Square Enix

Square

Square was founded in Yokohama in September 1983 by Masashi Miyamoto after he graduated from Waseda, one of Japan's top universities. At that time, Square was a computer game software division of Den-Yu-Sha, a power line construction company owned by Miyamoto's father. While at the time game development was usually conducted by only one programmer, Miyamoto believed that it would be more efficient to have graphic designers, programmers and professional story writers working together on common projects. In September 1986, Square spun off from Den-Yu-Sha and became an independent company officially named Square Co., Ltd. After releasing several unsuccessful games for the Famicom, Square relocated to Ueno, Tokyo in 1987 and developed a role-playing video game titled Final Fantasy, which was inspired by Enix's success in the genre with Dragon Quest (released in North America as Dragon Warrior until 2005). With 400,000 copies sold, Final Fantasy spawned multiple sequels over the years and became Square's main franchise.

Buoyed by the success of their Final Fantasy franchise, Square developed many other widely known games such as Chrono Trigger, Chrono Cross, Secret of Mana, Legend of Mana, Xenogears, Brave Fencer Musashi, Parasite Eve, Parasite Eve 2, Saga Frontier, Romancing Saga, Vagrant Story, Kingdom Hearts (done in collaboration with Disney Interactive), and Super Mario RPG (done under the guidance of Shigeru Miyamoto). By late 1994 they had developed a reputation as a producer of high quality role-playing video games (RPGs). Square was one of the many companies that had planned to develop and publish their games for the Nintendo 64, but with the cheaper costs associated with developing games on CD-based consoles such as the Sega Saturn and the Sony PlayStation, Square decided to develop titles for the latter system. Final Fantasy VII was one of these games, and it sold 9.8 million copies, making it the second-best-selling game for the PlayStation.

Enix

Enix was founded on September 22, 1975 as Eidansha Boshu Service Center by Japanese architect-turned-entrepreneur Yasuhiro Fukushima. Enix focused on publishing games, often by companies who exclusively partnered with the company, and is perhaps most famous for publishing the Dragon Quest series of console games developed by Chunsoft. Key members of the developer's staff consisted of director Koichi Nakamura, writer Yuuji Horii, artist Akira Toriyama, and composer Koichi Sugiyama, among others. The first game in the Famicom-based RPG series was released in 1986, and would eventually sell 1.5 million copies in Japan, establishing Dragon Quest as the company's most profitable franchise. Despite the announcement that Enix's long-time competitor Square would develop exclusively for Sony PlayStation, Enix announced in January 1997 that it would release games for both Nintendo and Sony consoles. This caused a significant rise in stock for both Enix and Sony. By November 1999, Enix was listed in the Tokyo Stock Exchange's 1st section, indicating it as a "large company".

Merger

A merger between Square and Enix was in consideration since at least 2000; however, the financial failure in 2001 of Square's first movie, Final Fantasy: The Spirits Within, made Enix reluctant to proceed while Square was losing money. With the company facing its second year of financial losses, Square approached Sony for a capital injection and on October 8, 2001, Sony Corp purchased 18.6% stake in Square. Following the success of both Final Fantasy X and Kingdom Hearts, the company's finances stabilized, and it recorded the highest operating margin in its history in fiscal year 2002. It was announced on November 25, 2002 that Square and Enix's previous plans to merge were to officially proceed, with the goal to mutually decrease development costs and to compete with foreign developers. As described by Yoichi Wada, Square's president and CEO: "Square has also fully recovered, meaning this merger is occurring at a time when both companies are at their height."

