Square Enix Announces
Layoffs and Major AI Push

October 12,2025
In a move signaling a significant strategic shift, Japanese video game giant Square Enix recently announced a “fundamental restructuring” that includes widespread layoffs across its North American and European publishing divisions. This restructuring aims to consolidate development functions in Japan and streamline global operations.
The company confirmed the cuts following a presentation to investors, noting the reorganization is designed to “strengthen global publishing capabilities and improving operational efficiency”.
While the exact number of employees affected in the North American division remains undisclosed, reports indicate that 137 jobs are currently at risk in the UK. As part of this centralization effort, Square Enix is planning to close several overseas development studios and will shift toward consolidating its development capabilities back in Japan. The company also plans to reduce its HD Games publishing organization from 11 divisions down to just four.
For Square Enix, this shift is expected to save a significant amount of cash, anticipating annual cost savings of over 3 billion yen (roughly $19.6 million).
The AI Future: Automating QA
The restructuring announcement came alongside a major technological pivot: a serious investment in Artificial Intelligence (AI) to boost productivity. Square Enix detailed plans to use generative AI technology to automate a huge portion of its development workload, setting an aggressive goal to automate 70% of QA and debugging tasks by the end of 2027.
To achieve this, the company is collaborating with the Matsuo Laboratory at the University of Tokyo, focusing on joint research aimed at improving game development process efficiency through AI technologies. This move is part of a larger effort to “optimize resource allocation” and “improve developer efficiency”.
Looking Ahead
Square Enix acknowledged that the layoffs were an “extremely difficult decision,” made to best position the company for long-term growth. They stated they are committed to treating departing staff “with the utmost respect” and providing support during the transition.
This restructuring confirms that the West will primarily be viewed as a distribution channel rather than a major development priority moving forward. For instance, core Western-managed IPs like Life Is Strange and Just Cause will now fall under a globally integrated structure.
Despite the internal changes, Square Enix is still moving forward with releases, including the planned re-release of Final Fantasy VII Remake Intergrade on January 22 for the Nintendo Switch 2 and Xbox Series X|S.
This whole situation feels a bit like watching a classic RPG party reorganize their inventory mid-dungeon. Square Enix is dropping weight (Western studios) and trying to level up a new skill (AI automation) in hopes of a much more efficient endgame.

