Square Enix Market Value Plummets By $2 Billion After Final Fantasy 16 Release

[Lakados]

https://tech4gamers.com/square-enix-lost-2-billion/
TLDR;
Poor leadership, lack of quality controls, and a focus on exclusivity led Square Enix to have 30% of its "Value" wiped out as more of its projects flounder into mediocrity.

 

[A I]

It's sad, Square in it's hay-day was great. Squenix now is a running joke amongst friends and FF fans. It's like they can't read the room at all anymore, concentrating on what they thought would be gimme's and sold off too many assets. Oh well, no one rules forever my son.

 

[NightReaver]

Only thing I've enjoyed from square in the past years has been FF XIV. Couldn't care less about their other projects.

From FFXV to """dungeon siege""" 3, I haven't enjoyed any of it. Shoot, last non MMO FF I liked was 12 lol.

 

[UnknownSouljer]

I have enjoyed a few recent projects from Square. Ironically from devs that they bought and have since sold.

Tomb Raider and the continuation of the Deus Ex series. But first party wise, basically nothing. I would buy almost all the older FF games on iOS if I didn’t feel like their prices were essentially extortion. But again, that’s not new titles.

My cousin is a relatively high up engine dev in SE. I wonder if I could ever get commentary from him. Probably not due to Japanese culture and likely they would never want to speak out due to fear of retribution and of course doing such informing being out of turn.

 

[A I]

I know it's a personal opinion and all but Yoshi-P did an amazing job with bringing back 14 into a fantastic MMO. But single player on 16, it's by far my least liked one of the series, not to say I didn't play through it multiple times, but still least liked. It was like I was in a bad linear quest line from 14 without the perks of my friends, other better quest lines, dungeons, hunt parties, raids, etc. Character development was absolutely stale too, it felt like I was playing the same schmuck at the end as in the beginning. Difficulty was ridiculously easy even on the "challenging" mode so I didn't even put and points into new skills my first play through, I just used the default Eikons skills. Just not a good game, imo of course.

 

[Lakados]

I know it's a personal opinion and all but Yoshi-P did an amazing job with bringing back 14 into a fantastic MMO. But single player on 16, it's by far my least liked one of the series, not to say I didn't play through it multiple times, but still least liked. It was like I was in a bad linear quest line from 14 without the perks of my friends, other better quest lines, dungeons, hunt parties, raids, etc. Character development was absolutely stale too, it felt like I was playing the same schmuck at the end as in the beginning. Difficulty was ridiculously easy even on the "challenging" mode so I didn't even put and points into new skills my first play through, I just used the default Eikons skills. Just not a good game, imo of course.

Yoshi-P is pretty much single-handedly floating the whole company, that guy has to be one of the hardest-worked people in the business.

 

[A I]

Yoshi-P is pretty much single-handedly floating the whole company, that guy has to be one of the hardest-worked people in the business.

I completely agree, but I think he's much better served in the MMO space, or maybe I'm a minority here. I purposely avoided all press releases, reviews, etc of 16 since I wanted purist play through.

 

[Lakados]

I completely agree, but I think he's much better served int he MMO space, or maybe I'm a minority here. I purposely avoided all press releases, reviews, etc of 16 since I wanted purist play through.

I haven't looked at it, what precious little game time I have right now is consumed by BG3, from Aug-Nov I am run off my feet.

 

[A I]

I haven't looked at it, what precious little game time I have right now is consumed by BG3, from Aug-Nov I am run off my feet.

I’m about 25 hours into bg3 now, I prefer divinities rule set, but having a blast.

 

[Flogger23m]

Final Fantasy 16 seems to have received high reviews. Maybe this will make them reconsider day 1 PC launches, but I doubt it.

 

[Lakados]

Final Fantasy 16 seems to have received high reviews. Maybe this will make them reconsider day 1 PC launches, but I doubt it.

High reviews but not nearly their expected sales forecast.

