Axios

Final Fantasy maker Square Enix is right to bring more of its games to Microsoft's Xbox and keep taking risks on new games, a former senior executive at the company tells Axios. However, he said it should not heed critics who say the company is too dependent on star game producers.

Why it matters: Square Enix is one of the most iconic and successful game companies in history, but it's been going through a rough patch.

• The company has lost $2 billion in market value since the June launch of PlayStation 5 exclusive Final Fantasy XVI, according to Bloomberg.
• The game sold 3 million copies at launch, solid if not spectacular for one of gaming's most famous franchises.
• But Square Enix has also released a string of bombs since 2022, including PC and PS5 game Forspoken in January and Babylon's Fall, an online game that was shut down less than a year after launch.

What they're saying: Final Fantasy XVI's exclusivity to Sony's PS5 was a key limiting factor to its current situation, says Jacob Navok, currently CEO at Genvid and former head of Square's Shinra Technologies.

• "The issue that I see is an issue that all of the industry should be cognizant of, which is the risk of console exclusives when you have a principal-agent problem," he says.
• Navok says Final Fantasy XVI had good enough reviews — in line with or better than prior entries — to have helped the company, but says Square's exclusivity put it in a position to need Sony to sell the game.
• "When you're the publisher relying on first party for success, you're always at a disadvantage, because your individual title matters less to the platform holder than it does to you."

State of play: In July, only his second month in the role, SquareEnix's new CEO Takashi Kiryu announced the company would bring more of its biggest releases to Xbox alongside other platforms.

• That deal, Navok suspects, came about "not because they expect that there will be more Xbox sales than PS5, but because he identified the same problem."

Between the lines: Navok disagrees with analysts who've criticized Square Enix for releasing too many new games, such as Forspoken and The DioField Chronicle, that got middling reviews and sold poorly.

• "This is what diversification of IP looks like. You need to take multiple swings to see what hits."
• "There is no fan out there who saw Babylon's Fall (and I say "saw" because very few actually played it) and decided against playing FF16. This is not how brand loyalty works"
• As for criticism of Square's big-name producers, who were blamed in a recent Bloomberg report for haphazard direction, Navok said that "Square Enix's producers are key to their product's success."
• The Bloomberg article didn't single out any specific producers for criticism, but Navok hailed several as examples of success: "Ryutaro Ichimura was producer of the Dragon Quest franchise for 20 years, Naoki Yoshida is the reason Final Fantasy 14 is so successful, Hajime Tabata saved Final Fantasy 15, and Yoshinori Kitase and Tetsuya Nomura are the reason Final Fantasy 7 Remake exists," he said.

Be smart: In early August, Kiryu told investors his goal as CEO is to improve the profitability of the company's high-end PC and console releases, it's so-called HD games: "I see ample room for improvement in our operating profit margin and would like to start by working primarily on our HD games."

• He said XVI's launch sales were "in line with our expectations."
• Bloomberg reported that Kiryu also said that the sales were lower than the company's highest end expectations, but that part of Kiryu's commentary did not make it into the English version presented on Square's website, which often omits part of what is originally said in Japanese.

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