Final Fantasy 16 Leads to Huge Loss for Square Enix

While Final Fantasy XVI was a critical success for Square Enix, the game was not a commercial one. Earlier this month, the publisher admitted that the game had underperformed expectations, and it seems the company's share price has taken a large hit. According to a new report from Bloomberg (via GamesIndustry.biz), the company's share price has fallen by 28% since June 20th, two days before Final Fantasy XVI's release. That translated to a loss of $2 billion in value. This is having an impact on investors, as analysts have cut their price targets for the company.

Why Did Final Fantasy XVI Underperform?

There are a lot of potential reasons for Final Fantasy XVI's struggles. The game marked the first M-rated entry in the numbered series, narrowing the potential audience. The potential number of players was narrowed again thanks to the fact that Final Fantasy XVI was an exclusive for PlayStation 5, while Final Fantasy XV, one of the best-selling games in the series, launched on PS4 and Xbox One. Final Fantasy XVI is a timed exclusive on PS5, which means Sony likely spent a lot of money to insure the game did not come to other platforms. However, that exclusivity deal was clearly not enough to account for these other factors. The game has already been announced for PC, but it's unclear when (or if) Final Fantasy XVI will ever come to Xbox systems. 

Another possibility is that Square Enix's expectations are simply too high. Despite having a narrowed audience, Final Fantasy XVI sold more than 3 million copies in its first week. Those numbers are quite good, and actually surpassed some of Sony's own first-party exclusives, including Demon's Souls and Ratchet & Clank: Rift Apart. While Square Enix has not offered information on how many copies need to be sold for the game to break even on development costs, that accomplishment was reached by Final Fantasy XV when it hit 5 million units.

Square Enix's AAA Problem

The problems surrounding Final Fantasy XVI are not new for Square Enix; the publisher has seen a number of major releases struggle to turn a profit over the last few years. One of the company's most prominent failures was Marvel's Avengers. The game was the top-selling title in its launch month, but Square Enix still lost $63 million on the game during that period. By all accounts, it seems that Square Enix's expectations are simply too high for many of its AAA games, and the publisher is spending too much. Final Fantasy XVI is only a few months old at this point, and there's a lot of time for the game to find an audience. However, it's clear that Square Enix's strategy is leaving too little room for error, and it doesn't seem like they plan on changing that anytime soon. 

Do you think Final Fantasy XVI will find more success over time? Is Sqaure Enix expecting too much from its games? Let us know in the comments or share your thoughts directly on Twitter at @Marcdachamp to talk all things gaming!