Final fantasy 16

Image source: Square Enix

Tough times

Square Enix, the renowned Japanese video game publisher, has experienced a staggering 30% decline in its stock value from the peak earlier this year, resulting in a substantial loss of nearly $2 billion in market capitalization. This downturn in the company’s fortunes follows the underwhelming performance of Final Fantasy 16 and several other high-budget releases, causing concerns among both industry insiders and analysts.

Final Fantasy 16 Sales Contribute to Square Enix Stock Value Slump

The zenith of Square Enix’s stock value in 2023 was reached just prior to the much-anticipated release of Final Fantasy 16 in June. However, recent developments have seen the company’s share price plummet to its lowest level since May 2022. The disappointment stems from the fact that sales of the game for the PlayStation 5 failed to meet the upper echelons of the company’s initial expectations.

Additionally, Square Enix has grappled with other high-profile disappointments, such as the 2020 live-service title Marvel’s Avengers, which is set to lose support later this month. Moreover, the inaugural offering from Square Enix’s Luminous Productions studio, Forspoken, experienced lackluster sales, according to the company.

A Bloomberg article dissecting Square Enix’s recent downturn delved into the concerns voiced by anonymous employees and contractors, who revealed the company’s ongoing challenges with game development structure and quality control. Meanwhile, financial analysts have expressed reservations about Square Enix’s longer-term outlook.

Tokyo-based developer and gamer Michael Prefontaine, when referencing titles like Marvel’s Avengers, Forspoken, and The DioField Chronicle, stated, “Flooding the market with unfinished, bad, or untested games is a bad move. The company has overstretched itself on too many titles without proper oversight.”

Current and former Square Enix employees have reportedly pinpointed one of the root causes of these issues as the company’s practice of granting individual producers excessive autonomy over project scope and direction. Furthermore, they have noted that games have suffered from inadequate documentation and suboptimal team structure.

“We remain concerned with the company’s game development structure and game quality control, which could limit the longer-term performance,” remarked Yijia Zhai, an analyst at Macquarie Capital Securities Japan.

In a bid to recover from this downturn, Square Enix recently announced the development of a PC version of Final Fantasy 16 and the introduction of two pieces of paid downloadable content (DLC). However, it remains to be seen whether these efforts will be sufficient to rejuvenate the company’s standing in the competitive gaming industry.