The storied Japanese developer and publisher of franchises like Dragon Quest and Final Fantasy is the next to join the spree of layoffs that continue to permeate the gaming industry.
According to a report from IGN on Thursday, Square Enix is laying off large portions of its remaining Western teams, which includes publishing staff in the U.S. and the U.K. The exact number of workers being laid off is not confirmed, but up to 137 staff in the U.K. could be affected.
The goal of these layoffs are to slim down publishing operations outside of Japan, with Square Enix focusing more on its Japanese games.
This comes as Square Enix has systematically whittled down its Western gaming division over the past several years, letting Hitman developer IO Interactive go independent, and selling its remaining Western studios to Embracer Group, including Tomb Raider developer Crystal Dynamics.
Despite no longer internally developing games with U.S. or European studios, Square Enix had continued to maintain a Western publishing division, publishing games like the first PowerWash Simulator (the sequel is notably being self-published by developer FuturLab) and the narrative-focused Life is Strange franchise.
This layoff news comes at the same time as Square Enix confirming to investors in a public report that it is "streamlining" many operations, consolidating an "overly layered and segmented organizational structure" in order to deliver savings of over 3 billion Yen, or just under $20 million USD.
Square Enix is investing in generative AI for QA testing
In that same public report, Square Enix outlined that the company is planning to make generative AI a more significant part of its game development workflow.
Specifically, Square Enix plans for AI to comprise automating 70% of its quality assurance (QA) work by 2027, with the company engaging in joint research with Matsuo Iwasawa Laboratory at the University of Tokyo.
Square Enix isn't alone in turning to AI of late in order to try and improve its development pipelines, with publisher Electronic Arts also rolling out AI tools to developers.
A report from Business Insider details how Electronic Arts employees have faced problems and setbacks due to these mandates, with coding issues and other "hallucinations" that have to be fixed.
Square Enix's multiplatform strategy continues
In the same report as above, Square Enix noted that it is continuing to focus on its multiplatform strategy, delivering more games to more players simultaneously.
This is in stark contrast to how the company previously operated, releasing many games such as Final Fantasy 7 Remake as timed console exclusives on PlayStation hardware.
Earlier in 2024, Square Enix brought Final Fantasy 16 to Xbox Series X|S. Looking ahead, Final Fantasy 7 Remake is finally slated to launch on Xbox Series X|S and Nintendo Switch 2 on Jan. 22, 2026. Final Fantasy 16 and Final Fantasy 7 Remake support Xbox Play Anywhere, meaning players can buy a copy for Xbox and then play on console or Windows PC.
Square Enix is also bringing the sequel, Final Fantasy 7 Rebirth, to both platforms at some point in the future, while the company has also confirmed that the third and final entry in the remake trilogy will also be a multiplatform game.
FAQ
Why is Square Enix laying off employees?
Square Enix is consolidating some its divisions, including publishing, with layoffs in U.S. and the U.K. as it focuses more on its Japanese operations.
Why is Square Enix using AI for QA?
The company says AI can speed up repetitive testing tasks, identify bugs faster, and reduce costs — though it admits human oversight is still required.
How many employees were affected?
Square Enix has not disclosed exact numbers, but reports suggest significant cuts in QA and support roles.
Does this mean AI is replacing human testers?
Not entirely. Square Enix describes AI QA as a supplement, but the layoffs raise concerns that automation is being used to justify workforce reductions.
How has the industry reacted?
Critics argue that AI cannot replicate the nuanced judgment of human testers, especially in complex gameplay scenarios. Supporters say automation could free testers from repetitive tasks.
Is this part of a larger trend?
Yes — several publishers are exploring AI QA tools, but Square Enix’s statement makes it one of the most visible examples of automation reshaping game development jobs.
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