Square Enix to be more ‘selective’ as it loses £112 million in cancelled games

Final Fantasy 7 Rebirth appears to have fallen below expectations (Picture: Square Enix

Some major changes are happening at Square Enix, as the company seems to be ditching lower budget titles that don’t sell or review well.

After Square Enix president Takashi Kiryu recently vowed to improve the quality of its games through a revised development system, it seems his ideas are already being put into action.

During an investor Q&A from November, Kiryu stated his intention is to focus resources on fewer ‘carefully selected’ new titles that it will ‘develop to a high level of quality’ – as it looks to diversify its portfolio beyond the company’s major IP like Final Fantasy and Dragon Quest.

The company has now confirmed it has abandoned, or re-scoped, a number of planned projects in the pursuit of this goal, resulting in a ¥22.1 billion (£112m) loss for the financial year ending March 2024.

Square Enix confirmed the ‘content abandonment losses’ in a Notification of Recognition of Extraordinary Losses notice to shareholders, where it described the company’s ‘intention of being more selective and focused in the allocation of development resources’. It’s unclear though what projects have been affected.

The company has been in a precarious position for a while. Last year, Final Fantasy 16 failed to meet the company’s high sales expectations, while Forspoken and its live service Avengers game were both critical and financial flops.

Square Enix was seemingly banking on Final Fantasy 7 Rebirth, which came out in February, but reports suggest that has fallen below sales expectations too, despite being one of the best reviewed games of the year.

The company also released Foamstars this year, which has seen a massive drop in players just two months after launch.

At the same time there’s been some significant shifts behind-the-scenes. Final Fantasy 7 Rebirth director, Naoki Hamaguchi, was recently promoted to Square Enix’s executive officer ranks, and is now the new head at Creative Studio 1 (the main Final Fantasy division), according to his LinkedIn page.

So apparently Square Enix don’t blame him for Final Fantasy 7 Rebirth’s underperformance.

A number of other developers were also given the keys to the executive toilet, including Octopath Traveler’s Tomoya Asano and The Diofield Chronicle producer Takamasa Shiba – so there’s clearly some major overhauls happening at the company.

Some commentors have taken this to mean that Square Enix will crack down on smaller budget AA titles, which is something the publisher makes more of than most similarly sized companies.

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However, Square Enix has not said that specifically and The Diofield Chronicle was exactly that sort of small-scale project, that didn’t seem to perform particularly well, and yet its producer is being rewarded.

For now, only time will tell exactly what difference this reshuffle makes to the company’s output, which is especially hard to predict at the moment considering they have relatively little scheduled, just the lower budget Visions Of Mana and a number of larger projects, such as Kingdom Hearts 4, that have no release date or year.

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