Square Enix

• 1. Two Rivals, One Company

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  Square Enix was born from the union of two companies that had long watched each other across Japan's video game landscape. In April 2003, Square and Enix merged, with Enix as the surviving legal entity. Each Square share was exchanged for 0.85 Enix shares, a ratio that had been revised upward from 0.81 after Square's founder and largest shareholder, Masafumi Miyamoto, raised concerns about dilution. At the time of the merger, 80% of Square Enix's staff were former Square employees.

  The path to that merger was rocky. Square's first film, Final Fantasy: The Spirits Within, released in 2001, failed at the box office and left Square recording losses for two consecutive years. Enix, already cautious, held back from the merger until Square stabilized. On the 8th of October 2001, Sony stepped in with an 18.6% equity stake, injecting capital and buying time. The financial turnaround came through Final Fantasy X and Kingdom Hearts, which together pushed Square to its highest operating margin on record in fiscal year 2002.

  The formal announcement came on the 25th of November 2002. Square's president Yoichi Wada framed the moment plainly: "Square has also fully recovered, meaning this merger is occurring at a time when both companies are at their height." Not everyone agreed. Takashi Oya of Deutsche Securities questioned whether operational synergies would materialize: "Enix outsources game development and has few in-house creators, while Square does everything by itself." Wada was appointed president of the new company. Keiji Honda, former Enix president, became vice president. Yasuhiro Fukushima, who had founded Enix in 1975, became honorary chairman of the combined corporation.

• 2. Enix and Square Before the Merge

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  Yasuhiro Fukushima founded Enix on the 22nd of September 1975 as Eidansha Boshu Service Center. He was trained as an architect, not a game developer, but saw publishing as his path into the industry. Enix's model was distinctive: rather than building games in-house, the company partnered with external developers. One of those partners was Chunsoft, who collaborated with Enix through the 1980s on the Dragon Quest series.

  The first Dragon Quest game, released in 1986 under the title Dragon Warrior in Japan, sold 1.5 million copies domestically on the Famicom. The team behind it included director Koichi Nakamura, writer Yuji Horii, artist Akira Toriyama, and composer Koichi Sugiyama. By November 1999, Enix had grown large enough to be listed on the Tokyo Stock Exchange's first section, a designation reserved for large companies.

  Square had a different origin. In October 1983, Masafumi Miyamoto launched it as a software division inside Den-Yu-Sha, a power line construction company his father owned. He believed game development worked better with teams combining programmers, graphic designers, and professional story writers. In September 1986, the division separated into Square Co., Ltd. After several failed Famicom releases, Square relocated to Ueno, Tokyo in 1987 and released Final Fantasy, directly inspired by Enix's success with Dragon Quest the previous year. Final Fantasy sold over 400,000 copies and anchored the company's future.

  Square's later years before the merger saw Final Fantasy VII sell 9.8 million copies on the PlayStation, making it the second-best-selling game on that platform. Square also developed Chrono, Mana, Kingdom Hearts in collaboration with The Walt Disney Company, and Super Mario RPG alongside Nintendo. By late 1994, Square had built a reputation as one of Japan's premier role-playing game producers.

• 3. Acquisitions and Expansion

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  In September 2005, Square Enix acquired Taito, the arcade developer behind Space Invaders and the Bubble Bobble series. Taito's home and portable console game divisions were merged into Square Enix itself by March 2010. The acquisition brought arcade facilities into the company's portfolio. In 2010, Taito introduced NESiCAxLive, a cloud-based system for distributing and updating arcade games over the internet rather than via physical media.

  Square Enix also attempted a takeover of Tecmo in August 2008, offering to purchase shares at a 30% premium. Tecmo rejected the bid. Tecmo later merged with Koei in April 2009 to form Koei Tecmo. A more successful move came in February 2009, when Square Enix reached a deal to acquire Eidos, the holding company for British publisher Eidos Interactive. The acquisition closed in April 2009 and brought with it studios Crystal Dynamics, Eidos-Montréal, and IO Interactive, along with franchises including Tomb Raider, Hitman, Deus Ex, Thief, and Legacy of Kain.

  On the mobile side, Square Enix acquired UIEvolution in March 2004 to strengthen its wireless business, then sold it in December 2007 and founded Square Enix MobileStudio in January 2008. In January 2005, it launched Square Enix China to expand into the People's Republic of China. In June 2020, the company donated $2.4 million to charities supporting the Black Lives Matter cause and COVID-19 relief, partially funded by proceeds from discounted game bundles. In March 2022, Square Enix committed $500,000 to a United Nations fund for Ukrainian refugees.