 

[KazeoHin]

High reviews but not nearly their expected sales forecast.

Squeenix has routinely forecasted much higher sales for their titles than history would have ever predicted and every time, failed to meet these expectations.

Remember these guys sold off Tomb Raider and Deus Ex because none of the games in those franchises 'met expectations'

What expectations? What were they based from?

 

[Lakados]

Squeenix has routinely forecasted much higher sales for their titles than history would have ever predicted and every time, failed to meet these expectations.

Remember these guys sold off Tomb Raider and Deus Ex because none of the games in those franchises 'met expectations'

What expectations? What were they based from?

They were narrowing their focus and removing non Japanese studios. They were also refocusing their business and efforts into NFTs and Crypto.

The rumours at the time were they were trimming themselves up so they could look attractive for buyers.

But Tomb Raider and Deus Ex sold pretty badly in Japan. And that was their metric, FF16 also sold badly there. Pre orders were good but after that it’s crickets.

 

[mike938]

High reviews but not nearly their expected sales forecast.

It actually did meet their expected sales. Ignore the articles that used mistranslations and misconstrued everything about the topic.

 

[Lakados]

It actually did meet their expected sales. Ignore the articles that used mistranslations and misconstrued everything about the topic.

In what way??
Square based their numbers expecting FF7 Remakes success to actually increase excitement and sales for FF16.

FF7 Remake managed 3.5 million units in the first week, managing 5 million by the end of year 1.

FF16 has barely crossed the 3 million mark and the drop off has been so sharp that it’s year 1 numbers are unlikely to match FF7 Remakes week 1 sales.

Square was expecting closer to 4 million units to have shipped by this time, they have sold 3/4’rd the units they expected to by this time and will likely only sell around 3.5 million by the end of the first year which is a far cry of the 6 million they projected.

So I ask again? I’m what way has FF16 actually met their sales expectations?

 

[Whalter12]

I think this is somehow a plot from Sony so they can buy them up cheap. I love the Dragon Quest games. FF games haven't had me hooked since FF7. Most of the rest of their games just do not interest me.

 

[KazeoHin]

In what way??
Square based their numbers expecting FF7 Remakes success to actually increase excitement and sales for FF16.

FF7 Remake managed 3.5 million units in the first week, managing 5 million by the end of year 1.

FF16 has barely crossed the 3 million mark and the drop off has been so sharp that it’s year 1 numbers are unlikely to match FF7 Remakes week 1 sales.

Square was expecting closer to 4 million units to have shipped by this time, they have sold 3/4’rd the units they expected to by this time and will likely only sell around 3.5 million by the end of the first year which is a far cry of the 6 million they projected.

So I ask again? I’m what way has FF16 actually met their sales expectations?

Once again, Squeenix thinking Final Fantasy "Whatever fucking number we have now" will sell MORE units than "The most asked for remake of one of the most beloved games of all time"...

On what basis do they have the balls to expect that!?

 

[A I]

Well despite beta testing 14 with plenty of others and then gathering tons of community feedback, they launched 1.0 being the complete flop it was. Squenix has more of a I know what is good for you better than you do attitude.
On a side note I still played 1.0 and maxed out mining to make money lol

 

[M76]

Squeenix has routinely forecasted much higher sales for their titles than history would have ever predicted and every time, failed to meet these expectations.

Remember these guys sold off Tomb Raider and Deus Ex because none of the games in those franchises 'met expectations'

What expectations? What were they based from?

The ironic thing is that Deus Ex Mankind Divided failed to meet sales goals exactly because Square Enix's ill conceived pre-order scheme.

 

[A I]

The ironic thing is that Deus Ex Mankind Divided failed to meet sales goals exactly because Square Enix's ill conceived pre-order scheme.

I don't remember their pre-order was is one of the splitting items between each different retailers?

 

[M76]

I don't remember their pre-order was is one of the splitting items between each different retailers?

