Square Enix wants to ‘upgrade some existing IPs to AAA status’

Square Enix president Takashi Kiryu has said he hopes to boost profitability by revitalising the company’s high definition games segment.

The Japanese publisher divides its digital entertainment business into three units: HD games, MMOs, and games for smart devices or browser-based titles.

During a Q&A session held at the beginning of August (a transcript of which has today been uploaded to Square Enix’s investor relations website), Kiryu said the company was “currently examining” its HD games pipeline.

He was asked what he hopes to achieve after assuming the role of president earlier this year from his predecessor, Yosuke Matsuda.

“I want to improve our profitability,” he responded. “I see ample room for improvement in our operating profit margin and would like to start by working primarily on our HD games.

“In addition, rather than solely attempting to create brand‐new IPs, we intend take a nuanced approach to investment whereby we also identify existing IPs with the potential to be upgraded to AAA status, taking ROI into account as well. In so doing, we hope to establish greater depth to the layers of our portfolio.

“Lastly, I would also like to continue to consistently grow our Publication, Amusement, and Merchandising segments as sources of recurring earnings, thereby enabling our Group to mitigate the volatility of the HD Game sub‐segment and improve its profitability.”

It was reported last week that Square Enix’s stock had fallen 30% from its peak this year, wiping almost $2 billion off the company’s market value.

The publisher’s share price reached its highest point this year in the days running up to Final Fantasy 16’s release in June, but it closed last Wednesday at its lowest level since May 2022.

The slump occurred after sales of the PS5 exclusive reportedly failed to meet the high end of the company’s expectations.

But it also follows the disappointing performances of other big budget releases like 2020’s live service flop Marvel’s Avengers, support for which will end this month, and Forspoken, the debut game from Square Enix’s Luminous Productions studio, which launched to “lacklustre” sales, according to the company.

Further reading

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Final Fantasy 16 shipped and digitally sold three million copies within a week of its release, according to Square Enix. “This achievement was in line with our expectations,” Kiryu claimed during August’s investor Q&A session.

Earlier this month Square Enix announced that a PC version of Final Fantasy 16 is in development, in addition to two pieces of paid DLC.