Square Enix
is a Japanese multinational holding company, video game publisher and entertainment conglomerate. It releases role-playing game franchises, such as Final Fantasy, Dragon Quest, and Kingdom Hearts, among numerous others. Outside of video game publishing and development, it is also in the business of merchandise, arcade facilities, and manga publication under its Gangan Comics brand.
The original Square Enix Co., Ltd. was formed in April 2003 from a merger between Square and Enix, with the latter as the surviving company. Each share of Square's common stock was exchanged for 0.85 shares of Enix's common stock. At the time, 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 was named vice president. Yasuhiro Fukushima, the largest shareholder of the combined corporation and founder of Enix, became chairman. In October 2008, Square Enix conducted a company split between its corporate business and video game operations, reorganizing itself as the holding company Square Enix Holdings Co., Ltd., while its internally domestic video game operations were formed under the subsidiary Square Enix Co., Ltd. The group operates American, Chinese and European branches, based in Los Angeles, Beijing, Paris, Hamburg, and London respectively.
Several of Square Enix's franchises have sold over 10 million copies worldwide after 2020, with Final Fantasy selling 173 million, Dragon Quest selling 85 million, and Kingdom Hearts shipping 36 million. In 2005, Square Enix acquired arcade corporation Taito. In 2009, Square Enix acquired Eidos plc, the parent company of British game publisher Eidos Interactive, which was then absorbed into its European branch. Square Enix is headquartered at the Shinjuku Eastside Square Building in Shinjuku, Tokyo, along with a second office at Osaka. It has over 5,000 employees worldwide through its base operations and subsidiaries.
Corporate history
Origins and pre-merger (1975–2003)
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 Warrior, 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, and Super Mario RPG. 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 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.
Merger (2003)
A merger between Square and Enix was considered since at least 2000; 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 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, 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.
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 their 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 their video games in Japan.
In February 2009, Square Enix announced a takeover deal for Eidos, 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 their 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.