Square Enix says its current focus on the Japanese market for revenue simply isn’t sustainable enough. The company argued before selling its Western studios to Embracer Group earlier this year that studios like Crystal Dynamics and Eidos Montreal were only focused on developing “major” games that “presented the risk of a serious cannibalization” of Square Enix’s limited resources. Despite this, it still believes that it needs to have a greater presence on the stage of the global market now.
Square Enix recently confirmed in its 2022 annual report that it will be shifting its focus from the Japanese market, which ” no longer sufficient for achieving a level of earning that enables us to recoup our development investment and generate a profit”, to the global market instead.
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In the annual report, Square Enix detailed the plan to shift its efforts, stating:
“Achieving major growth in the game industry is difficult now for companies that compete primarily in the Japanese market, given its graying demographics. As such, it is critical for our business that we produce hit titles that speak to the global market, which offers greater scale in terms of both customers and sales volumes.”
Square Enix says the rising development costs and increasing size of the gaming industry are the primary reasons behind this change:
“The investment required to develop game titles is therefore an order of magnitude greater than in the past. In other words, the Japanese market is no longer sufficient for achieving a level of earning that enables us to recoup our development investment and generate a profit, and we therefore need to approach development efforts based on the assumption that we have to succeed in a global market.”
Of course, Square Enix’s Western-focused projects aren’t exactly seeing stellar results right now. Forspoken has a lot of players worried, while the saga behind the downward spiral of Babylon’s Fall needs no introduction. Hopefully, the company won’t lose sight of its biggest IPs like Final Fantasy and Kingdom Hearts.
Source: Square Enix