A few days ago, former Square Enix executive and current Genvid CEO Jacob Navok shared some insights about the current state of Square Enix. He then wrote a detailed article explaining his views. Here’s a summary of his views:
→ There might be a misconception about the underperformance on the financial side of Final Fantasy XVI and Final Fantasy VII Remake. The issue is not that they didn't generate revenue, but that the return on investment (ROI) was lower compared to other potential investments. For instance, spending $100 million and five years on game development yields less return than investing the same amount over five years.
→ Changing Development Environment: The development of a massive title like FF16 likely started six years ago when the game development environment landscape was very different back then. Nowadays, games with long-term service models have a better hold on players. When Final Fantasy XVI and Final Fantasy VII Remake were initiated, long-term service games like Fortnite hadn't even yet become popular.
→ There has been a significant change in consumer behavior. Previously, players would finish a game and look for the next one. Now, they only spend money on new games if they are significantly better than what they are currently playing. This creates a highly polarized market where a game must either succeed greatly or fail completely.
→ Another problem is the generation gap. For a 13-year-old today, they would have been only five when Final Fantasy XV was released. They might not even know what Final Fantasy is, and some of them may not even own a home console.
→ While low-cost games can indeed become hits, replicating such success is difficult for a large company like Square Enix. A single successful low-cost game is often surrounded by thousands of failures. For an individual developer, a $2 million profit can be life-changing, but it's insufficient for a team of 100. Additionally, fans might not accept low-cost games for a prestigious IP like Final Fantasy.
→ It's undeniable that most players now prefer long-term service games. Compared to Final Fantasy, they are more willing to spend time and money on games like Genshin Impact. Square Enix should have aimed for the market that Genshin Impact captured.
*→ Companies like Larian Studios, which are not publicly traded, often produce excellent games because they lack the pressure from shareholders and can exercise creative freedom. In contrast, Square Enix, being a publicly traded company, must prioritize profitability to fulfill its responsibility to shareholders.
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https://gameworldobserver.com/2024/05/24/square-enix-final-fantasy-unrealistic-sales-targets-jacob-navok
