Square Enix's longtime CEO, Yoichi Wada, has resigned from the company according to an internal memo passed on to shareholders. Wada's resigning coincidences with the company's latest financial report, which is stating that Square Enix will be posing "extraordinary losses."
Square Enix will be seeing a monster loss of 13 billion yen ($130 million) for which they cites "slow sales of major console games" as the main cause. The forecast came after Square Enix forecasted a 3.5 billion ($40 million) profit.
"The company forecasts that actual business results from its Digital Entertainment Segment substantially fall below its plan primarily due to slow sales of major console game titles in North American and European markets."
As for Wada, his resignation is expected to be part of a major "management reform" occurring within the ranks of the Japanese video game giant. Director Yousuke Matsuda will be taking over his position temporarily while shareholders hold an election for the next man to take the job at a meeting in June. Matsuda has been predicted for the full role.
What this situation essentially boils down to is that Square Enix took a gamble on morphing itself into a major western publisher like EA or Activision, and the transition didn't go as smoothly as they had hoped.
The quality of their new games acquired during their purchase of Eidos, such as Tomb Raider, Hitman, and Deus Ex, can hardly be blamed for this backfire as each of them are wonderful. Instead, blame can be placed on Square Enix for putting too much into the success of unproven franchises on the modern mainstream market. Each of these titles was considered a revival upon release and while old fans jumped aboard with no problems, strangers to the series must not have been as enthusiastic
What's even more heartbreaking is that in their gamble, they also sacrificed their niche as the leader of JRPG world. While they still hold strong in Japan, smaller companies like Level-5, NipponIchi, and of course Atlus have all risen to the challenge and stolen a large chunk of the audience while Square Enix was busy hyping the new western half of their company.
Now with unproven franchises and a dwindling under-supported longtime fanbase, how can Square Enix possibly pull themselves out of this hole? Final Fantasy doesn't nearly have the credibility it once did. Chrono, Mana, SaGa, and Parasite Eve are all gone he way of the dodo. Dragon Quest pleases its fans in Japan, but hardly enjoys the same success in the States.
Perhaps Kingdom Hearts is all the Japanese half of the company can lean on anymore, and even for that to work, Final Fantasy XV is going to have to be something incredibly special and sales will have to pick up on all of their Eidos games. Maybe if they recruited a few of the geniuses who put them on top of the world in the late 1990s, they might be able to inspire some creative juices and actually get back to making decent JRPGs.
Time to return to your roots Square Enix.
Yoichi Wada is the second high profile video game to resign in a week following EA's John Riccitiello.