Square Enix Massive Layoffs Amid Japanese Consolidation

Square Enix, a prominent player in the gaming industry, is witnessing significant layoffs today, potentially affecting more than 100 individuals. This massive shift is part of a broader strategy by the company towards consolidating its publishing arm and intensifying its development efforts on home turf, Japan. The downsizing news has been mutually confirmed by public posts from exited employees and internal sources. The impact of this move is not regionally confined, with notifications of the layoffs being served to employees in both the UK and US.nnBy the end of the week, a yet-to-be-ascertained number of US employees will lose their jobs, whereas the potential risk in the UK is estimated to be around 137 jobs. As per the UK regulations, Square Enix is subject to redundancy consultation to explore options to salvage jobs, suggesting that the final layoff numbers in the UK could be less than anticipated. However, the specifics of the impacted teams remain a mystery.nnOn the internal front, employees were privy to a slide presentation offering an update on the company’s ‘restructuring of overseas organizations’. Square Enix confirmed the strategy incorporated the closure of foreign development studios and a more centered focus on development function in Japan.nnThe repercussions of this approach were felt with the sale of Crystal Dynamics, Eidos-Montreal, Square Enix Montreal, among other entities alongside associated IPs to Embracer Group. The company had also streamlined its Western operations with previous layoffs during 2024. Currently, the Life Is Strange, Outriders, and Just Cause franchises are managed by Western-studios of Square Enix, and they are also involved in the publication of Powerwash Simulator.nnIn the same internal presentation, it was revealed that the gaming giant plans to outsource around 70% of its Quality Assurance work to AI (Artificial Intelligence) by the end of 2027. Square Enix has been historically vocal about its intent to aggressively incorporate AI in both development and publishing arms. Reported queries about the recent development are yet to receive a response from Square Enix.