Wada Was The Start: Why Square Enix Is In Serious Trouble

squareenixI remember a few years back – I believe I was writing for DailyGamesNews at the time – when I heard a story about a meeting that now-former Square Enix CEO Yoichi Wada had with his executives after what was a rather poor financial quarter. To keep it brief, he basically got them in a room and berated them, Mike Rice style, yelling at them that the only thing that mattered was sales, and if they didn’t meet sales, heads would roll. Having dealt with coaches like Mike Rice and bosses who have taken that same tact – the “yell at them until they cry” school of management – I knew how it would end: there’d be initial fear and reaction to the noise, then everyone would realize how screwed they were – not individually, but as a group – because of the lack of leadership they were getting.

I couldn’t help but think of that as I heard the news that Wada had “stepped down” (read: Humpty Dumpty was pushed) as the CEO of SquareEnix. For the thirteen years that Wada has been a senior executive at the company – twelve of those as its CEO – Squeenix has been in a spiral downwards in virtually every metric, both hard and subjective. Square Enix’s financials have been a mess, with no fact showing that as clearly as the fact that Tomb Raider, which has so far sold 3.4m copies and is the best selling game of 2013 as of this writing, underperformed expectations1; when a game sells three and a half million copies in a month and it still isn’t good enough, you have a serious management problem on your hands.

However, Square Enix has also had a problem managing their reputation with gamers. Very few gamers are as dedicated in our business as those who support Japanese role playing games. Typically the milieu of the dedicated to begin with, Square’s past games raised a generation of gamers, one in which I was a part of, and therefore raised the bar for everything bearing the company’s name, sometimes to absurd levels. As the PlayStation 2 hit, the company could do very little wrong; even their failed experiments, like The Bouncer, did well for themselves. However, a combination of substandard games, questionable localization decisions, and in more recent years, outright contempt for their fans2 have led to the brand being damaged, especially in areas they’re trying to expand in like the MMO market. As time has passed, the relationship between the consumer and the company became badly damaged, and while that would normally not be entirely permanent – Electronic Arts is still in a very strong position despite executives from the company pretty much telling longtime fans to shut up and stop being a vocal minority – it’s different with the kind of fans that Square’s games have. I’ve mentioned that they’re overly dedicated, but that also means they’re overly attached, and when you mistreat someone who’s a little too invested in the relationship, they lash out. The problem with vocal minorities is that eventually, they become loud enough to become a very vocal majority, and that’s what has largely happened in the current generation of consoles. When I purchase anything from Square Enix, I expect a large amount of frustration that has nothing to do with the game to come along with it – be it an over inflated price, or extra hoops such as the ridiculous PC port of Final Fantasy VII that I discussed on Twitter recently – and after awhile, I just get sick of dealing with the bullshit. If I am sick of them, how many millions more are in my boat with me?

Unfortunately for Square Enix, being such a large company, “nimble” is the last word to come to mind. They’re getting assaulted on all fronts, and yet their major game in Japan is Dragon Quest X, a subscription based MMO on the Wii. That game has zero chance of success in America. But in other areas, they are suffering as well. Arguably the best thing the company has done is their work relating to Eidos, who was a breath away from liquidation when Square Enix bought them out. Since then, that arm of the group has produced some outstanding games such as Deus Ex, Hitman and Tomb Raider. However, all three of their games have underperformed their expectations in the upcoming quarterly report, which indicts poor management and runaway development costs. On the mobile front, they’re getting swallowed alive in Japan by DeNA and GREE, and their combination of premium (in the literal sense of the word) priced ports of 25 year old games and atrocious, borderline scandalous “freemium” experiments that happen to cost money are not exactly setting the world on fire. In terms of their bread and butter – Japanese role playing games brought over to the Western world – they’re a mess. Final Fantasy XIV was an abomination that never should have been released in the state it was. Final Fantasy XIII Versus and Type-0 have just about hit vaporware status, a word previously synonymous with the likes of Duke Nukem Forever. And while the localization of Bravely Default is a step in the right direction, that’s still a niche game for a company that needs to start making serious mainstream profits, immediately.

As one of millions of people across the world who grew up in love with Square Soft, it’s almost tragic to see what has happened during Yoichi Wada’s term as Chief Executive Officer. It’s easy to blame him for the company’s failures, but the rot goes so deep – arguably to the root of Japanese culture in and of itself, a culture that, especially in the corporate world, abhors change and resists evolution – that it’s impossible to really know where to begin to clean up the mess. Like Electronic Arts, they’ve let their CEO go, but unlike EA, they don’t have any solid ground to stand on for the future. They are in the position that no large, publicly traded company wants to be in: their main business drying up or being relegated to irrelevance, and unable to make a foothold in emerging markets that have been staked out by smaller, more nimble companies. Such words are usually the beginning of a company’s obituary, and if Squeenix’s incoming CEO doesn’t have the temerity to change the company’s root culture with near immediacy, we could be reading that obituary sooner than any of us wants to admit.

1 – Leaked numbers indicate that the expectation floor – the break even, minimum number – was five million copies; they were expecting closer to six. This, for a series that had been a critical failure in the West for years, and for whom 3.4m copies was the largest launch in its history. Who is doing Squeenix’s projections, Don Quixote?

2 – When asked if a sequel to Chrono Trigger was coming, Shinji Hashimoto stated , in an exasperated tone, that there wouldn’t be anything in the near future for Chrono Trigger because fans weren’t buying the remake, stating bluntly “If people want a sequel, they should buy more!”. It should be noted that at the time it was released, the Chrono Trigger remake – more of a port than a remake, only really featuring a better translation and a couple of extra side quests – was priced at $40, literally the most expensive DS game on the market. Even Pokemon games released at the time, save for HeartGold and SoulSilver (which came with pedometers), cost $35.

Christopher Bowen

About Christopher Bowen

Christopher Bowen is the Editor in Chief of Gaming Bus. Before opening Gaming Bus in May of 2011, he was the News Editor at Diehard GameFAN, a lead reporter for DailyGamesNews, and a reviewer at Not A True Ending, also contributing to VIMM, SNESZone and Scotsmanality. Outside of the industry, he is a network engineer in Norwalk, CT and a veteran of Operation Iraqi Freedom.