Square Enix, the renowned Japanese video game company behind iconic franchises like Final Fantasy, Kingdom Hearts, and Dragon Quest, has announced layoffs and internal restructuring.
This move comes amidst the company’s latest disappointing financial results indicating a nearly 70% drop in profits from the previous year.
These losses are due to the cancellation of projects by external developers that do not align with the company’s future strategies.
In the Digital Entertainment segment also, which includes video games, their profit fell by a staggering 15.8%, despite the release of highly anticipated titles like Final Fantasy 16, Final Fantasy Pixel Remaster, Foamstars, and Final Fantasy 7 Rebirth.
So the company’s president, Takashi Kiryu, who took charge in June 2023, decided a large-scale reorganization to reverse these disappointing numbers.
What Departments Are Affected by the Layoffs?
According to VGC, President Kiryu informed employees about the company’s plans for layoffs across its American and European branches in an internal meeting on Monday.
While the exact number of layoffs was not disclosed, it was revealed that employees working in publishing, IT, and Square Enix’s Collective indie games division would be especially affected.
The impacted employees will be notified this week, with a one-month consultancy period for UK-based staff, as per local employment law.
US-based employees, on the other hand, could potentially leave their roles before June.
Adopting The Multiplatform Strategy
One of the key components of Square Enix’s restructuring plan is a shift towards a multiplatform strategy for its AAA games.
The company announced its new 3-year medium-term business plan, dubbed “Square Enix Reboots and Awakens,” to make its AAA games available across multiple platforms, including Nintendo, PlayStation, Xbox, and PCs.
This strategy is a departure from the company’s previous approach, which saw recent Final Fantasy games like Final Fantasy 7 Remake, Final Fantasy 16, and Final Fantasy 7 Rebirth launching as PlayStation 5 exclusives.
What Next for Final Fantasy and Other Franchises?
The restructuring and multiplatform strategy have significant implications for Square Enix’s flagship franchises, particularly Final Fantasy.
While Final Fantasy 16 and Final Fantasy 7 Rebirth launched as PlayStation 5 exclusives, the company has not released sales figures for the latter, leading to speculation that it may have underperformed.
However, in the meeting, the company did acknowledge the need for a more profitable approach to HD game development, as some outsourced titles and AAA games have failed to meet profit expectations.
Despite the financial struggles and restructuring efforts, Square Enix’s pipeline remains promising, with highly anticipated titles such as the Final Fantasy 14 expansion Dawntrail, Kingdom Hearts 4, the third game in the Final Fantasy 7 remake trilogy, and Dragon Quest 12 in development.
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