Some shareholders expressed concerns about the merger, notably Square's original founder and largest shareholder, Masashi Miyamoto, who would find himself holding a significantly smaller percentage of the combined companies. Other criticism came from Takashi Oya of Deutsche Securities who expressed doubts about the benefits of such a merger: "Enix outsources game development and has few in-house creators, while Square does everything by itself. The combination of the two provides no negative factors but would bring little in the way of operational synergies." Miyamoto's concerns were eventually resolved by altering the exchange ratio of the merger so that each Square share would be exchanged for 0.85 Enix shares rather than 0.81 shares, and the merger was greenlit. The merger was set for April 1, 2003, on which date the newly merged entity Square Enix came into being. At the time of the merger, 80% of Square Enix staff were made up of former Square employees. As part of the merger, former Square president Yoichi Wada was appointed president of the new corporation, while former Enix president Keiji Honda became its vice president. The founder of Enix and the largest shareholder of the newly combined corporation, Yasuhiro Fukushima, was made its honorary chairman. In July of that year, the Square Enix headquarters were moved to Yoyogi, Shibuya, Tokyo, as part of the process of combining the two companies.

Acquisitions and subsidiaries

Since its foundation, Square Enix has acquired a number of companies, as well as creating several subsidiary companies. To strengthen its wireless market, Square Enix acquired mobile application developer UIEvolution in March 2004, though it was sold in December 2007, and the company instead founded its own Square Enix MobileStudio in January 2008 to focus on mobile products. In January 2005 Square Enix founded Square Enix China, expanding their interests in the People's Republic of China. In September of that year Square Enix bought the gaming developer and publisher Taito, renowned for their arcade hits such as Space Invaders and the Bubble Bobble series; Taito's home and portable console games divisions were merged into Square Enix itself by March 2010. In August 2008, Square Enix made plans for a similar expansion by way of a friendly takeover of video game developer Tecmo by purchasing shares at a 30 percent premium, but Tecmo rejected the proposed takeover. Instead, in February 2009, Square Enix announced a takeover deal for Eidos plc, the holding company for Eidos Interactive, the UK-based publisher of the Tomb Raider, Hitman, Deus Ex, Thief and Legacy of Kain franchises, along with its multiple subsidiary development studios which developed the games. The acquisition of Eidos was completed in April 2009, and in November the publisher was merged with Square Enix's European publishing organization to form Square Enix Europe. In March 2011 Square Enix founded another mobile development studio, Hippos Lab, followed by another in 2012, Square Enix Montréal. A third mobile studio was founded in Indonesia in June 2013, Smileworks, but was closed in January 2015. The latest subsidiary company to be created was Shinra Technologies, a cloud gaming company, but it was only in existence from September 2014 to January 2016. In 2015, Square created a new studio known as Tokyo RPG Factory to develop what was then dubbed Project Setsuna. On February 21, 2017, the formation of new studio Studio Istolia was announced. The studio, headed by Hideo Baba, would be working on the new RPG Project Prelude Rune.

Corporate structure

On October 1, 2008, Square Enix transformed into a holding company and was renamed to Square Enix Holdings. At the same time the gaming, contents and publishing businesses were transferred to a spin-off named Square Enix, sharing the same corporate leadership and offices with the holding. The primary offices for Square Enix and Square Enix Holdings are in the Shinjuku Eastside Square Building in Shinjuku, Tokyo.

Development organization

After the merger in 2003, Square Enix's development department was organized into eight Square and two Enix Product Development Divisions (開発事業部, kaihatsu jigyōbu), each focused on different groupings of games. The divisions were spread around different offices; for example, Product Development Division 5 had offices both in Osaka and Tokyo.

According to Yoichi Wada, the development department was reorganized away from the Product Development Division System by March 2007 into a project-based system. Until 2013, the teams in charge of the Final Fantasy and Kingdom Hearts series were still collectively referred to as the 1st Production Department (第1制作部, dai-ichi seisakubu). The 1st Production Department was formed from the fall 2010 combination of Square Enix's Tokyo and Osaka development studios, with Shinji Hashimoto as its corporate executive.

