In brief: Square Enix, the Japanese entertainment giant behind the Final Fantasy games, is in trouble. Since the release of the latest entry in the series, Final Fantasy 16, the company has lost almost $2 billion in market value, and it might not be able to recover.
The excitement surrounding PlayStation 5-exclusive Final Fantasy 16's pre-release in June pushed Square Enix's stock price to its highest point of the year. It has fallen 30% since then, closing on Wednesday at its lowest level since May 2022.
Final Fantasy 16 is a departure from its predecessors, even the recent ones, with many comparing it to a full-blown action game like God of War. Not everyone likes it, but FF16 still has an excellent Metacritic review rating of 87 and a respectable user score of 8.1.
Final Fantasy 16 sold three million copies during launch week. Square Enix told IGN in July that sales were "extremely strong," and it had sold relatively well. However, sources say those sales have slowed significantly and failed to meet overall expectations.
It seems the latest Final Fantasy wasn't successful enough to offset Square Enix's flops from recent years. The 2020 live service game Marvel's Avengers was so disliked that it's essentially being killed off this month. There was also Forspoken, a title that had generated massive hype ahead of release with promises of it being a technical and visual marvel, only for it to arrive to unimpressive reviews and lackluster sales. There have been some less-than-successful mobile games adding to Square Enix's woes, too.
"Flooding the market with unfinished, bad or untested games is a bad move," said Tokyo-based developer and gamer Michael Prefontaine. "The company has overstretched itself on too many titles without proper oversight."
Bloomberg reports that Square Enix reported a sharp profit decline in August, with shares falling by double digits. The publication writes that a big part of the problem is producers at the company being given full reign over the scope and direction of projects, as well as a shortage of proper documentation and team structure, resulting in end products of varying quality. Analysts are worried that the company's game development structure and quality control could limit its longer-term performance.
New Square Enix CEO Takashi Kiryu is trying to make changes across the company. He aims to reduce the number of smaller games in development, focusing instead on larger, big-budget titles that are more likely to be more profitable. But it could be a case of too little, too late.
Square Enix announced this month that two paid expansions for Final Fantasy 16 are in the works. It also confirmed a PC port for the game.