Former World of Warcraft Team Lead Mark Kern predicts that the video game industry will experience a bloodbath going forward after Square Enix shared that the company experienced nearly a 70% decline in profits and will be strategically moving away from console exclusivity to a multi-platform model.
Mark Kern via Sodapoppin YouTube
In Square Enix’s Results Briefing Session for the Fiscal Year ended March 31, 2024, the company reported that its net sales increased from 343.2 billion yen or around $2.2 billion to $356.3 billion yen or around $2.3 billion.
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.
A screenshot from Final Fantasy VII Rebirth (2024), Square Enix
Given the disastrous decline in profits, the company announced a new medium-term business plan with a “shift to a multiplatform strategy.” The strategy details that the company will “aggressively pursue a multiplatform strategy that includes Nintendo platforms, PlayStation, Xbox and PCs.”
Furthermore, the company detailed it plans to “build an environment where customers can enjoy our titles in regards to major franchises and AAA titles including catalog titles.”
It also added it hopes to “devise a platform strategy for SD titles, too, that includes not only iOS and Android, but also the possibility of PC launches,” The company wants to “maximize acquisition of new users when launching a title and that of recurring users after starting management of game operation.”
A screenshot from Square Enix’s New Medium-term Business Plan (FY2025/3-FY2027/3).
Kern shared his predictions in a post on X. He wrote, “More bloodbath at Microsoft as they face the music on over 80 billion in acquisitions, and forty studios, that FAILED to grow Game Pass.”
He continued, “Expect Xbox execs to “retire” and get rotated out as the disaster snowballs. Heads will roll.”
A screenshot from Redfall (2023), Arkane Austin
Next, he detailed, “Everybody going multi-platform as sales continues to soften. Microsoft will put their games on every platform, faster and in greater quantity. Nothing will be sacred to earn back those $.”
“Increased micro-transactions, esp for Game Pass, Origin and other such subscription services. EA has already talked about ads, and they will be turning over every rock looking for $ and the squeeze will be hard,” Kern predicted.
A screenshot from Halo Infinite (2021), 343 Industries
He then declared, “It’s going to get a lot uglier in AAA and console games before it gets better. REMEMBER: 2 YEARS TO STOP THE SPREAD and get gamer voices heard. Play your Steam libraries and older games. Vote with your wallet.
And CANCEL your PSN+ to fight Sony PSN requirements and to help Stellar Blade. They are vulnerable now,” he concluded.
Sony and @Playstation continue to LOSE alongside Xbox last SQUARE-ENIX DUMPS SONY exclusivity. @SquareEnix profits dropped over 15% and they are going muti-platform.
The entire console industry is hurting.
Here’s what you can expect:
– More bloodbath at Microsoft as they… pic.twitter.com/8AZ1AIVElH
— Grummz (@Grummz) May 13, 2024
In the middle of April, Kern previously called for a moratorium on the purchase of AAA video game titles after developer Crystal Dynamics teamed up with table top role-playing game maker Evil Hat Productions to redefine the Tomb Raider franchise along with its iconic heroine Lara Croft.
He wrote on X, “Calling on all game[r]s to NOT buy any AAA titles for the next 2 years that do this. Play your Steam backlog. You will send a very clear message.”
He added, “Lara Croft did nothing wrong, and does not need fixing.”
Calling on all games to NOT buy any AAA titles for the next 2 years that do this.
Play your steam backlog.
You will send a very clear message.
Lara Croft did nothing wrong, and does not need fixing. https://t.co/Plg9wbOFK4
— Grummz (@Grummz) April 9, 2024
He’s also called for gamers to cancel their PlayStation Network accounts in response to Sony censoring Shift Up Corporation’s Stellar Blade including numerous outfits as well as the game’s gore.
He posted an 8-step plan to free Stellar Blade towards the end of April. One of the steps was to “cancel your PSN and tag PlayStation” to let them know on social media that you cancelled due to Stellar Blade censorship.
The plan to get Stellar Blade censorship removed (condensed version of pinned tweet):
– Contact Shift Up offices, send physical mail as that carries more weight in Asia:
14F, Apro Square, 55 Seocho-daero 77-gil, Seocho-gu, Seoul, 06611, Korea
– Email them at cs@shiftup.co.kr…
— Grummz (@Grummz) April 27, 2024
READ: Gamers Begin Cancelling PlayStation Network Subscriptions To Free ‘Stellar Blade’ From Censorship
The video game industry has been wracked with layoffs and studio closures over the last couple of years. At the end of February Sony announced huge layoffs affecting Insomniac Games, Naughty Dog, Guerilla, and Firesprite.
President and CEO of Sony Interactive Entertainment Jim Ryan announced the layoffs in a blog post, “We have made the extremely hard decision to announce our plan to commence a reduction of our overall headcount globally by about 8% or about 900 people, subject to local law and consultation processes. Employees across the globe, including our studios, are impacted.”
Ryan went on to explain, “The industry has changed immensely, and we need to future ready ourselves to set the business up for what lies ahead. We need to deliver on expectations from developers and gamers and continue to propel future technology in gaming, so we took a step back to ensure we are set up to continue bringing the best gaming experiences to the community.”
Miles Morales in Marvel’s Spider-Man 2 (2023), Insomniac Games
Microsoft, the parent company of Xbox, shut down multiple studios earlier this month including Arkane Austin, Tango Gameworks, Alpha Dog Games, and Roundhouse Studios.
Xbox’s Matt Booty explained the closures and layoffs, “These changes are grounded in prioritizing high-impact titles and further investing in Bethesda’s portfolio of blockbuster games and beloved worlds which you have nurtured over many decades.”
He added, “To double down on these franchises and invest to build new ones requires us to look across the business to identify the opportunities that are best positioned for success. This reprioritization of titles and resources means a few teams will be realigned to others and that some of our colleagues will be leaving us.”
A screenshot from Hi-Fi Rush (2023), Tango Gameworks
After going over the closures, Booty stated, “With this consolidation of our Bethesda studio teams, so that we can invest more deeply in our portfolio of games and new IP, a small number of roles across select Bethesda publishing and corporate teams will also be eliminated.”
He went on to note, “These changes are not a reflection of the creativity and skill of the talented individuals at these teams or the risks they took to try new things. I acknowledge that these changes are also disruptive to the various support teams across ZeniMax and Bethesda that bring our games to market. We are making these tough decisions to create capacity to increase investment in other parts of our portfolio and focus on our priority games.”
A screenshot from The Elder Scrolls Online (2014), ZeniMax Online Studios
Embracer Group recently shut down and sold numerous studios including Gearbox, Sabre, and Volition. The company has more recently announced it plans to split itself into three separate entities: Asmodee, Coffee Stain & Friends, and Middle-earth Enterprises & Friends.
The company’s co-founder and current CEO Lars Wingefors stated, “This move has been made with the intention to unleash the full potential of each team and provide them with their own leadership and strategic direction. This is the start of a new chapter, a chapter that I intend to remain part of as an active, committed, and supportive shareholder of all three new entities, with an evergreen horizon. This move towards three independent companies reinforces Embracer’s vision of backing entrepreneurs and creators with a long-term mindset, allowing them to continue to deliver unforgettable experiences for gamers and fans across the globe.”
A screenshot from Warhammer 40,000: Space Marine 2 (2024), Saber Interactive
What do you make of Kern’s predictions?
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