• 4. The 2013 Restructuring

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  On the 26th of March 2013, Square Enix announced a major restructuring. President Yoichi Wada resigned after the company projected a loss of 10 billion yen. Yosuke Matsuda replaced him. Phil Rogers joined the board as a new director.

  The trigger was disappointing Western sales. Despite critical acclaim, Tomb Raider released in 2013 and Hitman: Absolution both underperformed commercially. Matsuda identified the problem clearly: development cycles were too long, and the company needed more frequent customer interaction. He cited Kickstarter as a model for the kind of ongoing engagement he wanted to cultivate.

  The restructuring rippled through the company's Western operations. Mike Fischer, CEO of Square Enix of America, left in May 2013. Phil Rogers stepped into a combined role overseeing both Americas and Europe. Square Enix Europe faced layoffs. Ian Livingstone, the division's Life President, departed in September 2013. An Indian office opened in Mumbai in March 2013 but closed in April 2014. Square Enix Latin America in Mexico closed in 2015. A mobile studio called Smileworks, founded in Indonesia in June 2013, shut down in January 2015.

  In March 2014, following the commercial success of Bravely Default, Matsuda announced the company would refocus on content aimed at its core audience, described internally as a return to roots. That same year, Square Enix Collective launched as an indie developer support service led by Phil Elliot. The company also signed a strategic alliance with Bandai Namco Entertainment and Ubisoft in 2014, formalized after already serving as Ubisoft's Japanese publisher since 2009.

• 5. Selling the West

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  On the 1st of May 2022, Square Enix announced it would sell a collection of Western studios and franchises to Swedish games holding company Embracer Group for $300 million. The deal included Crystal Dynamics, Eidos-Montréal, and Square Enix Montreal, along with the Deus Ex, Legacy of Kain, Thief, and Tomb Raider franchises and rights to more than 50 additional games.

  Square Enix's initial statement tied the sale to blockchain investment and broader strategic adaptation. Twelve days later, at a full-year financial results briefing on the 13th of May, president Yosuke Matsuda walked that back. He said the proceeds would be used to strengthen the company's core games business. The acquisition closed by the 26th of August 2022, with the sold assets held under a new entity called CDE Entertainment, led from London by Phil Rogers.

  The sale did not include everything. Square Enix retained the Life Is Strange, Outriders, and Just Cause franchises. In September 2022, Matsuda described a broader shift away from direct studio ownership, citing rising development costs. The company was instead looking at joint ventures and investment partnerships. That year, Square Enix placed strategic investments in seven blockchain and cloud businesses, including Zebedee in the United States, Blocklords in Estonia, Cross The Ages and Blacknut in France, The Sandbox in Australia and Hong Kong, and Ubitus in Japan.

  In March 2024, Square Enix announced it would cancel numerous unannounced titles as part of a more selective development strategy. The write-offs from "content abandonment" totaled 22.1 billion yen, roughly $140 million. The company's stated priority became completing the third installment of the Final Fantasy VII Remake series following the release of Rebirth.

• 6. Franchises and Scale

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  Final Fantasy, which Square launched in 1987, is the company's best-selling franchise. Worldwide sales exceeded 173 million units as of March 2022. Dragon Quest, whose first entry appeared in 1986, has sold over 85 million units globally and is considered one of the most popular game series in Japan. Kingdom Hearts, developed in collaboration with Disney beginning in 2002, reached 36 million units shipped as of March 2022.

  Smaller but significant franchises fill out the catalog. The SaGa series has sold nearly 10 million copies since 1989. The Mana series has exceeded 6 million sales since 1991. The Chrono series has sold over 5 million since 1995. Famitsu magazine's 2006 list of the top 100 games ever made included 27 Square Enix titles, with 7 in the top 10 and Final Fantasy X at number one. The company won IGN's award for Best Developer of 2006 for the PlayStation 2.

  Square Enix's manga publishing arm, Gangan Comics, traces back to Enix's original publishing operations. Fullmetal Alchemist is its most successful title, with more than 64 million volumes sold worldwide. It is licensed in North America by Viz Media, and its two anime adaptations were licensed by Funimation, now Crunchyroll. Gangan Comics also publishes Soul Eater and manga adaptations of Dragon Quest, Kingdom Hearts, and Star Ocean.

  Beyond games and manga, Square Enix operates merchandise lines, arcade facilities through Taito, and a media and arts unit covering music production and live performances. The company employs over 5,000 people globally. Its headquarters are in the Shinjuku Eastside Square Building in Shinjuku, Tokyo, with a second office in Osaka. After a leadership transition in May 2023, Takashi Kiryu succeeded Yosuke Matsuda as president, appearing at the Final Fantasy XVI launch event as one of his first public acts in the role.