Soapbox: Square Enix’s “Extraordinary Losses” And This Whole Xbox Mess Have Me Scared For The Future

Soapbox features enable our individual writers and contributors to voice their opinions on hot topics and random stuff they’ve been chewing over. Today, Alana fears for Square Enix’s smaller-budget titles and is worried about the rest of the industry as a result.

What on earth is going on with Square Enix?

I asked that question about a year and a half ago when the Japanese publisher and developer was firing on all cylinders, releasing a huge amount of games in a short span. So back in February 2024 when President Takashi Kiryu said that the company would be overhauling how it makes games, “reviewing from scratch what the organizational structure is to embody the contents of the pipeline, and what is best,” I wasn’t surprised. Disappointed? Maybe.

Come April 30th, the company announces that it “expects to recognize approximately ¥22.1 billion in content abandonment losses.” That’s $140 million down the drain just from reorganising structure, cancelling projects, and reducing the amount of outsourcing. When Final Fantasy VII Rebirth — arguably the developer’s tentpole release of the year — is underperforming, something is going on.

That feeling of disappointment is back, but it’s more than just that this time around — I’m worried. Surely, even with its big tentpole franchises selling below expectations, Square Enix wants to focus on those big names: Final Fantasy, Dragon Quest (which is going through its own problems, including a delay to Dragon Quest XII, and the lead producer reportedly “stepping down”), and Kingdom Hearts. I love all of those series to varying degrees, but I don’t want a homogenised game developer who only makes ‘big-budget’ video games.

I don’t want a homogenised game developer who only makes “big-budget” video games

It’s much the same story across the entire industry. This feeling of concern ramped up tenfold this week after Xbox announced it was shuttering Arkane Austin, Alpha Dog Studios, and Tango Gameworks — the latter of which made one of 2023’s best games in Hi-Fi Rush. Apparently, it doesn’t matter if a game is good, or even successful, after all. And while Hi-Fi Rush (and Arkane’s Redfall, which did disappoint) are likely higher-budget than say, an Octopath Traveler, they’re still outside of Xbox’s ‘core’ games, whatever they are.

So what does “content abandonment losses” mean, exactly? Essentially, writing off the investment into now-axed projects. But what smaller projects will be getting the chop? I sure hope those NFT projects are in the firing line, at least.

Looking back over the past few years, Square Enix has been busy reviving some of its more obscure franchises. Star Ocean made a return thanks to Star Ocean: The Divine Force and the excellent Star Ocean: The Second Story R. The former reportedly bombed during its opening week in Japan, and the latter sold over 500k copies in its first week. This has been a franchise in flux following Star Ocean: Integrity and Faithlessness (which I did not enjoy at all), so it’s felt like the future of this franchise has been in doubt for a long time.

Another recently-returned series is SaGa. A combination of remasters like SaGa Frontier Remastered and brand-new games such as SaGa Emerald Beyond have helped revive one of Square Enix’s strangest properties. It’s still too early to say anything about Emerald Beyond, but in 2021, SE reported that SaGa rerelease sales “exceeded expectations.” They’re not huge sellers, and they definitely work on a lower budget, but hopefully they’re doing enough. I might not adore every game in that series — though I will shill for SaGa Scarlet Grace — but I’d hate to see Square Enix trash something that feels wholly its own thing.

I’d hate to see Square Enix trash something that feels wholly its own thing.

One of my biggest worries is with one of Square Enix’s newest series, Octopath Traveler. I really liked the first game, then Octopath Traveler II waltzed in and became one of my favourite RPGs of all time. The mobile game is apparently decent, too. The first game sold one million copies in three weeks — pretty darn good for a new IP. As of September 2022, it has sold over three million units. The sequel sold one million copies as of June 2023, four months after it was released… and we’ve heard nothing since. It also launched multiplatform from day one, as opposed to the initially Switch-exclusive first game. One million is a good number. A very good number. But is that good enough for Square Enix in this day and age?

Admittedly, Octopath Traveler II came out after a year full of HD-2D — Triangle Strategy and the Live A Live remake both dropped in 2022, both using those stunning pixel art visuals. Triangle Strategy admittedly is much more niche than a turn-based RPG, and it managed to shift one million copies by the end of 2022, while Live A Live amassed 500k sales on Switch as of September 2022. Not earth-shattering numbers at all, but pretty notable.

To the average player, seeing Octopath Traveler II — the third HD-2D game in 12 months — might cause some fatigue. But if Octopath and these HD-2D projects fall under that ‘smaller’ project umbrella — despite Tomoya Asano saying that the art style “costs more than you think” — is this the end of bigger studios using pixel art visuals? I really hope not.

Games like Harvestella or Paranormasight might not have the broad appeal that the brand of Final Fantasy has nowadays, but the gaming world would be a lot more boring without them. Harvestella might follow in the footsteps of Rune Factory, but for Square Enix to dip its toe into a different sub-genre was fun to see play out. And Paranormasight, developed by indie studio Xeen, felt like a truly unique horror visual novel. but it got hardly any marketing in the West, only being announced during a Japanese Nintendo Direct. And now the ‘sequel’ will be in the form of a comic.

And I think that’s just one of the big problems that have caused Square Enix to post these “extraordinary losses.” Marketing needs to be better for these smaller titles. This huge publisher puts out one of the better visual novels in recent years and it essentially evaporates into the ether? It got extremely good word-of-mouth, but that doesn’t seem to have done much.

Secondly, project-wise, Square Enix just threw everything at the wall, didn’t it? The developer released way too many games between 2021 and 2024. Final Fantasy XIV still continues to be the company’s biggest moneymaker, with Endwalker being a huge hit. But even mainline games like Final Fantasy XVI and, more recently, VII Rebirth, suffer because of the glut of releases, game release delays due to COVID, and the fact that they’re locked to a single console. Concerning that glut — from Dragon Quest Treasures to Infinity Strash, the Pixel Remasters to Crisis Core, Tactics Ogre: Reborn to Minstrel Song, that’s a lot to release over the course of a couple of years. I’m cherry-picking, too. And I know these are all made from different development studios within Square Enix, but there has to be some knock-on effect at some point.

And it seems like “content abandonment losses” is that knock-on effect. We’re going to lose those weird risks that Square Enix sometimes takes, and spreadsheet figures might be better for it. But the richness of the video game industry and the culture it feeds will be diluted as a result, as it has been with the closure of studios like Tango Gameworks, Paladins, and the huge layoffs at Embracer. AAA games are necessary, yes, but so are smaller games.

I want to see more than just crowd-pleasers come out of a big developer.

Of course, I’m speculating here, but as much as I love Final Fantasy (I confess that Rebirth is probably going to be my GOTY, unless Silksong decides to make an appearance), I also love games that take a risk, that feel different, and that dip a toe in experimental waters. Whether that’s changing up the art style, going down a different genre route than expected, or simply taking a punt on a small studio, I want to see more than just predictable crowd-pleasers come out of big companies. It’s part of what has drawn me to Square Enix, and other developers, over the years.

I understand that, at the end of the day, this industry — like most — is all about making money. But video games are diverse, fun, interesting, artistic, and varied. I don’t want to see bigger studios give up on ‘mid-budget’ games. We’ll lose that more human touch that variety and creativity gives us.

NFT games, though? Get outta here. What do you think of Square Enix’s strategy? Let us know down below.