It seems that gaming companies are restructuring left and right this year. Shortly after the Activision Blizzard news, Square Enix is following suit with a plan to consolidate after “disappointing” Q3 results.
According to its financial report for the nine-month period that ended on December 31st, 2018, profits had fallen by 60.1% from the year before. During the investor call, President Yosuke Matsuda mentioned a restructuring, but we’ve recently learned more about the situation.
The quote from the call:
"As of Q3 of fiscal year 2020, we plan on reorganizing and consolidate the 11 existing business divisions at Square Enix into four business units in order to increase the efficiency of our workflows, make more effective use of our resources, and consolidate our expertise with the aim of improving profitability.”For context, this response was to a question that asked about Square’s Q2 initiative to focus on smartphone games.
For now, Square Enix has 11 different business divisions. The changes will result in just four. However, as GamesIndustry.biz reports, there will be no “reduction of workforce”. Instead, these changes would “be limited to Square Enix’s Japan studio and would take place in April of 2019.”
Q3 saw the release of Just Cause 4, Dragon Quest Builders 2, and Shadow of the Tomb Raider. Unfortunately, none of these titles made up for the losses year-over-year.
Matsuda shared some insight on the reorganization:
"We think the main reason is that we were unable to provide an experience that was novel enough that players would choose to buy them before any of the other numerous major titles on the competitive landscape. Also, while it is true that we are seeing a shift away from sales of boxes to digital downloads, with this many titles competing with one another, initial sales are definitely an important element in increasing user awareness. For that reason, we do need to engage in a certain amount of advertising just ahead of a new title's launch."That said, this quarter saw the release of Kingdom Hearts III which topped sales charts in the UK, so Q4 may fare better upon results. The company also plans to announce multiple new titles at E3 2019.