Square Enix, Sega and Konami are all planning significant changes to their game business as development costs rise

IbizaPocholo

NeoGAFs Kent Brockman


Square Enix, Sega and Konami, three stalwarts of the Japanese gaming scene, are making risky bets that will change how they do business.

Driving the news: In reports to investors over the past two weeks, the keepers of Final Fantasy, Sonic and Castlevania have made it clear that the status quo is not working well enough.

  • They cite a mix of rising development costs and a need to find financially prudent ways to create global hits.
The boldest moves are underway at Square Enix, where the publisher is courting outside investors for its development teams, potentially leading to a day when external firms have a stake in the creation of the next Kingdom Hearts or Final Fantasy.

  • What that means for how projects are greenlit and budgeted is unclear, but it’d be an unprecedented approach for a big game publisher.
  • Square Enix’s old model of fully owning studios has “begun to produce side effects of a scale that we cannot ignore,” company president Yosuke Matsuda said in the company’s recently released annual report, citing swelling costs.
  • The company's risk avoidance explains its decision earlier this year to sell most of its Western studios and franchises, including Tomb Raider and Deus Ex.
  • Square Enix is also pushing hard into blockchain gaming. In a presentation to investors on Monday, it promoted its newly announced interactive NFT art project Symbiogenesis and new investments in a blockchain payment platform, a blockchain medieval strategy game and a collectible NFT trading card game.
Sega’s big swing will be a “super game,” a mysterious project promised by the end of March 2026.

  • The company wants to create “a game so revolutionary that it attracts far more active users than any of the group’s games to date,” Sega president Haruki Satomi said in a recent note to stockholders, projecting lifetime sales at ¥100 billion, or $683 million.
  • This comes amid a concern that the company’s “profit margins are still relatively low vis-à-vis the competition,” as noted by co-COO Shuji Utsumi.
Konami, which had pivoted away from making sequels to globally popular franchises in favor of a focus on Japan is now getting back to its old ways a bit, with recent plans for a slate of new Silent Hill games.


Between the lines: All of these companies are searching for growth amid a stagnating Japanese market.

  • Mobile gaming had been a lifeline for some time, but growth in that sector has slowed partially due to increased competition from Chinese game makers, MST Financial analyst David Gibson tells Axios: “The Japan mobile rivers of gold are no longer growing.”
  • That is forcing Japanese game companies to develop plans to generate global hits in console and PC, Gibson says.
The bottom line: It’s telling that another long-time Japanese publisher-developer, Capcom, got through earnings season without having to promote any pivots.

  • That’s likely because Capcom is already where its Japanese peers want to be, with its regular cadence of releases for its globally popular franchises Resident Evil and Monster Hunter — the latter of which even U.S. publisher EA now wants to compete with.
  • On Tuesday, Capcom announced the development of a Monster Hunter mobile game, in partnership with TiMi, which is part of the globally successful Chinese gaming company Tencent.
 
 

Holammer

Gold Member
Japanese companies insisted on trying to develop on the cheap after the PS360 era and went mobile, while European & American game budgets increased considerably.
This is the gap they need to close, so expect more investor funded games like Forspoken. Designed for a wider market with less weeb stuff innit.

The coup de grâce and ultimate betrayal will come when Bandai Namco makes a non-anime Tales game.
 
Japanese companies insisted on trying to develop on the cheap after the PS360 era and went mobile, while European & American game budgets increased considerably.
This is the gap they need to close, so expect more investor funded games like Forspoken. Designed for a wider market with less weeb stuff innit.

The coup de grâce and ultimate betrayal will come when Bandai Namco makes a non-anime Tales game.
The talent isn't there anymore, so it's not as simple as budgeting, have to recruit, enable, and build.

So many of these Japanese devs are independent now and want to stay that way.
 

64bitmodels

Reverse groomer.
That’s likely because Capcom is already where its Japanese peers want to be, with its regular cadence of releases for its globally popular franchises Resident Evil and Monster Hunter — the latter of which even U.S. publisher EA now wants to compete with.
Capcom- the example that the rest of the japanese industry should be following but refuses to because every japanese businessman are so ruthless they end up hurting themselves in their endless chase to cut costs and gain profit
 
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Designed for a wider market with less weeb stuff innit.
The coup de grâce and ultimate betrayal will come when Bandai Namco makes a non-anime Tales game.
It's still gotta have weeb stuff in it. All the Japanese studios tried hard to appeal to the west with western style stuff during the PS360 days and it backfired hard.

The Koreans have the right ideas. Their games have a very realistic rendering style that's also anime tinged, aka "The Artstation Style". This is most evident in their MMO's but also say here:

Final Fantasy has always been kinda on this wavelength, but they need to push it towards realism a bit more. This way, they have their cake and eat it too.
 

Bernkastel

Ask me about my fanboy energy!
It's still gotta have weeb stuff in it. All the Japanese studios tried hard to appeal to the west with western style stuff during the PS360 days and it backfired hard.

