Japanese video game publisher Square Enix has announced today that its President and CEO Yoichi Wada will be stepping down. Yousuke Matsuda, the company’s Representative Director, will be taking the helm moving forward.

Wada has led Square Enix since 2000 and there is no word yet on whether he will move into a new role within the company.

It follows a revision to its consolidated results forecast for this fiscal year, which was described as an “extraordinary loss” in a report published yesterday.

Expected net sales were reduced from 150,000 million to 145,000 million, with net income falling from 3.5 billion yen ($37m USD) to a loss of 13 billion yen ($138m USD).

Square Enix has attributed the poor performance to “slow sales of major console game titles in North American and European markets”, perhaps pointing to some relatively lacklustre sales figures for Sleeping Dogs, Final Fantasy XIII-2 and Hitman: Absolution.

The publisher also said that it was experiencing “sluggish” revenues from its arcade machine business, which has long been a reliable money-maker in Japan.

Square Enix is therefore in a bit of a bind. The company has decided to introduce some major reforms and restructuring for its business models, development cycle and organisational hierarchy. As a result of these changes, Square Enix will lose roughly 10 billion yen.

Japanese video game development is in a difficult place right now. Critics have argued that developers have failed to shift with the times, producing multiple iterations of well-loved franchises that fail to innovate or recognize developments in the West.

There are exceptions to this rule – Demon’s Souls and Dark Souls have been a cult hit and the Monster Hunter franchise is starting to take a hold – but the Final Fantasy franchise has been a major casualty.

Square Enix’s beloved series is arguably on a downward spiral, selling less copies on the current generation of hardware due to an incredibly linear structure in Final Fantasy XIII and almost nonsensical narrative in its direct sequel, Final Fantasy XIII-2.

The publisher has also struggled to ship games in a timely fashion. Final Fantasy Versus XIII, directed by Tetsuya Nomura, was originally unveiled in May 2006, but the team is yet to deliver a demo. Final Fantasy Type-0, a PlayStation Portable title, was released in Japan in October 2011, but still hasn’t seen an international launch.

There are a few notable titles that could change Square Enix’s fate; a relaunch of its failed MMO, Final Fantasy 14: A Realm Reborn is on the horizon, and Lightning Returns: Final Fantasy 13 is in development.

It’s fair to say though that Matsuda has his work cut out for him.

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