During December 2013, Square Enix's development was restructured into 12 Business Divisions. The former Twitter account of the 1st Production Department is now used to distribute information on the games developed by Business Divisions 1 to 4. Yoshinori Kitase is the Head of Business Division 1, Hajime Tabata is the Head of Business Division 2, Shinji Hashimoto is the Head of Business Division 3, Ichiro Hazama is the Head of Business Division 4, Naoki Yoshida is the Head of Business Division 5, Kei Hirono is the Head of Business Division 8, Tomohiro Hasegawa is the Head of Business Division 9, Yuki Watanabe is the Head of Business Division 10, Yamanaka Yuzuruji is the Head of Business Division 11 and Mizumachi Minoru Tadashi is the Head of Business Division 12.

Business model

The business model of Square Enix is centered on the idea of "polymorphic content", which consists of developing franchises on multiple potential hardware or media rather than being restricted by a single gaming platform. An early example of this strategy is Enix's Fullmetal Alchemist manga series, which has been adapted into two anime TV series, two movies, and several novels and video games. Other polymorphic projects include Compilation of Final Fantasy VII, Code Age, World of Mana, Ivalice Alliance and as of 2016 the ongoing Fabula Nova Crystallis Final Fantasy series. According to Yoichi Wada, "It's very difficult to hit the jackpot, as it were. Once we've hit it, we have to get all the juice possible out of it". Similar to Sony's Greatest Hits program, Square Enix also re-releases their best selling games at a reduced price under a label designated "Ultimate Hits".

The standard game design model Square Enix employs is to establish the plot, characters and art of the game first. Battle systems, field maps and cutscenes are created next. According to Taku Murata, this process became the company's model for development after the success of Square's Final Fantasy VII in 1997. The team size for Final Fantasy XIII peaked at 180 artists, 30 programmers, and 36 game designers, but analysis and restructuring were done to outsource large-scale development in the future.

Video games

Square Enix's main concentration is on video gaming, and it is primarily known for its role-playing video game franchises. Of its properties, the Final Fantasy franchise, begun in 1987, is the best-selling, with a total worldwide sales of over 110 million units as of June 2014. The Dragon Quest franchise, begun in 1986, is also high-selling; it is considered one of the most popular game series in Japan and new installments regularly outsell other games at the times of their release, with a total worldwide sales of over 64 million units as of June 2014. More recently, the Kingdom Hearts series (developed in collaboration with Disney's Buena Vista Games beginning in 2002) has become popular, with over 20 million units sold as of March 2014. Other popular series developed by Square Enix include the SaGa series with nearly 10 million copies sold since 1989, the Mana series with over 6 million sales since 1991, and the Chrono series with over 5 million sold since 1995. In addition to their sales numbers, many Square Enix games have been highly reviewed; 27 Square Enix games were included in Famitsu magazine's 2006 "Top 100 Games Ever", with 7 in the top 10 and Final Fantasy X claiming the number 1 position. The company also won IGN's award for Best Developer of 2006 for the PlayStation 2.

Square and Enix initially targeted Nintendo home consoles with their games, but Square Enix currently develops games for a wide variety of systems. In the seventh generation of video game consoles, Square Enix released new installments from its major series across all three major systems, including Final Fantasy XIII on both the PlayStation 3 and Xbox 360, and Dragon Quest X on the Wii. Square Enix has also developed titles for handheld game consoles, including the Game Boy Advance, Nintendo DS, PlayStation Portable, Nintendo 3DS and PlayStation Vita. In addition, they have published games for Microsoft Windows-based personal computers, and for various models of mobile phones and modern smartphones. Square Enix mobile phone games became available in 2004 on the Vodafone network in some European countries, including Germany, United Kingdom, Spain, and Italy.

Before its launch, Michihiro Sasaki, senior vice president of Square Enix, spoke about the PlayStation 3, saying "We don't want the PlayStation 3 to be the overwhelming loser, so we want to support them, but we don't want them to be the overwhelming winner either, so we can't support them too much." Square Enix continued to reiterate their devotion to multi-platform publishing in 2007, promising more support for the North American and European gaming markets where console pluralism is generally more prevalent than in Japan. Their interest in multi-platform development was made clear in 2008 when the previously PlayStation 3-exclusive game Final Fantasy XIII was announced for release on the Xbox 360.

