Square Enix's Future: A Major Shareholder's Perspective (2026)

Bold claim: Square Enix may be veering away from truly transformative innovation, and a major investor asks for a fundamental rethink of the company’s medium-term plans. This isn’t just a tweak; it questions whether the publisher’s current path will restore its once-storied growth and profitability.

A prominent shareholder, 3D Investment Partners, has released a comprehensive 100-page critique of Square Enix, criticizing the company’s sales trajectory and urging a fundamental reassessment of its mid-range management strategy. As the third-largest holder, owning roughly 14.36 percent, the Singapore-based firm began building its stake in April and has since gone public with its concerns after a reportedly unsatisfactory response from Square Enix CEO Takashi Kiryu to earlier analysis.

The document elevates Square Enix’s standing as a premier Japanese game developer, highlighting beloved franchises like Final Fantasy and Dragon Quest. Yet it portrays a troubling decline in earning power and argues that the current plan does not sufficiently rejuvenate the business. The plan in question was unveiled last year, when Square Enix announced an aggressive push toward a multiplatform strategy intended to diversify earnings. This shift followed a broader review of development processes and the decision to discontinue about £112 million worth of in-development projects in pursuit of higher quality.

3D Investment Partners attributes several reasons for waning profitability: narrowed profit margins, lower game sales, heavy development costs, and factors such as exclusive platform deals, suboptimal advertising ROI, weak performance of legacy titles, and a revenue mix that appears misaligned with growth opportunities. The critique also contrasts Square Enix with key Japanese rivals like Capcom and Konami, suggesting Square Enix relies too heavily on the domestic market and struggles to expand internationally.

There are, however, signs of movement. This year’s releases included Final Fantasy 16 reaching Xbox after a period of PlayStation exclusivity, and the Final Fantasy 7 Remake trilogy is planned for Xbox and Switch 2 in the future. Yet 3D Investment Partners remains an activist voice pushing for more concrete change, with the aim of reshaping leadership dynamics and strategy. While the document questions data sources and praises some titles (notably Dragon Quest 3 HD-2D Remake and Final Fantasy 16’s popularity), it emphasizes perceived gaps in Square Enix’s guidance and long-range vision.

Beyond games, the critique also scrutinizes Square Enix’s cross-media ambitions in films, anime, and merchandise, arguing that synergies with non-gaming businesses are underdeveloped. The arcade and publishing divisions (including manga) are also described as underperforming relative to expectations.

This critique lands at a delicate moment. Square Enix acknowledged last year that Final Fantasy 16 and Final Fantasy 7 Rebirth did not fully meet sales expectations, and its May earnings report showed a decline in single-player title sales despite an overall profit uptick driven by Dragon Quest 3 HD-2D Remake. More recently, the company signaled a pivot toward using generative AI to handle a large portion of QA by 2027, a move paired with substantial staffing reductions overseas and in the UK. These developments complicate the narrative around the company’s ability to sustain growth while managing costs.

Questions worth considering include: Can Square Enix translate its strong IP library into sustained, diversified revenue without overreliance on a shrinking domestic market? Will the management’s strategic revisions deliver the ambitious multiplatform rollout and cross-media synergies necessary to rekindle growth, or is a leadership shift required to unlock the next phase? And as AI-driven QA and restructuring reshape development pipelines, how will this affect game quality, employee morale, and long-term profitability?

If this debate interests you, join the discussion below: Do you think Square Enix has a viable path to meaningful, broad-based growth, or is the company destined to remain tethered to its traditional strengths without delivering a new era of innovation?