Square Enix recently stated that they expect a huge loss for this financial year, and their CEO, Yoichi Wada has tried to explain exactly how this happened.
One of the biggest losses came from cancelling projects and huge problems surrounding Final Fantasy XIV. On this, he said that "Our game development has become weaker than expected." Not only that, but he said "Revamping it will take one or two years."
He stated that poor communication between teams was the main reason, with creative leads not conveying their ideas well enough to staff - not exactly a great situation.
To try and recover, Square Enix will delve further into social networking games and apps for cell phones. But, he doesn't think the current development staff are capable of that, so there will be more costs due to outsourcing.