Square Enix will recognize the losses it incurred from the abandonment of games in the fiscal year ending March 2024. In a meeting held by the company’s board of directors on March 27 (which came to the limelight on April 30), the company’s board voted on several changes including a revision to how the company approached high-definition games.
Going forward, the company plans to be “more selective and focused in the allocation of development resources”. According to Niko Partners’ director of research and insights, Daniel Ahmad, Final Fantasy Rebirth reportedly underperformed in sales.
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Ahmad further claimed that the game was “selling about half of what Remake sold in the same timeframe and looks like it’ll have a weaker tail”. When questioned about his source, Ahmad said he got his numbers from Equities research reports.
It is important to mention that Final Fantasy 7 remake was released in April 2020 on PS4 which had already sold 100 million units. As of February 2024, the PS5 had sold only 55.47 million units, which is just above half of PS4’s number. Also, FF7 Remake was released during the pandemic when a lot of people had more idle time and craved entertainment.
“As a result of a close examination of the Group’s development pipeline undertaken in keeping with this revised approach, the Company expects to recognize approximately ¥22.1 billion (approx. $140 million) in content abandonment losses on its books for the fiscal year ended March 2024,” the company said in a letter to shareholders.
“The Company is carefully reviewing its consolidated forecasts for the fiscal year ended March 2024 to assess the potential for impact from the above or other factors. Should revisions to its forecasts prove necessary, the Company will promptly disclose the same.”
Square Enix is undergoing a massive product review
After the appointment of Takashi Kiryu as the new president of Square Enix, he kickstarted what was termed “a fundamental review” of the company’s development process to improve the quality of its games, according to a Bloomberg report.
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Back in February, the president said, “We are reviewing from scratch what the organizational structure is, and what the best way is to implement the contents of the pipeline,” during a conference call.
It is also claimed that Square Enix wants to cut down on the number of development projects it outsources to external studios and shift towards developing most of its games (especially high-profile titles) in-house. The executives believe that is the best way they can increase the quality and profit margins of their games.
Analysts who spoke to Bloomberg opined that the new development process will include a new checking mechanism that will allow Square Enix to decide on the quality of the game while it is still in an early stage of development.
