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Square Enix Confirms Layoffs, Restructuring in N. American, European Publishing Operations

In a presentation on Thursday on its earnings for the six-month period ending on September 30, 2025, Square Enix disclosed to investors that the company will be laying off employees in its North American and European publishing operations as part of restructuring of its overseas organizations.

The restructuring will involve closing overseas development studios and shifting toward consolidating development functions in Japan. The company plans to "optimize resource allocation for maximizing the value generated by IPs." It plans to do so by consolidating the HD Games publishing organization from 11 divisions to four divisions.

The company is expecting a restructuring expense of 11.8 billion yen (about US$76.8 million) in the fiscal year ending March 2026. As a result of the restructuring, Square Enix expects cost savings of over 3 billion yen (about US$19.5 million) annually. The presentation states that Square Enix is undertaking the restructuring initiatives with the aim of "further strengthening global publishing capabilities and improving operational efficiency."

IGN reported on Friday that Square Enix will dismiss an unknown number of employees in the United States by the end of the week, and that about 137 jobs are at risk in the United Kingdom. It notes that the number could be smaller as Square Enix is required under U.K. law to undergo redundancy consultations.

Square Enix had sold Crystal Dynamics, Eidos-Montreal, Square Enix Montreal, and several associated IPs to Embracer Group in May 2022.

Square Enix announced in the same presentation on Thursday it is implementing initiatives to improve productivity by utilizing AI (artificial intelligence). The company stated that it is "initiating joint research with the Matsuo Laboratory at the University of Tokyo, aimed at improving the efficiency of game development processes through AI technologies." A joint research team comprising of Square Enix engineers and researchers from the Matsuo-Iwasawa Laboratory are undertaking the project, the goal of which is to automate 70% of QA and debugging tasks in game development by the end of 2027. The company also held a business idea contest centering on the use of AI and is developing projects based on several selected ideas.

Square Enix was amongst 18 Japanese manga and anime companies that published a joint statement last week criticizing the use of OpenAI's Sora2 AI video-audio generation system. Along with the Content Overseas Distribution Association (CODA) and its member companies, they have determined that Sora2 is producing content resembling works and images that were originally created by the companies.

Square Enix reported net sales of 133.8 billion yen (about US$871 million) for the first half of the fiscal year 2026, a 15% decline compared to the same time period last year. The company also reported operating income of 27.2 billion yen (about US$177 million), a 29% increase from last year.

Square Enix was founded in September 1975 as Enix. Square was founded in 1983. A merger between Enix and Square was finalized in November 2002 after Sony acquired 18.6% of Square in 2001.

Sources: Square Enix's website, Variety (Todd Spangler), IGN (Rebekah Valentine)