Square Enix records $140.8 million in 'content abandonment losses' after reviewing development pipeline

Square Enix has told investors to expect $140.8 million in "content abandonment losses" as it attempts to streamline its development pipeline.

The Japanese company has issued a notice explaining those losses will be recognized on its books for the fiscal year ended March 2024.

It said the 22.1 billion yen ($140.8 million) hit comes after the board of directors voted to revise Square Enix's approach to the development of "high-definition games with the intention of being more selective and focused in the allocation of development resources."

"As a result of a close examination of the Group’s development pipeline undertaken in keeping with this revised approach, the Company expects to recognize approximately 22.1 billion yen in content abandonment losses on its books for the fiscal year ended March 2024," it added.

Square Enix develops console and PC titles within its HD Games segment, including entries in major franchises like Final Fantasy Dragon Quest, and Star Ocean.

Earlier this year, the company said it wanted to revitalize its production process by focusing more on internal development and large-scale titles. During a financial briefing (via Bloomberg) at the start of the year, Square Enix president and representative director Takashi Kiryu indicated the company wants to become less reliant on external studios and improve the quality of its biggest releases.

Kiryu's remarks tallied with another report from Genki in January that indicated Square would be assessing its development pipeline with the goal of making better, fewer games.

In its latest fiscal report for the nine-months ended December 31, 2023, Square Enix noted that net sales fell by 2.6 percent year-on-year to around $1.2 billion. Operating income declined by 20.7 percent to roughly $207.4 million over that same period.