Square Enix has announced that it will formulate a new medium-term management plan, “Square Enix Reboot and Awakening ~Three Years of Foundation Building~'' for the period ending March 2025 to March 2027. long term growth. ”
This business plan aims to overcome the challenges faced in the previous medium-term management plan, such as low profitability in the high-definition game business, sluggishness in smart device games and the PC browser business, and declining profitability. Portfolio management by franchise, and some gaps in Square Enix's management infrastructure.
The four pillars of the new business plan are as follows.
| pillar | Initiative |
|---|---|
| (1) Optimize the development footprint and improve productivity in the digital entertainment (DE) field. | We will focus on developing titles that provide the “fun” that only our group can create, and build a development system. |
| (2) Diversify profit opportunities by strengthening customer contact points. | Shift to a multi-platform strategy. Strengthen digital sales and build continuous customer contact points for your titles. Create interaction with customers by increasing the sophistication of publishing functions. Create new revenue opportunities by delivering IP across a variety of entertainment experiences. |
| (3) Develop initiatives to further enhance fundamental stability. | Rebuild the overseas business division from scratch. Introducing Japan's organization and personnel allocation policy. We will implement the PDCA cycle in a timely and appropriate manner to strengthen our business foundation. |
| (4) Allocate capital in consideration of the balance between shareholder returns and growth investments. | Total strategic investment is planned to be up to 100 billion yen over three years (share buybacks will be 20 billion yen over the next year). |
| By promoting the new medium-term management plan, we will shift from quantity to quality and evolve with the aim of providing a variety of content that provides “fun” to the world. | |
Here's a complete breakdown of each pillar:
(1) Improving productivity by optimizing the development footprint in the digital entertainment (DE) field
(2) Diversification of profit opportunities by strengthening customer contact points
(3) Develop initiatives to further enhance fundamental stability
(4) Capital allocation that takes into account the balance between growth investment and shareholder returns
(1) Improving productivity by optimizing the development footprint in the digital entertainment (DE) field
- Shift from quantity to quality
- Our group (Square Enix) will promote a “transition from quantity to quality” as a medium- to long-term philosophy for our DE business portfolio. To this end, we will work to build an optimal portfolio by striking a balance between “product-out,” which maximizes the imagination of our employees, and “market-in,” which takes advantage of customer voices and opinions. Data that informs development efforts. The company aims for a regular release pace and will focus its development efforts and investments on titles with great potential to be loved by customers for many years.
- We focus on developing titles that provide the “fun” that only our group can create.
- Our group aims to develop titles that provide unforgettable excitement to our customers, and will focus on the following points. First, keeping in mind the need to launch HD titles to help attract more fans to the group, the group regularly releases AAA titles in its major franchises to maintain and build its fan base. We will also strive to improve the success rate of SD games by introducing carefully selected titles. We'll also explore ways to take advantage of our rich IP library.
- Establishment of an in-house development base that brings the “fun” that only the group can create
- The Group will strive to establish an operationally integrated organization with the goal of eliminating a business unit-based organizational design, revamping its internal title development footprint, and bringing more functionality in-house. Additionally, we will transition to a project management system while maintaining a balance between the creativity of each employee and management centered on the organization. To this end, our group will redefine the mission of related employees, including producers, and establish an internal support system. Additionally, we will review the entire title development management process to improve development investment efficiency.
(2) Diversification of profit opportunities by strengthening customer contact points
- Shift to a multi-platform strategy
- Regarding HD titles, we will actively promote a multi-platform strategy that includes Nintendo platforms, PlayStation, Xbox, and PC. In particular, we will create an environment where more customers can enjoy AAA titles, including major franchises and catalog titles. Additionally, for SD titles, we will formulate a platform strategy that includes not only iOS and Android, but also PC. Furthermore, we will strive to maximize the acquisition of new users when a title is released and the acquisition of repeat users after the game begins operations.
- Build continuous customer contact points for in-house titles by strengthening digital sales
- Regarding promotional efforts, our group will strengthen the user flow of digital sales when new titles are released. In addition, the rich lineup of catalog titles will create profit opportunities, which will lead to stronger revenue base through increased sales of catalog titles. We will also focus on acquiring computer users.
- Create interaction with customers by increasing the sophistication of publishing functions
- Our group will promote integrated domestic sales and marketing operations, consolidate marketing functions that were previously dispersed in the creative department, expand common knowledge, and eliminate duplicative functions to improve publishing efficiency. . We will also create a new reporting line to strengthen collaboration between sales and marketing departments. Additionally, when developing advertising campaigns for HD and SD titles, we will respond to the sophistication of marketing by utilizing first-party data such as CRM solutions and data analysis.
- Create new revenue opportunities by delivering IP across a variety of entertainment experiences
- Our group will promote a cross-media strategy that allows us to approach new markets. Specifically, we will establish a new department focused on developing intellectual property businesses in the global market and expand the scope of our licensing business. Additionally, by providing IP in all media formats, we will build an organization that more actively utilizes IP. Additionally, we aim to create synergies by integrating organizations related to the merchandising business.
(3) Developing initiatives to improve foundation stability
- Rebuild the overseas business division from scratch
- The Group began cost optimization in its European and American offices through structural reforms. We will also promote collaboration between domestic and international groups and strengthen the functions of our London development base. For example, the Group intends to strengthen the closer collaboration between its divisions in Japan (Creative Studio and Publishing) and strive to increase the mobility of talent between its divisions and the Group's publishing functions overseas.
- Reforming human resource allocation and investment policies to balance Japan's “creativity and productivity”
- Our group is building a flat organization by increasing promotion opportunities through selection to pursue new human resources and streamlining decision-making. Specifically, we will develop a new personnel system that aligns with the unified management of development functions, and create a new system for hiring, promoting, and appointing managers. Additionally, we will rebuild our new graduate training system and introduce an in-house training program to improve the abilities of mid-career employees.
- Strengthening the management base by implementing timely and appropriate PDCA cycles
- Our group will continue to advance the sophistication of our management accounting system in order to better visualize our business activities. In addition to constructing infrastructure to maximize employee productivity under the hybrid work system, we will also create an attractive office environment that allows our development teams to express their creativity.
(4) Capital allocation that takes into account the balance between growth investment and shareholder returns
The Group has formulated a capital allocation policy that takes into account the balance between growth investments and shareholder returns, and has set a maximum total of 100 billion yen for strategic investments (growth investments or shareholder returns) over three years.
Regarding growth investments, we will utilize our own business knowledge to carefully select investment opportunities that will contribute to increasing corporate value. Consider the possibility of inorganic investment for the purpose of expanding business areas and improving stability.
In order to return profits to our shareholders, our group will pay regular dividends with a basic policy of a payout ratio of 30%. Additionally, we have changed our previous approach to capital allocation, securing 20 billion yen as funds for the acquisition of treasury stock, which will be carried out flexibly between May 14, 2024 and May 13, 2025. Masu. factors such as strategic investment opportunities, the group's financial condition and stock price; The breakdown of dividends per share (interim dividends and year-end dividends) has also been revised.
Through these initiatives, our group aims to further improve our corporate value.
For more information, please see Square Enix's medium-term management plan presentation.
