In a recent financial update, Square Enix disclosed its performance for the period between April and September 2023, revealing intriguing insights into the sales of the latest entry in its flagship franchise, Final Fantasy 16. Despite the PS5 exclusive game’s commendable sales, it wasn’t sufficient to offset the company’s declining profits, primarily due to high development costs and advertising expenses.
FF16, a key contributor to Square Enix’s “digital entertainment” revenue during the said period, witnessed a robust sales performance. The game’s success, along with that of the Final Fantasy Pixel Remaster series, contributed to an increase in overall sales compared to the same period in 2022. However, this surge wasn’t enough to counterbalance the lower sales in other segments. But, before we all go ahead and point at the usual suspects, specifically, Forspoken, which had launched earlier this year and received negative reviews that eventually resulted in the closure of its developers, one of the areas Square Enix struggled was in the MMO space. Apparently, Final Fantasy 14’s profits saw a decrease during this time. Consequently, the overall profits of Square Enix declined in comparison to the previous year, underscoring the challenge of balancing development costs against revenue generation in the gaming industry.
While there’s no clear evidence indicating whether Final Fantasy 16 has recouped its development costs, early figures from June suggested promising sales. The game achieved the distinction of being the fastest-selling PS5 game in Japan, surpassing titles like Gran Turismo 7, and also became the fastest-selling true PS5 exclusive, outperforming games like Returnal and Ratchet and Clank: Rift Apart. However, these initial successes did not translate into a financial panacea for Square Enix’s broader economic challenges.
Looking ahead, Square Enix has some significant releases lined up, which could potentially bolster its financial standing. The launch of Final Fantasy 7 Rebirth early next year and the Final Fantasy 14 Dawntrail expansion, scheduled for a few months later, are notable. Additionally, the expansion of Final Fantasy 14 onto Xbox consoles could open new revenue streams for the company.
However, the complexity of Square Enix’s financial situation extends beyond the performance of individual titles. The company’s latest financial reports reflect a variety of factors influencing the company’s profitability and the fluctuating Japanese yen, a decrease in MMO segment sales, and underwhelming performances by some of its mobile games. Not to mention, the intense competition in both consumer and smart device game markets necessitates continuous innovation and the creation of new intellectual properties, as highlighted in the company’s financial report.
Final Fantasy 16’s performance, while commendable as a standalone achievement, illustrates the multifaceted nature of the gaming industry’s economics. High development and marketing costs, coupled with the shifting dynamics of player preferences and market competition, present ongoing challenges even for established franchises.
Square Enix’s experience with Final Fantasy 16 proves that a single successful title, even one belonging to a franchise as legendary as Final Fantasy, may not always be sufficient to offset broader financial complexities in the rapidly evolving gaming landscape.
While Final Fantasy 16 has certainly marked its presence in the gaming market with notable sales figures, it falls short of being a financial savior for Square Enix’s broader economic challenges. It probably wouldn’t have helped at all even if it was released day and date on the Xbox Series S/X as well the PC.
Going forward, the gaming giant’s future success will likely depend on its ability to adapt to prevailing market trends as well as manage development costs effectively, and continue delivering compelling content that resonates with its diverse gaming audience.
Aside from FF7 Rebirth and FF14, FF16 will once again dominate headlines in the near future when Square Enix releases its PC port and two story DLCs. Finally, the company is reportedly working on remakes of Final Fantasy 9 and a Final Fantasy Tactics remaster.
