The head of the Japanese games group behind the hit Final Fantasy series has warned that Covid-19 has caused “time to stand still” on production of new titles, threatening to undermine an industry boost from global lockdowns.

Yosuke Matsuda, chief executive of Square Enix, told the Financial Times in an interview that while the $145bn sector had benefited from people spending more time at home due to coronavirus lockdowns, social distancing restrictions had hit development pipelines for new games.

“There is also a considerable impact on the production side. It will resonate in the future. What we are selling now may have provided some positive aspects, but on the negative side time has stood still in terms of production. We couldn’t develop anything. That is where the impact will come,” said Mr Matsuda, whose company has annual revenues of $2.5bn.

The blunt assessment from one of the Japanese gaming sector’s most senior executives differs to the rosier picture so far painted by other leading industry figures. It suggests that the current game release schedules focused around the hyped November launches of Sony and Microsoft’s next-generation consoles may be in jeopardy. 

Mr Matsuda’s comments come as shares in Square Enix — which is also responsible for the popular Dragon Quest franchise — have risen 68 per cent from a mid-March low hit during the worst of the coronavirus market turmoil. 

Much is riding on the launch of Sony’s PlayStation 5, which represents a reprise of the “console wars” fought with Microsoft in recent years © via Reuters

Brokerages including Mizuho, Daiwa and SMBC Nikko have raised their target price on the stock after an increase in digital sales of games — such as Final Fantasy VII Remake — resulted in more than a three-fold increase in first-quarter operating profits. 

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Development of the type of blockbuster games in which Square Enix specialises has much in common with film production, requiring motion capture and voice actors to interact closely in studios. Artists and programmers must also work on sophisticated machines that cannot easily be taken home.

Executives at big gaming companies have yet to acknowledge any tangible postponements to production schedules. But Hiroki Totoki, Sony’s chief financial officer, has said the Japanese group is watching closely for potential delays, noting that productivity could fall with games developers working under “various constraints”. 

Square Enix said on Friday that the launch of its Marvel’s Avengers game for the new PlayStation 5 and Xbox Series X would now be pushed back to an unspecified date next year.

Much is riding on the launch of the two platforms, which represents a reprise of the “console wars” fought between the pair in the past and has generated a scramble to secure the best exclusive content.

Analytics firm NewZoo forecast in May that revenues for the global games industry, which includes the vast contribution of smartphone-based titles, would rise over 9 per cent this year to $159bn driven by Covid-19 lockdowns and the new console launches.

Mr Matsuda, however, said the pandemic has cast uncertainty over the outlook for the important Christmas season, with gamers more likely to buy new consoles online as queueing at physical shops becomes more difficult.

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“Customers are less and less likely to go to the store and will buy online. I still don’t know how much it will affect us,” Mr Matsuda said.

Via Financial Times