Square Enix can no longer rely on Japanese market to make money-Michael Beckwith-Entertainment – Metro

Something like Forspoken was clearly made with a global audience in mind (pic: Square Enix)

In a statement to shareholders, Square Enix explains why it’s only going to do more to target global audiences and not just rely on Japan.

The news of Square Enix selling practically its entire Western division remains one of the most surprising industry stories of the year. However, despite what some may think, this doesn’t mean the company is giving up on the Western market.

Aside from the fact that Square Enix said at the time, that it would continue to publish Western made games such as Just Cause and Life Is Strange, the company has also recently admitted it can no longer afford to ignore markets outside of Japan.

It’s even gone so far as to call the Japanese market insufficient for recouping development costs and turning a profit, meaning it is ‘critical’ that it release games that can succeed globally.

One major contributing factor is the increased costs of game development. It’s been obvious for a while that games are becoming more and more expensive to make (it’s Sony’s justification for selling its titles at £70), something that the Japanese market alone can’t sustain.

‘Achieving major growth in the game industry is difficult now for companies that compete primarily in the Japanese market, given its greying demographics,’ said Square Enix president Yosuke Matsuda.

‘The Japanese market is no longer sufficient for achieving a level of earnings that enables us to recoup our development investment and generate a profit, and we therefore need to approach our development efforts based on the assumption that we have to succeed in the global market.’

This may all sound fairly obvious (releasing games worldwide means more people available to spend money on them), but as this comes from a financial report, this is a statement meant more for Square Enix’s investors than its customers.

The obvious concern is that this will signal a return to the bad old days of the Xbox 360 era, when Japanese publishers first began to worry their games were no longer appealing to Western audience, and tried to mimic Western made games in usually inferior forms.

That’s arguably already happened with the peculiar Stranger Of Paradise: Final Fantasy Origin and the same logic is also likely to have influenced Forspoken’s development and lead to more games like it. Despite it being in the works at Luminous Productions, a Japanese studio, Forspoken’s story and dialogue were written by a Western team.

Plus, its character designs look more in line with Western games than something like Final Fantasy, with the New Yorker protagonist’s appearance modelled after her English actress.

Final Fantasy 16 – don’t expect the Final Fantasy games to get any less outlandish though (pic: Square Enix)

Elsewhere, Matsuda reiterates the motivations behind the sale of Crystal Dynamics, Eidos-Montréal, and Square Enix Montréal, saying it was to ‘build stronger business foundations by revamping our portfolio of titles and studios.’

He adds, ‘Their portfolios were focused on the development of major titles, which presented the risk of a serious cannibalisation of our group’s financial resources over the medium to long term.’

Matsuda also continues to triple down on blockchain technology, even in the face of the frosty reception to his New Year’s announcement and the fact that there have yet to be any significant success stories involving blockchain gaming.

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‘This field is only in its infancy, and we have yet to see any games providing the type of excitement only possible with blockchain technology,’ he admits.

‘We also acknowledge that some view the very concept of blockchain gaming with suspicion due to what appears to be a bubble in NFT asset sales, the incredible volatility of crypto assets, and the fact that laws, accounting practices, and tax codes are still being established or formalised.

‘However, I believe that blockchain gaming holds the potential to create new forms of gaming content, and that it represents a new business domain worth our group addressing alongside traditional games.’

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