Square Enix has a secret weapon to help boost its flagging games business

Square Enix's total net sales revenues are down year-over-year, but the company could deliver a significant boost to its games segments with a lucrative new partnership.

3

Square Enix recently posted its Q1'25 results, reflecting lower net sales earnings than a year ago. These revenues punctuate up-and-down sales for the last two fiscal years. It's not that the Japanese publisher is in trouble--far from it, as the cost-cutting measures have actually boosting operating profits and total net profits--but compared to FY21 and FY22, the past few years (FY23 and FY24) have been markedly lower insofar as sales.

With a lack of big new AAA games, Q1'25 saw net sales drop to $435 million, the lowest quarterly sales in the past 16 quarters, or 4 fiscal years. In lieu of no AAA games, the MMO and mobile segments are doing heavy lifting for Square Enix right now. But the publisher has a secret weapon that will combine the strengths of both of these segments together.

3

Reports indicate that Square Enix is working to bring a mobile version of Final Fantasy XIV to smartphones. The MMORPG has routinely been one of Square Enix's main revenue and profit drivers, delivering consistent earnings since the major A Realm Reborn update launched some 11 years ago.

Niko Partners reports that the Chinese government has approved a Final Fantasy XIV mobile game, and that Chinese games juggernaut Tencent is producing the mobile MMORPG for Square Enix.

"Two notable Japanese IPs also received licenses, Final Fantasy and Dynasty Warriors. A mobile game based on Final Fantasy XIV is being developed by Tencent and Square Enix and was approved. A mobile game based on Dynasty Warriors 8 developed by Century Network, TCI Play and Koei Tecmo was also approved," the analyst firm wrote earlier this month.

The Final Fantasy XIV mobile version has yet to be announced by Square Enix, and it's possible the company could reveal the game at the Tokyo Game Show, assuming of course the project will be made available outside of China.

In 2022, Activision-Blizzard teamed up with Chinese games giant NetEase to release the wildly successful Diablo Immortal to worldwide audiences, including a launch in China.