Square Enix reports $140.8 million loss in 'content abandonment' after streamlining development pipeline

Square Enix has informed investors to expect $140.8 million in 'content abandonment losses' as it works on streamlining its development pipeline.

The Japanese company has issued a statement stating that these losses will be recorded in its books for the fiscal year ending in March 2024.

It explained that the $140.8 million hit is a result of the board of directors revising Square Enix's approach to developing high-definition games, with a focus on being more selective and efficient in resource allocation.

"After a thorough review of the Group's development pipeline in line with this new approach, the Company anticipates recognizing around $140.8 million in content abandonment losses in the fiscal year ending March 2024," it stated.

Square Enix is known for developing console and PC titles under its HD Games segment, including popular franchises like Final Fantasy, Dragon Quest, and Star Ocean.

Earlier this year, the company expressed its intention to improve its production process by placing more emphasis on internal development and larger-scale projects. Square Enix President Takashi Kiryu mentioned during a financial briefing that the company aims to reduce its reliance on external studios and enhance the quality of its major releases.

Kiryu's comments align with a report from Genki in January, suggesting that Square Enix will evaluate its development pipeline to focus on creating better quality, fewer games.

In its most recent fiscal report for the nine months ending December 31, 2023, Square Enix reported a 2.6 percent decrease in net sales to approximately $1.2 billion. Operating income also declined by 20.7 percent to around $207.4 million during the same period.