Square Enix hit with a brutal 100-slide presentation from one of its shareholders about alleged mismanagement, other shareholders asked to pitch in with ‘frank views’

Square Enix has had a rough couple of years—combining $140 million in losses from abandoned projects, the shine slowly fading from Final Fantasy 14 (even if it does look like things are on the up, again), and sluggish Final Fantasy sales across the board. Its newer IPs haven’t done great, either. Remember Babylon’s Fall? You’d better, ’cause it’ll only exist in your memories forever.

It’s almost enough to make me feel sad for a large company (almost—you shouldn’t do that) to see it now hit with a 100-slide presentation on its alleged mismanagement from one of its major shareholders. 3D Investment, which holds a 14.36% stake in the company, is now looking to get other shareholders onside.

As shared here by Businesswire (thanks, Automaton), 3D Investment states that Square Enix has, in the three years since replacing its president, been “facing the following management issues: (i) a sluggish revenue growth rate and (ii) sluggish profit margins … More recently, SQEX HD recorded massive impairment losses on game development assets, which lack earning power, so SQEX HD is in a very serious situation.”

This is exasperated by the fact, the shareholder argues that Square’s “medium-term business plan” is a little thin on details:

“The plan does not present a concrete future vision, and under the slogan ‘Reboots,’ it appears to be effectively leaving unaddressed the management issues … the Current Medium-Term Business Plan presents only extremely vague policies for resolving each problem (e.g., a dispersed development portfolio, poor platform selection, and deficiencies in product design), and contains no description of specific KPIs, quantitative targets, or execution plans.”

The company also states that efforts to communicate with Square Enix before the 100-slide dunk weren’t fruitful, either: “President Kiryu replied only with a brief email stating, without addressing any of the specific management issues or solutions we had raised, and without providing any concrete explanation of his reasoning, that the Current Medium-Term Business Plan was sufficient and a new review framework was not necessary.”

Hence, banging the “shareholders unite” drum. I won’t go through every single complaint in the 100-page slideshow—but it’s a lot. In fairness, it does kick off with a polite call to action: “Once again—surprise us, move us, and ignite that passion we once felt. For gamers across the globe have been waiting, endlessly, for that irreplaceable experience.”

56 slides later, 3D Investment points out that some folks on Metacritic called Forspoken’s dialogue cringe.

(Image credit: 3D Investment / Square Enix)

It should be noted here that 3D Investment is an “activist” investor. Activist investors are known—by reputation and action—to take a vested interest in how a company is run, usually trying to lift underperforming companies up out of the dirt and get them on the up-and-up. It first started buying shares in Square Enix in April.

Point being, this isn’t a sign that an investor has reached its breaking point as much as it’s an activist investor doing what activist investors do—sticking a finger in the pie. 3D Investment concludes its statement with the following call to fellow shareholders:

“We kindly ask all shareholders of SQEX HD to read the Presentation and share with us your frank views on SQEX HD’s strategy, capital allocation, business portfolio, governance, growth opportunities, and other related matters. We would be grateful to receive views from as many shareholders as possible to convey your views to the Board of Directors of SQEX HD to help resolve its management issues.”

Time will tell if enough pressure is placed on President Kiryu’s head. Maybe sweeping through QA testers and replacing them with AI will help the bottom line, just, uh—don’t pay attention to the fact we might be in a bubble with that stuff. It’s probably fine.

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