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Will Square Enix go out of business? What to make of bleak reports

CLOUD square enix extraordinary losses

Despite Final Fantasy 7 Rebirth and Final Fantasy 16, Square Enix is admittedly hurting and fans wonder if the beloved publisher is going out of business.

Square Enix has come to define the concept of being hit-or-miss in the game industry. The company has a long list of blockbuster IPs from which fans are clamoring for new games, ranging from Nier 3 to Kingdom Hearts 4. It’s also released a number of critically successful games over the last few years across multiple platforms. But for every win the publisher gets, it seems to take at least one catastrophic loss.

kingdom hearts 4 sora
Kingdom Hearts 4

That pattern might have finally caught up with the company, as it made a post on its corporate website regarding the fiscal year ending March 31, 2024. The post is entitled “Notification of Recognition of Extraordinary Losses,” which speaks for itself while painting a bleak picture for its upcoming financial reports.

Square Enix announces “extraordinary losses” despite Final Fantasy 7 Rebirth’s success

The Japanese publisher warned shareholders of impending reports of “extraordinary losses” related to a wave of game cancelations and shutdowns.

“Square Enix Holdings Co., LTD expects to recognize extraordinary losses pertaining to abandonment losses associated with its content production account on its books for the fiscal year ended March 2024,” the company said in a statement.

In layman’s terms, the company is giving notice that its upcoming financial report is set to be covered in red. Square Enix says this stems from an estimated $140 million in “abandonment losses.” This likely refers to canceling in-development projects and bowing out of middling online games as part of an overhaul of Square Enix’s business operations.

This comes after a March 27 decision by the board of directors to overhaul the game’s development efforts. The company says it will be “more selective and focused in the allocation of development resources” moving forward.

It didn’t specifically name which projects would be canceled or shut down in the notice. Fans may have gotten a first taste of this hours earlier with the mobile game NieR Reincarnation being shut down:

Is Square Enix going out of business?

Square Enix is not going out of business, despite announcing nine-figure losses.

A company announcing “extraordinary losses” is never good. It also comes at a worrying time, given constant news of studios being shut down and layoffs. This doesn’t mean that Square Enix is about to shut down, though.

Fans have had a generally accurate read on what will and won’t work for Square Enix. The company has a history of bandwagoning trends after they’ve started dying out, or unsuccessfully bolting them onto existing games. There are many examples of this, with flagging live-service multiplayer game Foamstars and NFT game Symbiogenesis being the most recent.

While this has shaken fans’ confidence and impacted balance sheets, publishers like Capcom have been in a similar position. Capcom was struggling in the early 2010s. In 2015, it underwent a restructuring that included moving development to internal studios and focusing on its main IPs. The move worked brilliantly, starting a strong run of commercially and critically successful games, most recently Dragon’s Dogma 2.

Square Enix will be looking to emulate that by doubling down on its biggest series and, ideally, avoiding the gaffes that brought things to this point.

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Written by Steven Rondina

Steven Rondina has been playing video games since he was a toddler and appreciates every genre out there. He has earned the platinum trophy in every Soulsborne game, is regularly Master Ball-ranked on the competitive Pokemon ladder, and has spent thousands of hours missing shots on Dust 2. His work has previously been featured by Bleacher Report and The Washington Post, and he was an Assistant Editor at WIN.gg. You can follow him on Twitter / X at @srondina.

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