Square (video game company)

• 1. A Company Born in a Salon

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  Square, the Japanese video game developer known internationally as SquareSoft, began its life in September 1983 not in a gleaming tech campus but in a former hairdresser's salon in Yokohama. The company was initially a software subsidiary of Den-Yu-Sha, an electric power conglomerate run by Kuniichi Miyamoto. His son Masafumi Miyamoto, then splitting his time between Keio University's Science and Technology Department and a part-time role at Den-Yu-Sha, had no interest in the electricity business his father ran.

  Miyamoto's conviction was unusual for the era. Video games in Japan were typically made by a single programmer working alone. He believed something different would be needed: graphic designers, programmers, and professional story writers working together. To find them, he organized a talent salon in Yokohama and hired those who impressed him with their programming skills. That approach brought in university students Hironobu Sakaguchi and Hiromichi Tanaka, as well as Hisashi Suzuki, who would eventually become Square's CEO. One early hire, Shinichiro Kajitani, described the company at that time as resembling a college club.

  The company's name drew from two references. It pointed to a golfing term about facing challenges directly, and to the idea of a town square, signaling a production culture built on cooperation rather than solitary coding. Square's first completed game, The Death Trap, shipped in 1984 for the NEC PC-8801 and was set in a war-torn African nation. Its sequel, Will: The Death Trap II, followed the next year to commercial success. Neither title would define the company, but they established the team that eventually would.

• 2. Final Fantasy and the Famicom Gamble

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  In 1985, Square negotiated a licensing agreement with Nintendo to develop for the Family Computer. The appeal was the Famicom's stable hardware, a contrast to the constantly shifting components of PC development. Square's first original Famicom title was King's Knight in 1986. New hires joined during this stretch: Akitoshi Kawazu and Koichi Ishii as designers, Kazuko Shibuya as artist, Iranian-American programmer Nasir Gebelli, and composer Nobuo Uematsu.

  In April 1986, Square moved its offices to Ginza, one of the most expensive commercial districts in Japan. Sakaguchi later speculated that Miyamoto chose the address to project the image of a thriving business. The costs were unsustainable. Square was forced to relocate to smaller offices in Okachimachi, Taitō, after a string of commercial failures on the Famicom Disk System peripheral.

  Facing financial pressure, Miyamoto asked the company's four directors to submit game proposals and let the staff vote. Sakaguchi proposed a role-playing game, pointing to the recent success of Enix's Dragon Quest. Miyamoto agreed, on one condition: the team could have no more than five people. Sakaguchi led a group that included Gebelli, Kawazu, Ishii, and Uematsu, with later support from Tanaka's team and a newcomer debugger named Hiroyuki Ito. Production lasted roughly ten months. Sakaguchi pushed to ship 400,000 units rather than the planned 200,000. Final Fantasy sold over 400,000 copies in Japan in 1987, and 700,000 copies in North America when it arrived in 1989.

• 3. Building a Studio and Its Series

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  Final Fantasy II arrived in 1988 and established the recurring story elements that would define the series. Five more Final Fantasy titles would follow for Nintendo hardware, culminating in Final Fantasy VI in 1994. Alongside that flagship, Square built several additional series with their own devoted audiences.

  Kawazu led the Game Boy RPG project that became Makai Toushi SaGa, released in 1989 and sold in the West as The Final Fantasy Legend, launching the long-running SaGa series. Koichi Ishii, after Final Fantasy III, was given the chance to create his own game; the result was Seiken Densetsu: Final Fantasy Gaiden for the Game Boy in 1991, which grew into the Mana series. Chrono Trigger came from an unusual three-way collaboration: Sakaguchi, Dragon Quest creator Yuji Horii, and Dragon Ball artist Akira Toriyama. Sakaguchi later reflected that while Final Fantasy was the company's most recognized property, Square could be profitable on its other series alone.

  New staff arrived through the early 1990s. Yoshinori Kitase worked as a writer before becoming a director. Tetsuya Nomura started as a graphic designer. Masato Kato, who joined in 1993, wrote for Chrono Trigger. Yoko Shimomura, previously a Capcom composer, joined and first worked on Live A Live in 1994. Yasunori Mitsuda began as a sound designer and became known for his work on the Chrono series. By 1995, Square moved its headquarters again, this time to the Shimomeguro district in Meguro.

• 4. The Break with Nintendo

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  Square's departure from Nintendo grew out of a practical calculation. Producing Final Fantasy VII, the team faced the cost gap between CD-ROM distribution on Sony's PlayStation and Nintendo's continued use of expensive ROM cartridges. Square chose Sony. One Square employee recalled Nintendo responding by telling the company to "never come back".