That, and locking content behind different pre-order tiers. "Augment your pre-order" or WTF it was called.
It was basically you buy a specific package you get a specific in game bonus. But there was no option to have them all, and those who didn't pre-order didn't get any of the locked content.

The backlash was so fierce that they cancelled the whole scheme before launch, but it was too little too late, the damage has already been done.

 

[A I]

That, and locking content behind different pre-order tiers. "Augment your pre-order" or WTF it was called.
It was basically you buy a specific package you get a specific in game bonus. But there was no option to have them all, and those who didn't pre-order didn't get any of the locked content.

The backlash was so fierce that they cancelled the whole scheme before launch, but it was too little too late, the damage has already been done.

I never understood why any game studio thought that was a good idea, splinter the player base based on different retailers.

 

[Prince Valiant]

https://tech4gamers.com/square-enix-lost-2-billion/
TLDR;
Poor leadership, lack of quality controls, and a focus on exclusivity led Square Enix to have 30% of its "Value" wiped out as more of its projects flounder into mediocrity.

Good news, thanks .

 

[Kerby1280]

Hahaha I was ready to blame Electronic Arts for the downfall of SquareEnix. Since everything EA touches they seem to kill the parent company. Didn't at one point EA had a minority ownership of Square?

 

[A I]

Hahaha I was ready to blame Electronic Arts for the downfall of SquareEnix. Since everything EA touches they seem to kill the parent company. Didn't at one point EA had a minority ownership of Square?

Even if they didn't we can still blame EA. But I know Square had Sony buy into them prior to the SquareEnix merger, and they've since entered into an "alliance" with other developers, but I don't know if EA has ever held stock in them or how much.

 

[M76]

I blame Matsuda, when NFTs and play to earn was the buzz he was so desperate to get on board with it that is was pathetic. This was just before they decided to sell their western studios and IPs.
They did replace Matsuda this summer with a new CEO, but the new guy is even more in love with NFTs if that's even humanly possible.

 

[Sir Beregond]

Sad. Loved Deus Ex Human Revolution. Writing was on the wall when Mankind Divided released and was half a story with cash shop....on a single player game. Not to mention that horrendous pre-order campaign. I don't really think I've looked at Square Enix since.

 

[Lakados]

Hahaha I was ready to blame Electronic Arts for the downfall of SquareEnix. Since everything EA touches they seem to kill the parent company. Didn't at one point EA had a minority ownership of Square?

EA is funny, they are surprisingly hands off, which is half the problem. They buy small teams and scale them up, but the skills to manage 50 people and the skills to manage 500 are very different.
Programmers tend not to make good managers, but it takes a really good manager to manage programming teams, they tend to be on the neuro-spicy side and it’s challenging.
So when the lead programmer who managed their team of 50 to make that game you loved over a 5 year stretch now needs to lead a team of 500 to make a game 3x bigger in half the time things tend to fall apart.
Communication breakdowns happen, instructions or intent get jumbled up, pieces don’t quite fit, projects fall behind. To catch up they bring in more bodies, but they’re green and have no history of many of oddities they are working with which causes new problems and they fall behind so more bodies are brought in. It’s a vicious cycle.
Pair that with some bad promotions, never put marketing in charge of product development… let them
Make good products and have marketing figure out how to sell it, but don’t have marketing directly take charge… that’s how you get boring cookie cutters.

This is basically EA’s model, and they are taking steps to correct it and they have a crapload of IP to work with, they just need to figure things out.

Their biggest issue is right now others are getting to market with similar ideas and either doing really well so they need to reassess how they did theirs, or really poorly so they again need to re assess. It’s putting their projects in limbo.

 

[mike938]

In what way??
Square based their numbers expecting FF7 Remakes success to actually increase excitement and sales for FF16.

FF7 Remake managed 3.5 million units in the first week, managing 5 million by the end of year 1.

FF16 has barely crossed the 3 million mark and the drop off has been so sharp that it’s year 1 numbers are unlikely to match FF7 Remakes week 1 sales.

