'Final Fantasy' Maker Square Enix Confirms Layoffs as AI Takes Over Game Development

In brief

Video game publisher Square Enix confirmed layoffs in the U.S. and Europe this week.
The Final Fantasy maker said it aims to have generative AI handle 70% of QA and debugging work by the end of 2027.
Generative AI use is growing across the video game industry amid widespread layoffs.

Square Enix, the gaming giant behind the Final Fantasy and Dragon Quest franchises, confirmed layoffs on Thursday across its United States and European divisions—the same day the company said it’s ramping up generative AI use to streamline game development.

“We are reorganizing our operations in North America and Europe to strengthen our development structure and to drive a globally integrated marketing strategy,” a spokesperson told IGN. “This was an extremely difficult decision, made following careful consideration and analysis by our leadership, in order to best position the group’s long-term growth.”

In a presentation shared Thursday, the game publisher said that it was shifting more development back to Japan, where Square Enix was founded. The company has been gradually trimming down following a period of global expansion, and in 2022, it sold off three studios and a bunch of franchises—including Tomb Raider—to help fuel AI and blockchain gaming development.

Square Enix did not confirm how many people were affected by the layoffs, but a source told IGN that 137 jobs were “at risk” at its London office alone, with other cuts expected in the U.S. as well.

In the presentation, Square Enix said that it aims to use generative AI tools to “automate 70% of QA and debugging tasks in game development by the end of 2027.” The plan emerged from a joint initiative with the Matsuo Laboratory at the University of Tokyo to develop generative AI technologies for game creation.

In recent years, Square Enix has embraced bleeding-edge tech, experimenting with NFTs and even introducing an NFT-powered Ethereum game called Symbiogenesis, which shut down following its final story chapter this summer.

At the start of 2024, Square Enix President Takashi Kiryu said the firm would be “aggressive” in its use of generative AI to reshape the game development process, citing potential productivity boosts. The company had previously debuted an AI-powered game demo, and even used Midjourney to generate some art for its 2024 game, Foamstars.

Square Enix isn’t the only major gaming firm to bet big on AI, with the likes of Ubisoft, Electronic Arts, and Krafton also making significant moves in that department. But they’ve come during a time of turmoil for the games industry, with layoffs rocking studios large and small over the last couple years.

Decrypt reached out to Square Enix for comment.