During Square Enix’s quarterly earnings call yesterday, things didn’t look great due to a significant decrease in net profit. In response, Square Enix unveiled a fresh iteration of their “Medium-term Business Plan” alongside a thorough review of their previous plan. They acknowledged that they fell short of their financial and operational targets for the fiscal year 2024. While they celebrated achievements like expanding their MMO player base, their themed entertainment business, and partially selling studio games internationally, they also highlighted failures in generating high profits from HD games, successful releases of SD games, and avoiding player base overlap in their game launches.
The new Square Enix blueprint is rooted in a new company philosophy of enriching people’s lives by creating unforgettable experiences. The term “unforgettable experiences” will be the company’s central focus moving forward.
Dubbed as Square Enix Reboots and Awakens, the latest 3-year plan aims to revitalize the company for long-term growth with four key objectives:
1) Improve productivity in the Digital Entertainment segment by streamlining development processes.
2) Expand revenue streams by enhancing customer engagement.
3) Implement stability measures to ensure a solid foundation.
4) Find a balance between shareholder returns and growth investments when allocating capital.
Addressing their development process shortcomings, Square Enix plans to shift focus towards quality over quantity. They aim to strike a new balance between free creative processes and customer feedback, particularly emphasizing a consistent output of AAA franchise games while also exploring mid-class titles with high profitability and a cautious approach to SD-sized games to increase their breakout success potential.
Additionally, Square Enix will restructure their organizational setup by moving away from a business unit-based design towards an operationally integrated organization. This will also entail a revamped game development approach that encourages a balance between creative freedom and centralized management.
The decision to adopt a multiplatform strategy marks a significant shift in Square Enix’s approach to game development. By expanding beyond mobile platforms to include Nintendo platforms, PlayStation, Xbox, and PCs, they aim to maximize game sales opportunities and broaden their player base.
Lastly, the plan includes adjustments to the organizational structure outside of Japan to reduce costs, enhance collaboration with the Japanese side, implement new HR policies regarding recruitment, promotions, and training, improve hybrid work efficiency, and upgrade office spaces to foster better team dynamics.
In summary, Square Enix’s latest 3-year business plan outlines a strategic overhaul to address past shortcomings, capitalize on market opportunities, and position the company for sustainable growth.
TLDR: Square Enix reveals a new 3-year business plan aimed at enhancing productivity, diversifying revenue streams, stabilizing operations, and balancing capital investments, while also focusing on quality game development, multiplatform strategies, organizational restructuring, and financial allocation adjustments.
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