Square Enix layoffs 2024 – A.I. create problems for employees?

Square Enix is about to become the latest game company to lay off its employees. The business has stated that it will shortly begin layoffs at its U.S. and European offices.

Square Enix’s new “medium-term business plan” was released. It provided hints of problems and outlined a goal to “strongly pursue” multiplatform game creation and “efforts designed to win over P.C. users.”

However, the bad news was hidden more profoundly in the document, under the heading “Rebuild overseas business divisions from the ground up.” According to the report, Square Enix has begun “improving costs at its European and American offices via structural reforms.”

One thing we’ve learned from the previous year and a half of gaming industry disasters. It is about “optimization” and “restructuring,” code terms for layoffs. As a result, the same thing is valid here.

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What happened to Square Enix?

Square Enix Holdings Co., Ltd. (Square Enix) develops and distributes digital entertainment products. The business publishes, distributes, and licenses entertainment content worldwide through its multinational brands.

Square Enix’s latest financial figures showed that profits were down roughly 70% from the prior year. It can be caused by the recognition of ¥22,087 million ($141 million) in losses on content disposal as an unusual loss.

It stated that these losses are due to the removal of efforts that do not align with the company’s future plans. This implies they were either linked to a single platform or relying too heavily on external developers.

Square Enix has stated that it will pursue a multiplatform strategy, including Nintendo platforms, PlayStation, Xbox, and P.C.s.

The business claimed that by taking this action, it would be able to 

“Create a space where more customers can enjoy our titles regarding popular franchises and AAA titles, including catalog titles.”

However, the original concept needed to be updated. Recently, Final Fantasy games have launched as PS5 exclusives. This includes Final Fantasy 7 Remake, Final Fantasy 16, and Final Fantasy 7 Rebirth. Rumour has it that sales of the later releases could have been better.

Square Enix’s layoffs

Square Enix’s layoff news comes shortly after the business revealed the demise of several unannounced games. Many large video game firms have experienced layoffs. Square Enix has now announced layoffs in its European and American units, but it has yet to make an official announcement.

This report came just after Square Enix reported weak financial results compared to last year. This was mainly due to the cancellation of undisclosed video games. This decision was meant to better align with a new longer-term company strategy, “Square Enix Reboots and Awakens.” However, it has resulted in a 70% earnings loss compared to last year.

It still needs to be determined what these games are. But news of them was released as a rising tide, quickly followed by Square Enix’s layoffs. The decision was announced at a company town hall meeting. During that meeting, president Takashi Kiryu stated that those in publishing, I.T., and Square Enix’s Collective Indie Games division would be the most affected. Also, the layoffs will happen over the coming month. The actual number of layoffs has yet to be revealed.

Reasons behind the layoff

Takashi Kiryu has been eager to explore innovative techniques and tactics for the company. It wasn’t until the beginning of this year. In a new year’s message to the world, he announced the firm will be “aggressive” in its use of A.I. in future video games. We’ve seen A.I. employed to some extent in Foamstars. But we haven’t seen any significant involvement in Square Enix games.

More importantly, these layoffs occurred just after Square Enix sold most of its Western studios and I.P. to Embracer Group. These studios are behind games like Deus Ex and Tomb Raider. After that, they were caught up in Embracer’s ongoing layoff hurricane. Eidos Montreal was especially affected. It lost 100 employees and had a Deus Ex game canceled. So, according to this news, the western half of Square Enix’s firm has been severely beaten up.

The rollercoaster of layoffs and studio closures appears to be far from over. In an industry overflowing with freshly laid-off coders, you have to wonder how much talent will be able to hang on until new possibilities appear. Also, it is shocking how many will be lost permanently.

When and where does the layoff happen?

Square Enix plans to let off an undefined number of staff from its U.S. and European operations this week. These offices are based in California and the United Kingdom, respectively. According to those in attendance, Square Enix president Takashi Kiryu announced the news during a company-wide meeting.

As we all know, layoffs like these were expected following Square Enix’s most recent financial. 

Earnings report. As part of Square Enix’s goal to restructure its global business divisions from the bottom up, the company “began optimizing costs.” This will happen at its European and American offices through structural reforms.

After almost 10,000 layoffs across game studios and publishers this year, it’s simple to read between the lines:

“Structural reforms sound exactly like “layoffs.”

According to the publication, these layoffs will occur over the next month. The individuals affected received notice this week. The entire number of expected layoffs needs to be clarified. Employees in publishing, I.T., and Square Enix’s Collective Indie Games branch are expected to be most affected.

Employees laid off in the United Kingdom will be subject to a “one-month consultancy period” under local U.K. law. The impacted U.S. employees could lose their jobs by the end of the month.

Square Enix later confirmed the planned cuts in a statement, stating that:

“Several months of analysis and discussion were undertaken among our leadership team. Only after that did we decide to restructure our Western organization.”

Conclusion

The video game business has suffered severe layoffs. The complete closures at studios of all sizes happened in 2023–2024. In just one year, there were over 16,000 layoffs. As 2024 continued, there was no sign that this trend would calm down.