Square Enix have three key strategic pillars for business that they say have existed since the merger of Square and Enix: globalization, becoming network-centric, and strengthening their internal properties.
Globalization and becoming network-centric go hand-in-hand. Wada believes that in the present industry conditions, software developers will face “structural difficulties” in being profitable. Executing a successful network strategy will be the key to profitability, he stated in an investor message.
Reaching a Wider Audience
As consumers demand more and more price reductions that are in excess of what physical software companies can offer, network operators are able to profit by offering them just that — digital software at a lower price. While it may seem like the falling prices of network-based content will adversely affect the industry, this issue is offset by the opportunity to cater to a wider audience, Wada says.
He also points out that Square have already had some success in their shift to digital. Chaos Rings, Final Fantasy and Space Invaders Infinity Gene each reached the #1 sales ranking on the iTunes App Store. In light of this, Square Enix believe that being network-centric could widen the scope of their business, perhaps even allowing them to become a digital platform holder (think Valve).
Becoming a Community Platform Operator
But Wada aims to go further. “Through the use of a common infrastructure, it is possible for us to become a network operator or even a platform holder. We plan to transform ourselves into a ‘community platform operator’,” Wada said to his investors.
Square believe this endeavour will allow them to gather community data to study shifts in customer perceptions of value. Being able to gather both user and community data is important as Wada feels “segmentation by individual customer preference” is one of the industry’s most vital challenges. He mentions transaction-based MMORPGs as an example of a business model that makes use of such data.
“By this, I mean that we are shifting from a creator of game data to a manager of individual and community data,” Wada concluded.