  In 1996, Square's final project with Nintendo was Sting Entertainment's Treasure Hunter G for the Super Famicom. That same year, Square debuted DreamFactory's Tobal No. 1 on the PlayStation. Sony then signed a licensing deal giving them the exclusive right to publish Square's next six games in the West.

  Final Fantasy VII, released worldwide in 1997 with Kitase directing, Naora as art director, Nomura as lead artist, and Nojima as scenario writer, was a worldwide commercial and critical success. It brought Square international fame and was widely credited with boosting the popularity of role-playing games and the PlayStation itself outside Japan. Three new hires arrived in this period: Shinji Hashimoto as promotions producer for Final Fantasy VII in 1995, Yasumi Matsuno who had left Quest Corporation after Tactics Ogre and went on to work on Final Fantasy Tactics in 1997, and Masashi Hamauzu who joined in 1996.

• 5. The Film That Nearly Broke Square

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  Final Fantasy: The Spirits Within was conceived at Square Pictures, a dedicated CGI film studio Sakaguchi founded in Hawaii following the success of Final Fantasy VII in 1997. Sakaguchi intended it as his first push into cross-media storytelling. The project ran over budget, eventually costing Square and co-producer Columbia Pictures US$137 million to make.

  Upon release in 2001, The Spirits Within drew mixed critical reception and grossed only $85 million. The failure closed Square Pictures and forced the company to record a financial loss for the first time in its history. Sakaguchi, Takechi, and director Masatsugu Hiramatsu resigned from their positions, though Sakaguchi stayed on as executive producer for Final Fantasy. Suzuki stepped down as President in late 2001, replaced by Yoichi Wada. Yosuke Matsuda became Senior Vice President.

  The film had already disrupted a potential merger. Rival publisher Enix had opened discussions with Square in 2000 about combining to reduce development costs. Enix halted those talks after The Spirits Within's failure. Under Wada, Square restructured internally and reopened talks with Nintendo for the first time since the 1990s split. Final Fantasy Crystal Chronicles began development for the GameCube in late 2001. Kingdom Hearts, a collaboration with The Walt Disney Company directed by Nomura in his directorial debut, released in 2002. The commercial success of both Final Fantasy X and Kingdom Hearts gave Square the financial standing to reopen merger talks with Enix.

• 6. The Merger and Its Terms

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  Square and Enix agreed to merge following the commercial recovery marked by Final Fantasy X and Kingdom Hearts. Wada described it as a merger of two companies "at their height". The deal had opposition. Masafumi Miyamoto, Square's founder, did not want his controlling stake diluted. His concern was resolved by adjusting the exchange ratio to one Square share for 0.85 Enix shares.

  On the 1st of April 2003, Square Enix was formed, with Enix as the surviving corporate entity. Square's departments and subsidiaries dissolved into the new company. Around 80% of Square's staff transitioned into Square Enix. Square's final release as an independent company was the Japanese version of Final Fantasy X-2.

  Takashi Oya of Deutsche Securities, commenting during merger reports, noted a structural contrast: Enix traditionally outsourced its development, while Square developed everything in-house. That distinction shaped how Square had grown over nearly two decades, from a ten-person team with no fixed roles to eight development divisions by 1997. The DigiCube distribution subsidiary, which had survived the merger, declared bankruptcy in 2004 after years of declining sales, a reminder that not every piece of Square's corporate structure outlasted the transition.

• 7. Staff Who Built Their Own Studios

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  Many of Square's developers left to found studios that went on to shape the wider industry. Frustrated with Square's rigid hierarchy, Hiroki Kikuta founded Sacnoth in 1997, which produced the Shadow Hearts series; he left Sacnoth in 1999 after completing Koudelka. Tetsuya Takahashi, Kaori Tanaka, and other Xenogears developers founded Monolith Soft in 1999 to pursue projects outside the Final Fantasy series, developing titles using the Xeno prefix.

  Kenichi Nishi founded Love-de-Lic in 1995, producing three games including Moon: Remix RPG Adventure; staff from that studio later founded Skip Ltd., known for Chibi-Robo, and Punchline, known for Rule of Rose. Kameoka and colleagues who worked on Legend of Mana founded Brownie Brown in 2000, which later collaborated with Square Enix on Sword of Mana. Tetsuo Mizuno, who had been Square's President, founded AlphaDream in 2000, developing the Mario & Luigi series.

  After stepping down as president in 2001, Sakaguchi went through a period of low morale before returning to game development. He founded Mistwalker in 2004, which became known for the Blue Dragon and Terra Wars series. Yasunori Mitsuda, who had left during the late 1990s restructuring, founded the music studio Procyon in 2001 to protect his health while continuing to compose. The collective output of these offshoots runs well beyond the company that spawned them, with Monolith Soft alone remaining active into the present.