Square Enix Reorganization Removes Naoki Yoshida From Board Of Directors

Over the last 24 hours news reports came out about how Naoki Yoshida, the head of Creative Studio 3 and Producer and Director of Final Fantasy XIV, no longer sits on the company's board of directors. The news actually was posted by Square Enix on 27 February but took a few days to receive widespread notice. Since I'm not breaking the news I get to take my time and dive into two aspects of the news of interest.

The first question is: did Yoshida receive a demotion? One might think so on leadership's reaction to the financial performance of Final Fantasy XVI in September of last year.

In a May 2024 financial report made public today (via Eurogamer), Square Enix president Takashi Kiryu said that Final Fantasy 7 Rebirth and Final Fantasy 16 haven't sold as many copies as the company had hoped. "We released multiple new titles, including major titles such as 'Final Fantasy 16' and 'Final Fantasy 7 Rebirth,' but profits unfortunately did not meet our expectations," Kiryu said.

The financial results were originally shared on May 13, 2024, months before yesterday's PC release of Final Fantasy 16—which, it's safe to assume, will give that particular sales metric a bump. A PC release for Final Fantasy 7 Rebirth, meanwhile, still hasn't been officially confirmed. Kiryu also noted that MMO profits were down, but attributed that to "a lull in releases ahead of the launch of the 'Final Fantasy 14: Dawntrail' expansion pack," which was released the following month in June.

One might think a game company executive might fall out of favor after their company's market value falls 30%, or $2 billion, in the three months after a high-profile game launches.

In addition to Final Fantasy XVI, the latest expansion for Final Fantasy XIV, Dawntrail, was not well-received. According to Metacritic, Dawntrail's critics score of 79 and user score of 5.2 only surpassed the scores of the original Final Fantasy XIV which Yoshida personally blew up to begin the game again with A Realm Reborn.

And yet, Yoshida reportedly asked Square Enix to remove him from the board of directors back in 2023. 

Yoshida revealed to Dutch publication NRC that he has even tried to step down from the board, but Square won’t let him. “I recently tried to quit that work, but the company didn’t agree with it. I don’t want to be on the board, it’s much more fun to just make games,” Yoshida told NRC. Clearly, Square wants to utilize the director’s expertise in as many areas as possible.

Yoshida goes on to say he doesn’t understand why fellow developers want to be on the studio’s board. “They probably just want to make a ton of money, but you can also just do that as a game developer.” Yoshida wears a lot of hats at Square, and it seems he’d be happy with the money he makes from his current roles without the added pressure of being on the board.

Perhaps a look at the 27 February press release is in order. The press released explained the internal reorganization.

In the midst of dramatic changes to both the entertainment business and the Company’s business environment, the Company has decided to introduce a new management structure in accordance to the Square Enix Group's medium-term business plan it devised for fiscal year 2024. This comes as part of the Company’s efforts to establish a framework for the continued execution of various initiatives currently underway. Consequently, from fiscal year 2025, the Company will review its executive structure and form a new Executive Management Committee. The aim of establishing this committee is to expedite the decision-making process and execution of matters related to business transformation and organizational management. 

The Square Enix board of directors is being reduced in size from 8 seats down to four. The four proposed members shareholders will vote on in April are:

• President and Representative Director: Takashi Kiryu 
• Executive Officer, Creative Studio 1 and Creative Studio 2: Yoshinori Kitase
• Executive Officer, Sales & Distribution Center and Customer Experience Design Center: Yu Miyake
• Audit & Supervisory Board Member: Nobuyuki Iwamoto 

The four board members departing are:

• Executive Officer, Publication Business Unit: Katsuyoshi Matsuura
• Executive Officer, General Affairs Division and Human Resources Division: Tsuneto Okuno
• Executive Officer, Creative Studio 4 and Creative Studio 5: Yosuke Saito
• Executive Officer, Creative Studio 3: Naoki Yoshida

However, the four former board members will sit on a new organization, the Executive Management Committee.

The Executive Management Committee will be composed of the President and Representative Director (Chair) along with six other members responsible for operations in such areas as digital entertainment (game development and publishing), publication, and corporate affairs. This committee will be positioned as SQUARE ENIX management’s leadership team, striving to further enhance corporate value and the overall growth of the Square Enix Group. The committee members will drive the formulation and execution of various measures to achieve the Square Enix Group’s medium-term business plan, which will be accomplished through collaboration across internal organizations. 

The Executive Management Committee will consist of:

• Takashi Kiryu - President of Square Enix
• Yosuke Saito - Head of Creative Studios 4 & 5
• Hajime Seki - Chief Legal Officer
• Toshiyuki Hirasawa - Proposed as an executive officer in April 2025
• Katsuyoshi Matsuura - Head of the Publication Business Unit
• Yu Miyake - Head of the Sales & Distribution Center and Customer Experience Design Center
• Naoki Yoshida - Head of Creative Studio 3

Now, just looking at the list something doesn't look right. I would expect the heads of Creative Studios 1 & 2 to also sit on the new committee. Is it possible Hirasawa will take over Creative Studios 1 & 2 with Kitase receiving a promotion? Or maybe Kitase will only work on the mainline Final Fantasy games like Yoshida does the MMORPGs? Don't mind me, that is just my personal speculation.

According to Jack Coleman writing for TheGamer, the Executive Managment Committee will "drive the formulation and execution of various measures to achieve Square Enix Group's medium-term business plan." Those are fine buzzwords. Coleman went on to explain:

The "medium-term business plan" is a new direction for Square, which prioritises "quality over quantity", "bold new IP" and an "aggressive shift" towards releasing its games on several platforms. Square had previously been prioritising new releases on PlayStation 5, a long-time practice for the company. However, Square recently reported that several of its recent triple-A releases have failed to meet sales forecasts, and the decision-makers likely feel that releasing their games on more platforms will boost sales numbers. It's something that Xbox is also experimenting with - porting exclusives to PlayStation 5 and Nintendo Switch.

The new committee is intended to speed up the company's decision-making, enabling the success of its medium-term plan. It seems that Square isn't willing to lose Yoshida's management expertise, even if the board allows him to step down from his executive position. Yoshida's expertise has been instrumental in many facets of the Final Fantasy series, with him acting as a producer for Final Fantasy 16 despite his ongoing work with Final Fantasy 14.

So any declaration of the demise of Naoki Yoshida's tenure at Square Enix is probably premature. One thing I am looking forward to is how will Final Fantasy XIV's next expansion play out with some of the duties removed from Yoshida's shoulders. Maybe he can even get some sleep.