Square Enix announced a new corporate philosophy of “unforgettable experiences” and a focus on “delivering ensured fun” after its profits declined 70% and it previously embraced progressive messaging with games like Forspoken.
A scene from Final Fantasy VII Rebirth (2024), Square Enix
Square Enix revealed their new medium-term business plan and corporate philosophy after the company reported its net sales increased from 343.2 billion yen or around $2.2 billion to $356.3 billion yen or around $2.3 billion in its Results Briefing Session for the Fiscal Year ended March 31, 2024.
However, despite the increase in net sales the company’s profitability shrunk from 49.2 billion Japanese yen to 14.9 billion yen. That’s a decline from around $315 million to $95.2 million. It’s a drop of approximately 69.7%.
A screenshot from Visions of Mana (2024), Square Enix
Not only did Square Enix see a massive decline in profitability, but in their New Medium -term Business Plan document, the company revealed that it had an “incomplete journey to better profitability in HD game development.”
Specifically, the company claimed it “launched many titles but some failed to live up to profit expectations, especially outsourced titles and some AAA titles.” One of those major titles was Forspoken, which progressive consultant Black Girl Gamers worked on.
Square Enix President and Representative Director Yosuke Matsuda previously admitted the games sales were not good during the company’s financial results briefing in February 2023. He said, “Reviews of Forspoken, which we released on January 24, 2023, have been challenging. However, the game has also received positive feedback on its action features, including its parkour and combat capabilities, so it has yielded results that will lead to improvement of our development capabilities of other games in the future.”
Next, he discussed the game’s sales, “That said, its sales have been lackluster, and while the performance of new titles with February and March release dates will be the ultimate determinant, we see considerable downside risk to our FY2023/3 earnings.”
A screenshot from Forspoken (2023), Square Enix
On top of failing to meet profit expectations on games like Forspoken, Square Enix also detailed it suffered a slowdown in SD games and was “unable to launch hit titles to offset market maturation, aging of legacy titles.”
Furthermore, Square Enix detailed it had “insufficient portfolio management on a franchise-by-franchise basis” and the company cannibalized “new titles due to the launch schedule’s overlap.” Finally, the company detailed it had gaps in our management infrastructure.”
A screenshot from Square Enix’s New Medium-term Business Plan (FY2025/3-FY2027/3).
After assessing these failures, the company announced its new corporate philosophy structure, “Enrich people’s own life with our help of creating precious ‘unforgettable experiences.’ The power of content is that of moving people’s heart. The experience that people are impressed is etched in my mind as ‘unforgettable experiences’ over time.”
“‘Unforgettable experiences’ will be part of people’s sense of value over time, leading to moral support. ‘Unforgettable experiences’ enrich people’s own life. We would like to help creating precious ‘Unforgettable experiences’ by delivering contents filled with ensured fun.”
A screenshot from Final Fantasy XIV (2024), Square Enix
On top of this new philosophy, Square Enix also detailed that it will “shift from quantity to quality, delivering ensured ‘fun.'”
In order to do this, Square Enix detailed it will “strive to create the optimal portfolio, striking a balance between a ‘product-out’ approach that gives creators’ imaginations free rein as they develop content, and a ‘market-in’ approach that references customers’ voices and data to inform our development.”
The company added that it will “engage honestly with our customers and strive for a regular launch cadence, focusing our development efforts and investment on titles with strong potential to be loved for years.”
Finally, the company added it will “continue to monitor the value of our content production account closely and work to keep it to an appropriate level.”
A screenshot from Square Enix’s New Medium-term Business Plan (FY2025/3-FY2027/3).
The company also detailed it will now be “placing top priority on bringing smiles to our customers’ faces.”
It also wants to “keep and build on the fan bases for our major franchises by regularly releasing AAA titles and releasing “mid-class titles based on strategies for individual lineups, prioritizing profitability.”
A screenshot from Square Enix’s New Medium-term Business Plan (FY2025/3-FY2027/3).
Of note, the company also detailed it will be revamping its human resource allocation policies.
Specifically it will “increase opportunities of promotion by selection in order to pursue a new talent” and “streamline the process of decision-making.”
It will also “develop and introduce a recruitment, promotion, and management appointment system.” Finally, Square will “rebuild [a] training system for new graduates” and “introduce internal education programs to enhance capabilities of junior and mid-level employees.
A screenshot from Square Enix’s New Medium-term Business Plan (FY2025/3-FY2027/3).
While Square Enix appears to be signaling a major shift in how it runs its company, it still has a Diversity, equity, and inclusion section on the Sustainability and Social Responsibility section of its website.
It reads, “The Square Enix Group believes in the importance of fostering diverse and inclusive workplaces – across the many rich facets of the human experience, including nationality, race, religion, thought and creed, age, gender, sexual orientation, and physical condition.”
“All of our locations work to increase representation, and promote diversity, equity, and inclusion across such areas as recruiting, training, teambuilding, and employee activities. We are encouraged by the progress we’ve seen through the years in the areas of diversity, equity, and inclusion, and continue to prioritize our work in this area,” it concludes.
A screenshot of Square Enix’s Sustainability and Social Responsibility website
What do you make of Square Enix’s new corporate philosophy and revamping of its human resources allocation?
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