAA productions like Final Fantasy XVI and Final Fantasy VII Rebirth were approved at a time when the industry was in a rapid growth phase.
This growth received an additional boost from the pandemic but stagnated post-pandemic. At the same time, the costs for game development continue to rise, and there are increasingly more service games that compete directly with AAA productions for the limited gaming time of the targeted audiences.
According to Navok, there are really only three options to respond to this situation: raise game prices further, significantly cut development budgets, or expand the target audience. Alternatively, it would be helpful if platform operators like Sony, Nintendo, Valve, and others would charge lower fees, but that seems unrealistic in the foreseeable future.
Is Navok right? It is known that game development is becoming increasingly complicated and expensive. At the same time, we have seen for years that publishers and developers are desperately searching for ways to earn more money from their releases.
Even in single-player experiences that one indulges in at full price, in-game shops, paid DLCs, or other monetization horrors are becoming more common. You can learn more about the crisis at Square Enix here: Too little profit, too many PS5 – gaming giant fires employees, cancels new games
