On the 22nd of September 1975, a man named Yasuhiro Fukushima opened a small office in Tokyo that would eventually become the backbone of the global video game industry. He was not a programmer or a game designer, but an architect who had pivoted to entrepreneurship, founding Eidansha Boshu Service Center. This humble beginning would evolve into Enix, a company that would eventually publish the Dragon Quest series, a franchise that became so culturally significant in Japan that it is often treated as a national pastime. At the same time, across the city, another architect-turned-entrepreneur named Masafumi Miyamoto was establishing Square in 1983 as a computer game software division of a power line construction company. Miyamoto believed that game development required a collaborative approach involving graphic designers, programmers, and professional story writers, a radical idea at a time when games were typically the work of a single programmer. These two distinct paths, one focused on publishing and the other on in-house development, would eventually collide in a merger that reshaped the entertainment landscape forever.
The Financial Crisis and The Merger
By the turn of the millennium, the video game industry was in a state of flux, and the two giants of the Japanese market were facing existential threats. Square, despite the massive success of the Final Fantasy franchise, had suffered a catastrophic financial failure with the release of Final Fantasy: The Spirits Within in 2001. This ambitious attempt to enter the film industry resulted in a box-office disaster that left the company losing money for its second consecutive year. Enix, the publisher of Dragon Quest, was initially reluctant to merge with Square due to these financial troubles, but the situation became untenable. On the 8th of October 2001, Sony purchased an 18.6% stake in Square to keep it afloat. The financial waters eventually calmed with the success of Final Fantasy X and Kingdom Hearts, allowing Square to record its highest operating margin in history by the fiscal year 2002. The merger was officially announced on the 25th of November 2002, with the goal of decreasing development costs and competing with foreign developers. The merger took effect on the 1st of April 2003, creating Square Enix. At the time of the merger, 80% of the staff were former Square employees, and Yoichi Wada, the former Square president, was appointed president of the new corporation, while Keiji Honda, the former Enix president, became vice president. The founder of Enix, Yasuhiro Fukushima, became the chairman, marking the end of two separate companies and the beginning of a new era in gaming history.The Global Expansion and The European Takeover