Bold claims mark the starting line: Square Enix’s management is under fire, and major shareholders are urged to speak openly. A 100-page presentation from 3D Investment Partners—on behalf of a significant Square Enix stakeholder—lays out a detailed case against the current leadership and invites other shareholders to share their candid views.
What’s inside the package? The slides scrutinize the company’s performance and governance, arguing that growth has stalled under president Takashi Kiryu. They point to negative revenue growth from FY2022/3 to FY2025/3 (-4%), noting that SQEX HD is the only company in its sector with such decline. They also highlight an operating profit margin of about 13% in FY2025/3, roughly half the 28% average among six peer firms.
A core concern centers on the HD/SD game segment, which the investor believes is dragging overall results. The firm reports a 32% drop in operating income, from ¥59,261 million (roughly $378 million) in FY2021/3 to ¥40,580 million (about $259 million) in the latest figures. Return on equity has fallen to 7%—down 12 percentage points from 19% in FY2021/3. Over the past decade, impairment losses at SQEX HD have been unusually large, totaling ¥32,028 million, with a notable ¥22,087 million impairment in FY2024/3 right after the new management structure took over.
Beyond earnings, the investor argues that Square Enix’s market value is undermined by holding non-game businesses that lack strong synergy with its core gaming operations, contributing to a perceived conglomerate discount. They express doubt that the medium-term plan for FY2025/3–FY2027/3 will address these fundamental issues.
The push for accountability hasn’t been quiet. Since July 2024, 3D Investment Partners has sought direct answers from Kiryu; responses have been limited to a brief email stating that the current plan is sufficient and that no new review framework is necessary, without addressing specific concerns.
In light of these concerns, the firm has shared the presentation with other Square Enix shareholders to solicit feedback on strategy, capital allocation, portfolio composition, governance, growth opportunities, and related topics. It’s a notable moment of investor activism just as Square Enix reportedly moves toward AI-assisted QA, rounding out a broader debate about modernizing the business while safeguarding value for shareholders.
Questions worth pondering: Do the non-game assets really weigh down the company’s value, or could they unlock new strategic advantages if better integrated? Is the current leadership capable of delivering meaningful, tangible improvements in a reasonable timeframe, or is a broader strategic shift unavoidable? How should Square Enix balance short-term profitability with longer-term investments in new platforms, IP, and markets? Share your thoughts in the comments on where you stand, and what you’d like to see next from Square Enix’s board and management.
