Report: Square Enix suffering from mismanagement, "ad hoc dev process"

A new report from Bloomberg claims Square Enix has lost nearly $2 billion in value after the release of Final Fantasy XVI. 

Following the game's release in June for the PlayStation 5, its claimed shares have fallen by about 30 percent. The overall sales have been deemed "underwhelming" following its initial launch of 3 million copies sold during opening week. 

Further exacerbating the issue is the number of Square Enix games that have underperformed and forced the developer to change its business operations. After Forspoken's tepid release in January, for example, Square Enix re-merged its subsidiary Luminous Productions back into itself.

Though Square Enix has been mum on Final Fantasy XVI's sales performance since then, it hasn't given up on the game. Recently, it confirmed two paid DLC expansions were in the work for the title, and it would be releasing on PC in the near future.

What's going at Square Enix?

Bloomberg's report sheds a little more light on the inner workings of the developer and provides context for its recent, sometimes erratic, business choices.

Current and former Square Enix staff told the outlet many of the studio's issues (like releasing and killing mobile games) can be pinned on giving producers full reign of a project. For example, Naoki Yoshida is one of Final Fantasy XVI's most prominent public figures, despite only serving as its producer.

Other claims have stated that projects tend to have their goals shifted without any prior warning. The infrastructure at the company is allegedly in such disarray that proper documentation and team structure can be nonexistent. 

The end result is a developer with a "high degree of volatility" of games, quality-wise. And analysts talking to Bloomberg believe Square Enix can only find consistency once it fixes itself internally. 

Such a shift is reportedly in the works, as CEO Takashi Kiryu has announced his plan to reduce the number of small games and outsourcing in order to prioritize big-budget titles. Those games may turn things around, but it might also be too late.

"The company has rested on its laurels for too long and may have already exhausted the patience of loyal fans," wrote analyst Kenji Fukuyama. "Even if we look five years ahead, there isn’t much that can make investors confident about the company’s future."