Square Enix has announced a new medium-term business plan titled “Square Enix Reboots and Awakens: 3 Years of Foundation-Laying for Long-Term Growth” covering the period from the fiscal year ending March 31, 2025, through March 31, 2027. This plan aims to tackle challenges from the previous business plan, including issues like low profitability in the high-definition games segment, a slowdown in games for smart devices, and PC browsers segment, as well as inadequate franchise portfolio management and management infrastructure gaps at Square Enix. The company is looking to address these challenges and set a strong foundation for long-term growth in the coming years.
The four pillars of its new business plan are as follows:
| Pillar | Initiative |
|---|---|
| (1) Enhance productivity by optimizing the development footprint in the Digital Entertainment (DE) segment. | Focus on development of titles delivering “Fun” that only the Group can create and build the development structure. |
| (2) Diversify earnings opportunities by strengthening customer contact points. | Shift to a multiplatform strategy. Building continuous customer contact points of our titles by stepping up digital sales. Create the interaction with customers by increasing sophistication of publishing function. Generating the opportunity of new revenue by offering IP across a range of entertainment experiences. |
| (3) Roll out initiatives to create additional foundational stability. | Rebuild overseas business divisions from the ground up. Introducing policies on organization and human resource allocation in Japan. Enhance business infrastructure by implementing PDCA cycle in a timely and appropriate manner. |
| (4) Strike a balance between shareholder return and growth investment when allocating capital. | Earmarks a maximum of ¥100 billion for total strategic investments over a three-year period (¥20 billion earmarked for share buybacks for the next one year). |
| By driving a new medium-term business plan, we will shift from quantity to quality and evolve to deliver a variety of contents that ensure “Fun” all over the world. | |
Pillar Breakdown Overview:
(1) Enhance Productivity in the Digital Entertainment (DE) Segment
Shift focus from quantity to quality, aiming to create a balanced and optimal portfolio that captures the imagination of employees while also leveraging customer feedback and data for development efforts. Strive for regular launches of titles with long-term customer appeal, concentrating on delivering “Fun” experiences unique to the Group.
Develop titles that attract and retain fans, focusing on releasing HD and AAA titles in major franchises and carefully curated SD titles. Explore ways to leverage the existing library of intellectual properties (IP).
Transition to an operationally integrated organization, moving towards a project management structure while maintaining a balance between individual creativity and organizational management. Enhance development investment efficiency by redefining roles and improving internal supporting structures.
(2) Diversify Earnings Opportunities
Pursue a multiplatform strategy for HD and SD titles, aiming to reach a wider audience while maximizing user acquisition and retention. Emphasize digital sales at launch and strengthen sales and marketing operations, utilizing first-party data and expanding into cross-media experiences.
(3) Roll Out Initiatives for Greater Foundational Stability
Optimize cost and strengthen collaboration across international offices to increase efficiency and talent mobility. Revamp human resource policies, implement an effective PDCA cycle, and enhance business infrastructure to support creativity and productivity.
(4) Allocate Capital Responsibly
Formulate a capital allocation policy aimed at balancing growth investments and shareholder returns, with a maximum earmark for strategic investments over a three-year period. Carefully select growth investment opportunities and consider inorganic investments. Allocate funds for dividends and potential share repurchases, aiming to enhance corporate value.
For more detailed information about Square Enix’s medium-term business plan presentation, LINK HERE.
