A thread on the recent Square Enix news regarding FF sales numbers and expectations.
Jacob Navok
5,330 posts
Jacob Navok
@JNavok
CEO & Emmy-Award Winner, Genvid. Previously 社長付 (President's Office) at Square Enix Holdings.
- This is a long thread about Square Enix, the Microsoft layoffs, AI, and Metcalfe's law.
- Many thanks to everyone who shared or retweeted my dive into Square Enix’s financial results. I noticed a few recurring questions that I’ll respond to here. First, I’ve seen several questions about how to build games cheaper or set budgets based on smaller sales figures. It’s
- Replying to @JNavokIf a game costs $100m to make, and takes 5 years, then you have to beat, as an example, what the business could have returned investing $100m into the stock market over that period. For the 5 years prior to Feb 2024, the stock market averaged a rate of return of 14.5%. Investing
- Replying to @JNavokNow if you're a younger gamer in your teens, you may not even be thinking about FF. If you are 13 years old now, you were 5 years old when the last mainline FF, FF15, came out. Your family may not own a PS5 and you may not care. You're satisfied with Fortnite or Roblox or
- Replying to @JNavokThere's a misunderstanding that has been repeated for nearly a decade and a half that Square Enix sets arbitrarily high sales requirements then gets upset when its arbitrarily high sales requirements fail to be met. This was not true when I was there and is unlikely to be true
- 1/ The flaw in cloud gaming strategies today is the platforms see the opportunity as enabling distribution rather than creating new content. Cloud gaming should enable new experiences around centralized AI, physics, rendering. We explored this ten years ago at Square Enix.
- Of all the replies I got to the Square Enix thread, the comments calling me a paid Microsoft shill were the most puzzling. I'm CEO of a streaming company. I have a fiduciary duty to my company. I cannot be a paid Microsoft spokesperson. I am also a huge Playstation fan and love
- Replying to @JNavokThere's another path that I can think of, which is increasing the take rate. If publishers can capture more of the platform side revenue, they can moderate price point increases while capturing a better return on investment because they'll be capturing say $50 or $55 out of $70.
- Replying to @JNavokAs a reminder I reported to two CEOs of Square Enix for the better part of a decade and ran a subsidiary. I also correctly predicted last year that Square Enix was going to break exclusivity. I'll note I have no confidential information that I'm basing my arguments on. To start,
- Replying to @JNavokThis is indeed the point. Square Enix are not competing against just the latest new installments, they are competing against every F2P online game that is constantly adding content and getting more robust over time.
- This is super critical: hits in gaming are very rarely out of no where. They come from years of building a culture, and require magic to come together. Many games fail, some get iterated on in development, and a rare few hit it on their first shot.
- Replying to @JNavokBut that's not even the core of the problem, this is just me proving that expectations aren't set immodestly. The core of the problem is that the budgets were set in a period where the expectation was that audiences would grow.
- Replying to @stephentotilo and @tha_ramiNot that Unity are incentivized to do so. The abuse only helps their coffers.
