As part of a new plan to wright their ship after a particularly disastrous financial year, Square Enix has announced that they will soon be taking steps to “rebuild” their US and European divisions “from the ground up” – beginning, reportedly, with by making major staffing cuts to said overseas teams.
The Final Fantasy developer’s intent to revamp their Western business operations was first revealed to the public on May 13th, courtesy of the company’s annual fiscal reports for the period between March 31st, 2023 and March 31st, 2024.
Therein, following the admission that their operating income and profit had decreased respectively by 26.6% and 69.7% compared to the year prior – a result attributed to the company’s recent decision to cancel multiple in-development console games – Square Enix informed their investors that they would be moving to employ “a new medium-term business plan” in the hopes of fostering their financial recovery.
(Notably, while the above numbers take into account all of Square Enix’s divisions – Amusement, Publication, Merchandising, and Digital Entertainment (video games) – their Digital Entertainment arm was the only one that failed to increase its performance over the last year, with the segment’s operating income decreasing a total of “38.3% from the prior fiscal year” due to alleged “higher development cost amortization and advertising expenses, as well as higher content valuation losses versus the previous fiscal year.”)
This plan, they explained, would see them work to achieve four specific goals, including refocusing themselves on the “development of titles delivering fun”, shifting their video game release plans “to a multiplatform strategy”, allocating “a maximum of ¥100 billion for total strategic investments (growth investments or shareholder returns) over a three-year period,” and “rebuild overseas business divisions from the ground up”.
“[Square Enix] has begun optimizing costs at its European and American offices via structural reforms,” detailed the company of this last goal. “It will also promote intra-Group collaboration in Japan and abroad and strengthen the functions of its London development site. For example, the Group intends to work to strengthen the close collaboration between
its divisions in Japan (creative studios and publishing) and to enable greater mobility of talent between them and the Group’s publishing functions overseas.”
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At the time of their financial report’s publication, the studio behind the Kingdom Hearts franchise did not provide any details as to just what their ‘overseas rebuilding’ process would entail.
However, according to two Square Enix employees who spoke to Video Game Chronicles, an internal meeting later that same day would see company president Takashi Kiryu reveal that said process would include a round of layoffs for their US and European offices.
According to the employees, while Kiryu did not specify just how many individuals would be affected by these staffing cuts, he did confirm that “people working in publishing, IT, and Square Enix’s Collective indie games division will be predominantly affected”.
Notably, this is not the first ‘massive reset’ Square Enix has made to their business plans in recent weeks.
As mentioned above, prior to this latest announcement, the company’s Board of Directors voted “to revise the Group’s approach to the development of high-definition (HD) games [i.e. console games] with the intention of being more selective and focused in the allocation of development resources.”
“As a result of a close examination of the Group’s development pipeline undertaken in keeping with this revised approach,” explained Square Enix of this move, “the Company expects to recognize approximately ¥22.1 billion (approx. ~$140 million USD] in content abandonment [i.e. game cancellation] losses on its books for the fiscal year ended March 2024.”
