Square Enix Says Japanese Market Isn’t Enough for Revenue After Selling Western Studios/IPs

The revenue generated from Square Enix games in Japan is no longer enough to recoup development costs and investment. The publisher said as much in its financial report for the year 2022, arguing that it had to sell its Western studios to Embracer because they were only focused on the development of “major” games, which “presented the risk of a serious cannibalization” of Square Enix’s limited resources. However, the company recognizes the need for a global presence in order to remain profitable, and wants to make games that enable it to succeed in the global market.

A number of recent Square Enix games have flopped

“For our Group to better focus on developing titles for the global market in this changing environment, we need to concentrate our limited resources on the development of strong and robust titles,” reads the report. Unfortunately, a number of Square Enix-published Western games in recent years landed with a thud in the market, with the most recent flop being PlatinumGames-developed Babylon’s Fall. And from we’ve seen so far, PS5 console exclusive Forspoken has people worried.

Interestingly, Square Enix’s Japanese games are some of its most successful titles around the globe. One needs to look no further than Final Fantasy.

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