Square Enix shareholders received a rude awakening Monday as the video game company behind Final Fantasy and Kingdom Hearts saw a 10-point dip in the Japanese market. This equates to a market capitalization loss that measures in the hundreds of millions.

The drop came in the wake of a Square Enix financial report that actually offered some offered good news to investors. The company saw $136 million in profits over a six month period ending in September of 2024. This represents a year-on-year increase of 22%.

A screenshot from Final Fantasy VII Rebirth (2024), Square Enix

However, several worrisome figures seemingly caused enough unease for the stock to still take a hefty hit. Despite the increase over that six month period, operating profits had been on a heavy decline throughout 2024. Most notably, Square Enix found itself 27% down in Q3 of 2024.

Premium game sales are also down this year, which could have pushed investors to sell.

Square started November with a valuation of $4.68 billion. This number was based on the company’s outstanding shares and the Square Enix stock price. However, it has since lost up to $350 million in value.

Sweet Baby Inc. CEO Kim Belair via InclusionFX YouTube

Square Enix was a notable client of Kim Belair’s Sweet Baby Inc. This narrative design company contracts with gaming studios to consult on story elements, often injecting DEI into the narrative. The company appeared prominently on SBI’s website, though recently Square Enix vanished from the list entirely.

List of companies Sweet Baby Inc. has worked with on their website

While there’s no definitive list of Sweet Baby Inc‘s influence on Square, many point to censorship actions taken by the company in recent years, like restricting the size of Tifa’s chest in Final Fantasy VII, as proof of the narrative firm’s involvement.

Sweet Baby Inc. wasn’t the only narrative design firm Square worked with. It also contracted Black Girl Gamers to work on noted flop Forspoken. Square Enix’s representative director Yosuke Matsuda even admitted that sales for Forspoken were weak back in February 2023.

A screenshot from Forspoken (2023), Square Enix

READ: Sweet Baby Inc. Removes Square Enix From Its Client List On Its Website

“Reviews of Forspoken, which we released on January 24, 2023, have been challenging,” he said. “However, the game has also received positive feedback on its action features, including its parkour and combat capabilities, so it has yielded results that will lead to improvement of our development capabilities of other games in the future.”

Moving to the game’s sales, Matsuda noted, “That said, its sales have been lackluster, and while the performance of new titles with February and March release dates will be the ultimate determinant, we see considerable downside risk to our FY2023/3 earnings.”

This failure was so extreme that Square closed down Forspoken’s studio, Luminous Productions, in February 2023.

It seemed to many as though Square learned the old adage, “go woke, go broke” the hard way. It saw a 70% decrease in profits following its work with Sweet Baby Inc. and Black Girl Gamers. Soon after, Square announced plans to enhance productivity and shift its focus from quantity to quality, citing a commitment to creating “unforgettable experiences.”

A screenshot from Final Fantasy XVI (2023), Square Enix

Still though, major releases like Final Fantasy XVI and Final Fantasy VII Rebirth underperformed, leaving the studio in dire straits.

“In the HD Games sub-segment, we released multiple new titles, including major titles such as FINAL FANTASY XVI and FINAL FANTASY VII REBIRTH, but profits unfortunately did not meet our expectations,” Square Enix President and Representative Director Takashi Kiryu noted back in September.

He later detailed, ” Despite the release of “FOAMSTARS” and “FINAL FANTASY VII REBIRTH” in Q4, initial sales were not as strong as expected, in addition to which an impairment was made to the content production account, resulting in the operating loss.”

A screenshot from Kingdom Hearts III (2019), Square Enix

Square has stated that going forward it will focus more on broad multi-platform releases rather than the console exclusive titles its produced of late. Though the final installment in the Final Fantasy VII Remake trilogy will still be a timed PS5 exclusive.

Do you believe this Square Enix stock drop is a direct result of its work with companies like Sweet Baby Inc. and Black Girl Gamers? Will you buy any Square Enix games in the future? Sound off and let us know!