Square was expecting closer to 4 million units to have shipped by this time, they have sold 3/4’rd the units they expected to by this time and will likely only sell around 3.5 million by the end of the first year which is a far cry of the 6 million they projected.

So I ask again? I’m what way has FF16 actually met their sales expectations?

It literally met their actual sales expectations. As they've stated.
What other way is there?

And the attach rate is significantly higher than FF7R. 3m sales on 40m~ consoles vs >100m PS4s for 3.5-5m sales?
Unless the attach or sell-through rate of something is 100%, is there any business that didn't HOPE for more sales? Doesn't mean they expected more.

Pretty much everything that says otherwise is based on things written by 1 author (Takahashi at Bloomberg) who gets things wrong and did so again in this case.

 

[Lakados]

It literally met their actual sales expectations. As they've stated.
What other way is there?

And the attach rate is significantly higher than FF7R. 3m sales on 40m~ consoles vs >100m PS4s for 3.5-5m sales?
Unless the attach or sell-through rate of something is 100%, is there any business that didn't HOPE for more sales? Doesn't mean they expected more.

Pretty much everything that says otherwise is based on things written by 1 author (Takahashi at Bloomberg) who gets things wrong and did so again in this case.

So when Takashi Kiryu got up and said the following:
"Sales of Final Fantasy 16 did not meet Square Enix's high expectations"

Then continued and blamed the low adoption rate of the PS5 compared to the PS4 as the reason their sales couldn't reach what they expected.

That is what?

And on the earnings call, when he said "the high end of the company's expectations were not met and the slow adoption of the PlayStation 5 was a limiting factor"
That translates to what?
They can go YAY we sold to 8% of the market that is very good, which it is.

But a year ago on those same calls, they were telling those very same investors to expect to move the same or more units of FF16 than they did FF7 Remake because of the boom in the popularity of FF14, and the resurgence of fans FF7 Remake provided.
Those predictions and numbers presented never materialized.

 

[mike938]

So when Takashi Kiryu got up and said the following:
"Sales of Final Fantasy 16 did not meet Square Enix's high expectations"

Then continued and blamed the low adoption rate of the PS5 compared to the PS4 as the reason their sales couldn't reach what they expected.

That is what?

And on the earnings call, when he said "the high end of the company's expectations were not met and the slow adoption of the PlayStation 5 was a limiting factor"
That translates to what?
They can go YAY we sold to 8% of the market that is very good, which it is.

But a year ago on those same calls, they were telling those very same investors to expect to move the same or more units of FF16 than they did FF7 Remake because of the boom in the popularity of FF14, and the resurgence of fans FF7 Remake provided.
Those predictions and numbers presented never materialized.

"High-end" "expectations" are hopes...
Expectations are what they EXPECT. Which they met. This is very simple.
eg: "We expect 2-4m sales. We got 3m sales. We met our expectations. We didn't meet the 4m we had hoped for."

 

[zehoo]

I wonder how much money they burned on Forspoken. Surely that has far more to with a drop in share price (and the NFT direction).

 

[Lakados]

"High-end" "expectations" are hopes...
Expectations are what they EXPECT. Which they met. This is very simple.
eg: "We expect 2-4m sales. We got 3m sales. We met our expectations. We didn't meet the 4m we had hoped for."

Whatever you want to call it, given their new figures they expect to loose $63 million on FF16 as they no longer believe they will recoup their $711 million dollar production budget on it. And they are hoping the 2 DLC packs that are almost done will correct that.
And they are restructuring as a result.

 

[Shoganai]

Hubris has been their problem for a very long time now. Maybe this will help them dislodge their heads from their arses. I doubt it, though.

