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The story
Enix (1975–2003)
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. In the 1980s, in a partnership with developers Chunsoft, the company began publishing the Dragon Quest series of console games.
Key members of the developer's staff consisted of director Koichi Nakamura, writer Yuji Horii, artist Akira Toriyama, and composer Koichi Sugiyama, among others. The first game, Dragon Quest, 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 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 first section, indicating it as a "large company".
Square (1983–2003)
Square was started in October 1983 by Masafumi Miyamoto as a computer game software division of Den-Yu-Sha, a power line construction company owned by his 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.
In September 1986, the division was spun off into an independent company led by Miyamoto, officially named Square Co., Ltd. After releasing several unsuccessful games for the Famicom, Square relocated to Ueno, Tokyo in 1987 and developed Final Fantasy, a role-playing video game inspired by Enix's success in the genre with the 1986 Dragon Quest. Final Fantasy was a success with over 400,000 copies sold, and it became Square's leading franchise, spawning dozens of games in a series that continues to the present.
Buoyed by the success of their Final Fantasy franchise, Square developed notable games and franchises such as Chrono, Mana, Kingdom Hearts (in collaboration with The Walt Disney Company), and Super Mario RPG (in collaboration with Nintendo). By late 1994 they had developed a reputation as a producer of high-quality role-playing video games. Square was one of the many companies that had planned to develop and publish its 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 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.
Merger (2003)
A merger between Square and Enix had been considered since at least 2000; the financial failure in 2001 of Square's first film, Final Fantasy: The Spirits Within, made Enix reluctant to proceed while Square suffered record losses. With the company facing its second year of financial losses, Square approached Sony for a capital injection, and on October 8, 2001, Sony purchased an 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 the fiscal year 2002. It was announced on November 25, 2002, that Square and Enix's previous plans to merge were to officially proceed, intending to decrease development costs and to compete with foreign developers. As described by Square's president and CEO Yoichi Wada: "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 Miyamoto (the founder and largest shareholder of Square), 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 the 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.
As a result of the merger, Enix was the surviving company and Square Co., Ltd. was dissolved. In July of that year, the Square Enix headquarters were moved to Yoyogi, Shibuya, Tokyo, to help combine the two companies.
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Post-merger and acquisitions (2003–2013)
To strengthen its wireless market, Square Enix acquired mobile application developer UIEvolution in March 2004, which 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 its interests in the People's Republic of China.
In September 2005, 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. Tecmo would later merge with Koei in April 2009 to form Koei Tecmo. In April 2007, Square Enix Ltd. CEO John Yamamoto also became CEO of Square Enix, Inc. In 2008–2009, Square Enix was reportedly working with Grin on a Final Fantasy spin-off codenamed Fortress. The project was allegedly canceled by Square Enix after introducing seemingly impossible milestones and without payments made, resulting in Grin declaring bankruptcy and its co-founders blaming Square Enix for being "betrayed". On January 8, 2009, Square Enix signed an agreement with Ubisoft where the former would work to assist the latter in distributing its video games in Japan.
In February 2009, Square Enix announced a takeover deal for Eidos (formerly SCi Entertainment), the holding company for Eidos Interactive. The UK-based publisher's assets include Tomb Raider, Hitman, Deus Ex, Thief, and Legacy of Kain franchises, along with subsidiary development studios Crystal Dynamics, Eidos-Montréal and IO Interactive that developed the games. The acquisition of Eidos was completed in April 2009, and in November it was merged with Square Enix's European publishing organization, business unit Square Enix Europe. Eidos' US operations were merged with Square Enix Incorporated. In April 2010, a new Japanese label for Western games bearing CERO restrictions called Square Enix Extreme Edges was announced. In July 2010, Mike Fischer was appointed CEO of Square Enix, Inc. Square Enix founded the mobile development studio Hippos Lab in March 2011 and Square Enix Montréal in 2012. In May 2011, VG24/7 reported Stainless Games had purchased the rights to Carmageddon from Square Enix. In July 2011, it was reported that Square Enix closed its Los Angeles Studio. In January 2012, Square Enix North American office could pursue smaller niche, mobile and social media games due to its existing revenue streams. In October 2012, Square Enix was perceived as a "force in mobile" games by Kotaku. The price of Final Fantasy Dimensions and Demons' Score, $30 and $44 respectively, was criticized.
Restructuring (2013)
On March 26, 2013, citing sluggish sales of major Western games, Square Enix announced major restructuring, expected loss of ¥10 billion and resignation of President Yoichi Wada, whom Yosuke Matsuda replaced. Phil Rogers was elected as a new director, among others. With the restructuring, Square Enix of America CEO Mike Fischer left the company in May, with former Square Enix Europe CEO Phil Rogers becoming CEO of Americas and Europe. Further executive changes at Square Enix Western studios were mentioned in a statement. Square Enix Europe was hit with layoffs and Life President Ian Livingstone departed from the company in September 2013.
It said with the fiscal year report in March 2013, sales of Tomb Raider (2013) and Hitman: Absolution were weak, despite critical acclaim. The North American sales force was said to be ineffective and price pressure was intense. Matsuda noted the long development time of its important games and said it needs to shift to a business model with frequent customer interactions, noting Kickstarter as an example.
