Square Enix has problems: after the release of Final Fantasy 16, the company’s capitalization decreased by $ 2 billion

Square Enix Holdings lost almost $ 2 billion of its cost after the Final Fantasy 16 game, which received mixed reviews. Now investors are beginning to ask about whether one of the most outstanding periods in the gaming industry is approaching the end.

The Tokyo company has relied on its popular franchises for a long time to accelerate its growth. It was this strategy that allowed the company to increase its cost five times in a decade preceding the release of the last part of Final Fantasy in June. However, sales of this game did not live up to expectations, and in August, after the company announced a sharp decrease in profit, the situation worsened. The company’s shares were doubled, a dozen analysts that tracks the shares reduced their target prices, and the long -term investor Sumitomo Mitsui Trust Asset Management reduced its stake in the gaming company.

Square Enix, one of the most recognizable among console and mobile gamers, was faced with a series of failures in an attempt to create a new popular franchise to support sales, and lags behind the market value from competitors such as Capcom and Activision Blizzard. Fans, analysts and developers with experience with the studio or inside it believe that the fall of the company gives important lessons for the industry about the importance of quality control and proper planning of products.

"The flooding of the market is incomplete, low -quality or unverified games – this is an unreasonable solution", – The Tokyo developer and gamer Michael Prefephein believes, calling Marvel’s Avengeers, Forspoken and The Diofield Chronicle as examples of non -conceived games. "The company overdid it, releasing too many games without proper supervision".

Gamers expressed dissatisfaction with mobile games, which, in their opinion, were created in a hurry and then closed in a year or so, as, for example, Bravely Default: Brilliant Lights and Echoes of Mana. The current Square Enix employees associate this with the approach of the company, in which each game project is under one producer.

Producers are given complete freedom in determining the scale and direction of projects, while the attention of the proper documentation and the structure of the team is not sufficiently paid, sources believe. Contractors working with Square Enix describe the process of work as unsystematic, where the project goals can change without prior notice.

As a result of this, there is a high instability of the quality of the final product: some of the latest Square Enix games received enthusiastic reviews, while others, for example, Forspoken, were faced with a commercial failure, without finding their audience.

The newly appointed general director of Takashi Kiryu, a 48-year-old graduate of the Massachusetts Institute of Technology, who previously worked at the largest advertising agency of Japan, announced his intention to reduce the number of games released and reduce outsourcing. The main trick will be focused on large -budget projects with high profit potential.

However, analysts express doubts about the effectiveness of changes in the product strategy without correcting internal processes.

"Square Enix has problems releasing games", – Serkan Toto, Tokyo Industry Consultant, said, noting that too many games of the company remain "ordinary" and do not claim the status of blockbusters. "These games receive 70% rating on Metacritic, their quality is normal, but they are quickly forgotten".

Last week, the company released a new Final Fantasy VII game, but its sales did not live up to investors’ expectations. Square Enix shares fell by about 30% from the peak of their growth this year, and on Wednesday their cost reached the lowest level since May last year.

According to the UBS Securities analyst, Kenji Fukuyama, the restoration of the famous manufacturer of role -playing games will take many years, and in the near future it is unlikely to expect a significant increase in profit. Fukuyama believes that the company relied on its old successes for too long and, possibly, has exhausted the patience of devoted fans, who are tired of seeing old games reprinted on mobile platforms. Its skepticism is also due to the inability of the company to create a new large franchise, in addition to Final Fantasy and Dragon Quest.

"Even if you look five years in advance, there is little to instill confidence in the future of the company in investors", – said Fukuyama.

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