Square Enix President and Representative Director Takashi Kiryu revealed that the company’s two most recently released Final Fantasy titles, Final Fantasy XVI and Final VII Rebirth, did not meet the company’s profit expectations.
A screenshot from Final Fantasy XVI (2024), Square Enix
In a document outlining the company’s financial results briefing that was held in May, but only published today, Kiryu shared, “In the HD Games sub-segment, we released multiple new titles, including major titles such as FINAL FANTASY XVI and FINAL FANTASY VII REBIRTH, but profits unfortunately did not meet our expectations.”
He later detailed, ” Despite the release of “FOAMSTARS” and “FINAL FANTASY VII REBIRTH” in Q4, initial sales were not as strong as expected, in addition to which an impairment was made to the content production account, resulting in the operating loss.” The company had an operating loss of 8.1 billion Yen or $5.7 million.
Screenshot from Final Fantasy VII Rebirth (2024), Square Enix
As for why these games did not meet profit expectations, Kiryu suggested it had to do with the company mismanaging its title’s release windows.
He said, “The HD Games sub-segment failed to better its profitability, posting operating losses in every year of our previous medium-term plan. In addition to this, we did not manage our title portfolio across the company as well as we could have, which I believe resulted in opportunity losses due to cannibalization between our own titles.”
Tifa in Final Fantasy VII Rebirth (2024), Square Enix
Interestingly, Square Enix had previously informed IGN that it considered “the initial sales results of Final Fantasy XVI to be extremely strong, and we will continue to carry out a wide range of initiatives to encourage even more people to play the game.”
The company revealed it had sold three million copies of Final Fantasy XVI “several days after its release on June 22, 2023.” Interestingly that was around 8% of all owners of PlayStation 5 given Square Enix shared that only “38 million PS5 consoles shipped globally (as of March 31, 2023).”
A screenshot from Final Fantasy XVI (2023), Square Enix
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Square Enix did just release Final Fantasy XVI to Steam and it is the current top seller on the platform.
A screenshot of Steam’s Top Sellers as of September 18, 2024
The game hit a peak concurrent player count of 22,684 just an hour ago according to SteamDB.
SteamDB concurrent player data for Final Fantasy XVI
It is not surprising that Final Fantasy VII Rebirth and Final Fantasy XVI did not meet profitability expectations given Square Enix had reported in May that 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%.
To address this massive decline, Square Enix announced a complete overhaul to its corporate philosophy on how it makes games. Specifically it plans to “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 XVI (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).
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