Post-restructuring and RPG development (2013–2021)
In March 2013, Square Enix India opened in Mumbai; however the office was closed in April 2014 and reopened five years later. As well as Square Enix Latin America in Mexico, which was closed in 2015. A mobile studio called Smileworks was founded in Indonesia in June 2013; however it was closed in January 2015. In 2014, Square Enix Collective launched, an indie developer service provider headed by Phil Elliot. Also in 2014, Square Enix signed a strategic alliance and cooperation with Japanese and French video game companies, Bandai Namco Entertainment and Ubisoft; it has served as the Japanese publisher of video games and crossover productions since 2009.
In March 2014, following the success of Bravely Default, Square Enix said it will "go back to their roots" and focus on creating content that will appeal to its core audience. Karl Stewart, vice president of strategic marketing at Square Enix for North America and Europe, left the company that month. In 2015, Square created a new studio known as Tokyo RPG Factory to develop what was then dubbed Project Setsuna. Around 2015, Square Enix's Western divisions began "officially working across LA and London".
In January 2017, Norwegian studio Artplant purchased former Eidos franchise Project I.G.I. On February 21, 2017, the formation of a new studio Studio Istolia was announced. The studio, headed by Hideo Baba, would be working on the new RPG Project Prelude Rune. In November 2017, IO Interactive conducted a management buyout from Square Enix and the Hitman IP was transferred to the studio. In September 2018, COO Mike Sherlock died, with Square Enix's executive team assuming his immediate responsibilities. In 2018, Square Enix branded its third party publishing division Square Enix External Studios, which is headed by Jon Brooke and Lee Singleton. John Heinecke was appointed as CMO for Americas and Europe in October 2018.
Baba departed the studio in early 2019, and shortly after this, Studio Istolia was closed, and Project Prelude Rune cancelled following an assessment of the project, with its staff being reassigned to different projects within the company. In 2019, Square Enix opened an Indian office again, now in Bangalore, which expanded into publishing mobile games for the Indian market in 2021. In June 2020, Square Enix donated $2.4 million to charities around its Western studios and offices for the Black Lives Matter cause and COVID-19, which were partially raised from sales of its discounted Square Enix Eidos Anthology bundle. In March 2021, Forever Entertainment, a Polish studio, was reported to be working to bring several of Square Enix's properties to modern systems. A new mobile studio called Square Enix London Mobile, working on Tomb Raider Reloaded and an unannounced title based on Avatar: The Last Airbender with Navigator Games, was announced on October 20, 2021.
Divestment of studios and business changes (2022–present)
In March 2022, Square Enix announced that it would donate $500,000 to the United Nations fund for Ukrainian refugees in the Russian invasion of Ukraine.
On May 1, 2022, Square Enix announced that it would sell several assets of subsidiary Square Enix Limited to Swedish games holding company Embracer Group for $300 million. This included studios Crystal Dynamics, Eidos-Montréal, and Square Enix Montreal, IPs Deus Ex, Legacy of Kain, Thief, and Tomb Raider and rights to "over 50 games". Square Enix stated that the sale will further help it in investment into blockchain and other technologies, and to "assist the company in adapting to the changes underway in the global business environment by establishing a more efficient allocation of resources". Square Enix also stated that it would retain the Life Is Strange, Outriders, and Just Cause franchises. However, during the Japanese publisher's full-year financial results briefing on May 13, president Yosuke Matsuda clarified the past statement and said the money from the sale will be used to strengthen the company's core games business. On July 25, 2022, Square Enix launched the English version of Manga Up!. The acquisition was closed by August 26, 2022, with the assets being held under CDE Entertainment which is headed from London by Phil Rogers, former CEO of Square Enix Americas and Europe.
In the company's financial statement for the following quarter, released in September 2022, Matsuda said it was moving away from outright owning studios due to rising costs of development, but were looking at means to invest in studios such as joint ventures or investment opportunities. In 2022, Square Enix invested in seven business strategic cooperations in the blockchain and cloud services such as Zebedee (United States), Blocklords (Estonia), Cross The Ages (France), Blacknut (France), Animoca Brands-owned The Sandbox (Australia and Hong Kong), and Ubitus (Japan).
On February 28, 2023, Square Enix Holdings announced that on May 1, Luminous Productions would reorganize and merge with Square Enix internally, citing the merging of the two would "enhance the group's abilities to develop HD games" for the 20th anniversary. On March 3, Square Enix issued a statement announcing a proposed change to the position of its president and representative director that, if implemented, would result in Yosuke Matsuda stepping down and being succeeded by Takashi Kiryu, who is presently the company's director. The change will become effective upon approval at the company's 43rd annual shareholders' meeting, which is planned for June 2023, and the board meeting which will follow ahead on the 20th anniversary of the merger. Kiryu succeeded on May 18 and was seen as part of the Final Fantasy XVI launch event as one of his first appearances in public.
In March 2024, Square Enix announced it would be more selective with the games it develops, resulting in numerous unannounced titles being cancelled. The company lost ¥22.1 billion (approximately $140 million) due to "content abandonment", it is now making the third installment of the Final Fantasy VII Remake its full focus after the release of Rebirth.
On July 10, 2026, Square Enix announced that the Extreme Edges label for Japan would be shut down, citing that western titles are now accepted in Japan, thus negating the necessity of a separate label for such titles.
From Wikipedia’s article on Square Enix, shared under CC BY-SA 4.0.5