In 2008, Square Enix released their first game for the iPod, Song Summoner: The Unsung Heroes. Square Enix made a new brand for younger children gaming that same year, known as Pure Dreams. Pure Dreams' first two games, Snoopy DS: Let's Go Meet Snoopy and His Friends! and Pingu's Wonderful Carnival were released that year. After acquiring Eidos in 2009, Square Enix combined it with its European publishing wing to create Square Enix Europe, which continues to publish Eidos franchises such as Tomb Raider (45 million sales), Hitman (15 million), Deus Ex (4 million), Thief (2.5 million) and Legacy of Kain (3.5 million). Square Enix has also served as the Japanese publisher for Ubisoft games since 2009.

Game engines

Square Enix does not usually use other companies' game engines, preferring to code from scratch. Square Enix has developed two notable in-house game engines. In 2004, Square Enix began to work on a "common 3D format" which would allow the entire company to develop titles without being restricted to a specific platform: this led to the creation of a game engine named Crystal Tools, which is compatible with the PlayStation 3, the Xbox 360, Windows-based PCs and to some extent the Wii. It was first shown off at a tech demo shown off at E3 2005, and was later used for Final Fantasy XIII based on the demo's reception. Crystal Tools was also used for Final Fantasy Versus XIII before its re-branding as Final Fantasy XV and shift onto next-gen platforms. Refinement of the engine continued through the development of Final Fantasy XIII-2, and it underwent a major overhaul for Lightning Returns: Final Fantasy XIII. No new titles have been announced for the engine, and it is believed that development of the engine has halted permanently in favor of the Square Enix Luminous Studio engine.

The second major in-house engine is Luminous Studio, intended for eighth-generation consoles, which was originally unveiled at E3 2012 through a tech demo titled Agni's Philosophy. The first major console title to be developed with Luminous Studio was Final Fantasy XV; the engine's development was done in tandem with the game, and the game's development helped the programming team optimize the engine.

In addition to their two major cross-platform engines and the custom engines made for individual games and platforms before and since, Square Enix uses and continues to consider other companies' engines and programming languages for their video game properties. Known examples are licensing Epic Games' Unreal Engine in 2007 for use in The Last Remnant, and using the Squirrel language for the WiiWare title Final Fantasy Crystal Chronicles: My Life as a King.

Online gaming

Before the merger, Enix published its first online game Cross Gate in Japan, mainland China, and Taiwan in 2001, and Square released Final Fantasy XI in Japan in 2002 for the PlayStation 2 and later the personal computer. With the huge success of Final Fantasy XI, the game was ported to the Xbox 360 two years later, and was the first MMORPG on the console. All versions of the game used PlayOnline, a cross-platform internet gaming platform and internet service developed by Square Enix. The platform was used as the online service for many games Square Enix developed and published throughout the decade. Due to the success of their MMORPG, Square Enix began a new project called Fantasy Earth: The Ring of Dominion. GamePot, a Japanese game portal, got the license to publish Fantasy Earth in Japan and it was released in Japan as "Fantasy Earth ZERO." In 2006, however, Square Enix dropped the Fantasy Earth Zero project, and sold it to GamePot. Square Enix released Concerto Gate, the sequel to Cross Gate, in 2007.

A next-gen MMORPG code named Rapture was developed by the Final Fantasy XI team using the company's Crystal Tools engine. It was unveiled at E3 2009 that the MMO, Final Fantasy XIV, for PlayStation 3 and Microsoft Windows, would be released on September 30, 2010. Dragon Quest X was announced in September 2011 as an MMORPG being developed for Nintendo's Wii and Wii U consoles, which released on August 2, 2012, and March 30, 2013, respectively. Like XIV, it used Crystal Tools.

Square Enix also made browser games and Facebook games, like Legend World, Chocobo's Crystal Tower and Knights of the Crystals, and online games for Yahoo! Japan, such as Monster x Dragon, Sengoku Ixa, Bravely Default: Praying Brage, Star Galaxy and Crystal Conquest.