 

[RanceJustice]

Maybe they can stop their horrible policies, not the least of which being

-Predatory monetization in all its forms, especially using Final Fantasy XIV as the trough of funds to bail out their other horrible decisions by means of not just taking subscribers' cash but having a horrible item mall packed with expensive cosmetics to sell - fuck that! I'd easily pay TWICE the monthly subscription if it meant that there was NO a la carte exclusive (or so time consuming/rare it would be near exclusive or to "entice people to buy") cosmetics of any kind. I consider it a continual insult that a subscription MMO has a new slate of $18-22 outfits, $25-50 mounts, $7 EMOTES! BLOODY EMOTES! and much more. You want to sell non-exclusive boosters or whatever that's fine if its not done poorly, but no actual game content of any kind , cosmetic or otherwise, and certainly no exclusive ones.

- Exclusivity by contract be it console or platform/store . SE has completed wasted the launch of the entire Kingdom Hearts series for example by stupidly taking the Faustian bargain of Epic Store exclusivity when it finally came to PC. Atop that, they priced it so moronically ($50 for the KH1, $60 each for KH2 and KH3 packages, plus $60 for the musical side game) at a time when the PS4 complete saga that had the same content as the 3 core games regularly went on sale for $40-50 and even at its most was $99 or so. There are still a lot of people who think that the Kingdom Hearts games never came to PC, because to this day they've not brought it to Steam! Massively foolish. Had they brought it to Steam and priced it reasonably, even if they set all 3 games in a pack for $99 initially and individually for $40 each, and then allowed discounts, they would have done much better and have long tail sales to boot. Oh what's this, all the crying about FFXVI not meeting its targets because of poor PS5 install base? Well, its damn good you decided to ignore PC players instead of launching concurrently or even soon after, isn't it? Wonderful business sense! The same goes for all of the delays where it takes 6+ months to bring a console title to PC. Oh, they hope the next Final Fantasy VII Re-Birth chapter to do well? Better not release it only on consoles at first, then spend months or a year to bring it to PC, THEN make it Epic exclusive , and only finally bring it to Steam later. Its like they constantly make the worst choices possible and then wonder it doesn't work out as they like.

SE isn't alone in this kind of stupidit, but they can get on a better path ASAP if thy want thing to change.

 

[vegeta535]

Whatever you want to call it, given their new figures they expect to loose $63 million on FF16 as they no longer believe they will recoup their $711 million dollar production budget on it. And they are hoping the 2 DLC packs that are almost done will correct that.
And they are restructuring as a result.

No way in hell did FF16 cost $711 million to make. 711 million yen don't make sense either. They lost their ass if this is true.

 

[Lakados]

No way in hell did FF16 cost $711 million to make. 711 million yen don't make sense either. They lost their ass if this is true.

That’s the number they stated after development, voice acting, advertising, and apparently 2 DLC packs.

Square has spent nearly $3B on its combined 2022 Projects, of which FF16 was one.

But yeah.

Square Enix has published a list of highlighted development talent working on Final Fantasy XVI, but this is by no means the complete list. The publisher is spending many millions to develop this game and its total game dev spending is up to a record $711 million as of last fiscal year.

Read more: https://www.tweaktown.com/news/8663...being-made-by-game-dev-dream-team/index.html#

Now Sony did pay them a chunk for their 1 year exclusivity agreement so there is some of that there to recoup those costs. But yeah that’s why the sales figures for FF16 are causing all the panic.

 

[vegeta535]

How is that even possible. FF16 was not impressive in anyway. They would of needed to sell more then 10 million copies just to break even. I am surprised they didn't lose more then $2billion in value.

 

[Bigbacon]

Only thing I've enjoyed from square in the past years has been FF XIV. Couldn't care less about their other projects.

From FFXV to """dungeon siege""" 3, I haven't enjoyed any of it. Shoot, last non MMO FF I liked was 12 lol.

same here, after 12 it was all garbage.

 

[Lakados]

How is that even possible. FF16 was not impressive in anyway. They would of needed to sell more then 10 million copies just to break even. I am surprised they didn't lose more than $2billion in value.

Yoshi-P, might as well have his picture placed under the articles for Atlas because he is single-handedly holding up Squares entire world.