Final Fantasy Maker Square Enix Takes $140 Million Hit in ‘Content Abandonment Losses’ as It Revises Game Pipeline – IGN

Square Enix has revised its approach to PC and console game development, and absorbed ¥22.1 billion (approx $140.9 million) in what it calls “content abandonment losses.”

In a warning to the investment community, the Japanese company said it would recognise the extraordinary loss for the fiscal year ended March 2024.

This is the result of a change in approach to Square Enix’s development of what it calls HD video games (PC and console, as opposed to mobile and MMO). In its note, the company said it wants to be “more selective and focused in the allocation of development resources”, and as a result of the “close examination” of its development pipeline with this in mind, is taking the multi-million dollar loss. Square Enix did not name the canceled or rescoped in-development titles.

Here’s the statement in full:

At the meeting convened on March 27, 2024, the Board of Directors of Square Enix Holdings Co., Ltd. (the “Company”) voted, in light of the myriad changes underway in the environment surrounding its Group, to revise the Group’s approach to the development of high-definition (HD) 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, the Company expects

to recognize approximately ¥22.1 billion in content abandonment losses on its books for the fiscal year ended March 2024.

In February, Square Enix had forecast full year sales of ¥360 billion (approx $2.3 billion), up 16.8% over the previous financial year. But it predicted profit would be flat at ¥55 billion (approx $350 million). Square Enix said it was “carefully reviewing” its forecasts to assess any impact from the writedown.

Square Enix released a major title, Final Fantasy 7 Rebirth, in February, but it has yet to announce a sales figure. Some analysts have suggested it has struggled, a topic IGN recently investigated. Other games released in the current financial year include Final Fantasy 16, Final Fantasy Pixel Remaster, and the Splatoon-style multiplayer game Foamstars. Dawntrail, the expansion for ongoing MMO Final Fantasy 14, launches in the next financial year, in late June. Square Enix also has Kingdom Hearts 4, the third game in the Final Fantasy remake trilogy, and Dragon Quest 12 in the works.

In February, Square Enix director and president Takashi Kiryu reportedly told analysts about plans to create a new company structure following falling sales in its digital entertainment business, despite the release of Final Fantasy 16 in June. Square Enix said the PlayStation 5 exclusive sold three million copies during launch week. A PC port is in the works. In January, Final Fantasy 16 producer Naoki Yoshida said it might be time for a younger generation to lead the franchise and helm Final Fantasy 17.

Wesley is the UK News Editor for IGN. Find him on Twitter at @wyp100. You can reach Wesley at wesley_yinpoole@ign.com or confidentially at wyp100@proton.me.