On May 8, 2012, Square Enix announced a collaboration with Bigpoint Games to create a free-to-play cloud gaming platform that "throws players into 'limitless game worlds' directly through their web browser". The service was launched under the name CoreOnline in August 2012. Claiming "limited commercial take-up", the service was cancelled on November 29, 2013. Square Enix launched another online game service in Japan called Dive In on October 9, 2014 that allowed players to stream console games to their iOS or Android devices. The service was monetized by the amount of time players spent playing, with each game offered for free for thirty minutes. The service was cancelled on September 13, 2015.

Arcade

With the merger of Taito businesses into Square Enix, the company gained possession of Taito's arcade infrastructure and facilities, and entered the arcade market in 2005. In 2010 Taito revealed NESiCAxLive, a cloud-based system of storing games and changing them through the internet instead of acquiring physical copies. This system was added to its many arcade gaming locations. The company continues to cater to the arcade audience in Japan with arcade-only titles, with game producers in 2015 stating that Square Enix as it has a loyal fan base that values the arcade gaming experience.

Film

The company has made two forays into the film industry. The first, Final Fantasy: The Spirits Within (2001), was produced by Square subsidiary Square Pictures prior to the merger with Enix; Square Pictures is now a consolidated subsidiary of Square Enix. Its box-office failure caused Enix to delay the merger, which was already under consideration before the creation of the film, until Square became profitable once again. In 2005, Square Enix released Final Fantasy VII Advent Children, a CGI-animation movie based on the PlayStation game Final Fantasy VII, set two years after the events of the game. A Deus Ex film is currently in pre-production and as of 2014 is undergoing rewrites. In 2016 Square Enix revealed a new movie called Kingsglaive: Final Fantasy XV based in the world of Final Fantasy XV and a new web series released on YouTube and Crunchyroll entitled Brotherhood: Final Fantasy XV.

Manga

The company has a manga publishing division in Japan (originally from Enix) called Gangan Comics, which publishes content for the Japanese market only. However, in 2010, Square Enix launched a digital manga store for North American audiences via its Members services, which contains several notable series published in Gangan anthologies. Titles published by Gangan Comics include Fullmetal Alchemist, Soul Eater, and many others. Other titles include manga adaptations of various Square Enix games, like Dragon Quest, Kingdom Hearts and Star Ocean. Some of these titles have also been adapted into anime series. Fullmetal Alchemist is the most successful title of Square Enix's manga branch, with more than 64 million volumes sold worldwide. It is licensed in North America by Viz Media, while its two anime adaptations were licensed by Funimation Entertainment in the United States.

Merchandise

Square Enix has created merchandise for virtually all of their video game franchises, though many items are available only in Japan. Square Enix's former online gaming portal PlayOnline sold merchandise from game franchises including Parasite Eve, Vagrant Story, Chocobo Racing, Front Mission, Chrono Cross, and Final Fantasy. Mascots from game franchises are a popular focus for merchandise, such as the Chocobo from Final Fantasy which has been seen as a rubber duck, a plush baby Chocobo, and on coffee mugs. Square Enix also designed a Chocobo character costume for the release of Chocobo Tales. The Slime character from Dragon Quest has also been frequently used in Square Enix merchandise, especially in Japan. On the Japanese Square Enix shopping website there is also a Slime-focused section called "Smile Slime". Slime merchandise includes plush toys, pencil cases, keychains, game controllers, a stylus, and several boardgames including one titled Dragon Quest Slime Racing. In Japan, pork filled steam buns shaped like slimes have been sold. For Dragon Quest's 25th anniversary, special items were sold including business cards, tote bags, and crystal figurines. Rabites from the Mana series have appeared in several pieces of Square Enix merchandise, including plush dolls, cushions, lighters, mouse pads, straps, telephone cards, and T-shirts. Square Enix has also made merchandise for series they do not own, including figures Mass Effect and Halo.