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I've heard this a lot, people often say that Square was at their peak during the SNES, PS1 and PS2 days with some going as far as to draw a red line at the point of the Square Enix merger. I think this is often due to views about the FF series as opinion of those games through time seems to correlate strongly with opinion of Squaresoft/Square Enix at those same times. Of course sometimes, as is the case with this OP, their less popular but still well regarded titles get brought up but I can't bring myself to agree that the Square of today is significantly worse than that of the pre-PS3 era.

I enjoy too many of their modern games to say that they have fallen, although I probably would say that my absolute favourite few games were released on or before the PS2. This holds for my overall taste in games though, not just Square Enix. Their output seems to be lower, I haven't actually checked this, but I would guess that's due to projects becoming larger than ever with some requiring support long after release. I actually like that FFXV has received extra content as I would have accepted the base game as a quality finished product. I also think that when this discussion arrises it tends to ignore the acquisition of Eidos IP so I will also ignore it in this overly long thought on the matter. Eidos is probably its own little discussion on how far they've fallen or not, since the old days.

I think people tend to view Squaresoft with nostalgia goggles. The claim that they were brilliant (they were and still are in my opinion) usually stems from them releasing a few very well regarded classics over many years, stuff like Chrono Trigger or 'insert that one FF you really liked here' but in reality they were always churning out stuff that was poorly received or instantly forgotten. Even the "golden age" of FF games contains the often derided FFVIII, the lukewarm FFV and FFX, which depending on who you ask is either the last true game of the franchise or the point the series died.

Then look at Bushido Blade, some say this was good but overall nobody cares or ever did. Most Mana games are only enjoyed by very small groups of fans, really only Secret of Mana gains widespread acclaim. For every critical darling like Vagrant Story and FF Tactics there is an Ehrgeiz, an Unlimited Saga or The Bouncer. Chocobo Racing, Chocobo Mystery Dungeon and Tobal No 1 helped bulk out their PS1 days while Threads of Fate bombed hard and received average reviews. Then Brave Fencer Musashi, a middling title itself was followed on the PS2 by the commercial and critical failure of Musashi Samurai Legend. Star Ocean is nice but very few people cared about Radiata Stories or would say it is a true classic. Although a few of us enjoyed Drakengard 1 and 2, most did not and almost nobody would say those games are of the same quality as Nier Automata. FFXI may be a favourite of a small number of diehards but FFXIV has clearly surpassed it in popularity and quality in most people's opinion. Xenogears certainly has it's fans but there are also a lot of people who think the game was unfinished and a chore to get through the second disc. Square got it's grubby hands on Grandia 3 but that is largely considered to be the worst of the main trilogy.

I actually like a lot of these games and a lot of their newer stuff too, but most of Square's games are not well regarded and never have been, at best some of the less popular titles may still be seen as hidden gems by small groups of fans (like me) and that's the situation we are still in with their modern stuff where Bravely Default, I am Setsuna and The Third Birthday will be quickly forgotten except when we want to wax lyrical about all those Square Enix gems that get overlooked and how the company just puts out trash on the PS6 unlike those glorious days up until around 2020.

TLDR They are only perhaps not quite as good as they once were, but they continue to release good games that tend to get overlooked/forgotten and at no time in their history have they had a period where they released nothing but good games, many of them were bad.