Square Enix market value drops nearly $2 billion amidst profit decline

The renowned Japanese video game company Square Enix, has witnessed a significant drop in its market value, shedding nearly $2 billion since the high-profile release of Final Fantasy 16 in late June. A recent report has pointed to the underperformance of this flagship Japanese role-playing game (JRPG) title as a major contributing factor, alongside a substantial profit decline reported in August.

According to Bloomberg, Square Enix shares have plummeted due to the lackluster sales of Final Fantasy 16. Despite the company's assertion in July that the game's sales were "extremely strong" on the PlayStation 5, investors and analysts remain unconvinced about Square Enix's future prospects. Tokyo-based game consultant Serkan Toto highlighted concerns over the company's game output, describing their titles as "kind of OK" and "very forgettable."

UBS Securities analyst Kenji Fukuyama echoed these concerns, emphasizing that Square Enix has failed to establish a brand as iconic as Final Fantasy or Dragon Quest in recent years, casting doubts on the company's long-term outlook.

Notably, Square Enix's other major release this year, Forspoken, received lackluster sales and faced challenging reviews. In response to these challenges, the newly appointed CEO, Takashi Kiryu, plans to steer the company toward big-budget games and reduce reliance on outsourcing for game development, signaling a shift in priorities for the company in an effort to regain investor confidence.