The Koreans have the right ideas. Their games have a very realistic rendering style that's also anime tinged, aka "The Artstation Style". This is most evident in their MMO's but also say here:

Final Fantasy has always been kinda on this wavelength, but they need to push it towards realism a bit more. This way, they have their cake and eat it too.
Koreans only want to make free to play MMO/Gacha-like games. And I don't hate f2p MMO/Gacha-like games(like PSO2 or Genshin). But they just love to make the kind I hate the most
It has to be those free to play MMOs like Tera Online or Blade and Soul.
Good reason why Square canceled FF XI mobile from Nexon. And Nexon is one of the few Korean publishers who can make semi-decent stuffs like Black Desert or Blue Archive. The rest just insert the same porcelain characters into the blandest type of game human could conceive.
Ohh and the game whose screenshot you showed me? Too bad buddy, that game is the studio's side game. This is where the studio pours most of their resources into.
Ohh and that studio is by Hyung-tae Kim, who also designed the characters in Blade and Soul and this abomination
 
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Woopah

Member
Worldwide releases of multiplatform games is the way to go. Reach as wide an audience as possible with most games (unless an exclusivity deal is particularly lucrative).

Capcom and Koei Tecmo are following different strategies but they are doing very very well Right now I don't see NFT and Blockchain being the secret answer that SE thinks it is.
 

Jinzo Prime

Member
Nintendo needs to step in and start investing. Sony is already propping up Square Enix. If Nintendo wants a healthy software environment for their current and next console, they need to invest in their fellow Japanese publishers.
 
I'm still surprised how Sony is just paying so many exclusive deals with Square-Enix instead of simply buying them. Just the 3 FFVII remake games (the first one was even extended at least one or twice lmao), Forspoken, FFXVI, Avengers Spider-Man exclusive DLC, all Final Fantasy games on PS Plus Extra, FFVII Remake on PS Plus less than a year after release, etc...this is easily a few billions right?
 

Go_Ly_Dow

Member
I'm still surprised how Sony is just paying so many exclusive deals with Square-Enix instead of simply buying them. Just the 3 FFVII remake games (the first one was even extended at least one or twice lmao), Forspoken, FFXVI, Avengers Spider-Man exclusive DLC, all Final Fantasy games on PS Plus Extra, FFVII Remake on PS Plus less than a year after release, etc...this is easily a few billions right?
+Final Fantasy XIV, Dragon Quest XII, NieR, Kingdom Hearts 4. Plenty of AAA output from one publisher.

Could also consolidate all their b-tier output on Playstation and Switch into let's say 2-3 higher budget games.

Should just buy them out.
 

Skifi28

Member
Konami with all these AAA games they've been developing these past years must be struggling with the increased costs the most. My heart goes out to them.
 
I hope that whatever shitty plans Square has in mind, they finish their FF7 Remake trilogy before then.

Also, Sega wants to put all their chips into one big game coming out in 3-4 years? This gives me huge Shenmue and Dreamcast vibes. “Those that fail to learn from history are doomed to repeat it” and all that.

It has to be a new Sonic game right? A new IP won’t push numbers that big from Sega, and they don’t have any other IPs I can think of on that level. But Sonic hasn’t been on the level of quality it has to be. I think Sega needs to do smaller games and do more of them. A mix of old games, new games and sequels, but keep the budget tight for these entries.

It cites Capcom, but for every RE8 and Rise, they have a Megaman 11 and RE2 Remake. That’s what they do. They have a couple fails (Re Verse, arguably RE3 Remake), but for every fail they have another entry that balances things out.
 

Ozriel

Member
I'm still surprised how Sony is just paying so many exclusive deals with Square-Enix instead of simply buying them. Just the 3 FFVII remake games (the first one was even extended at least one or twice lmao), Forspoken, FFXVI, Avengers Spider-Man exclusive DLC, all Final Fantasy games on PS Plus Extra, FFVII Remake on PS Plus less than a year after release, etc...this is easily a few billions right?

Billions? All this combined still doesn’t come anywhere close to half a billion.
 
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Billions? All this combined still doesn’t come anywhere close to half a billion.
Having 4 exclusive Final Fantasy games on your console isn't worth half a billion?
Have you seen some of these deals?

Almost a decade ago Rise of the Tomb Raider 1 year console exclusive deal (not even fully exclusive since it came out on PC) to Xbox One was 100 Million and it was done with Square-Enix as well.

Some of you guys underestimate these deals and how big they really are.
 

Fbh

Member
So if I read this correctly:

- Square is looking into blockchain and whoring out their franchises
- Sega is betting it all on some live service game (that will probably fail)

Stressed Season 2 GIF by Blunt Talk
 

Ozriel

Member
Having 4 exclusive Final Fantasy games on your console isn't worth half a billion?
Have you seen some of these deals?

Almost a decade ago Rise of the Tomb Raider 1 year console exclusive deal (not even fully exclusive since it came out on PC) to Xbox One was 100 Million and it was done with Square-Enix as well.

Some of you guys underestimate these deals and how big they really are.

You’re making my point for me.
The PS4 was undeniably the market leader and would have been the one projected to have a higher attach rate for RoTR…and yet it cost MS $100 mln to delay a PS4 release for a year. extremely likely FF7R cost Sony less than that…especially given the usual sales performance of JRPGs on Xbox consoles.

By the time deals for FFXVI were being laid out, Sony was already outselling Xbox at greater than 2:1 ratio, with a (then ) even worse outlook for the next gen. Square probably would be happy with enough cash to cover much of the development costs.

Payments for Plus releases aren’t that much for year old games that aren’t made by Rockstar. And stuff like Avengers DLC character exclusivity won’t cost more than $10 million, tbh.
 
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