LevelNth dropping truth bombs up in here but still going mostly ignored.
Originally Posted by george_us
I'd like to hear more about this.
What more is there to know?
Sony put a lot of coin behind The Spirits Within and further subsidized it's losses by buying a small non-voting stake in Square following it's failures to steady them financially.
Before then and beyond Square and EA had a strong cross-publishing partnership where Square made VERY nice profit margins on EA published games in the west while also seeing healthy growth in the sales rates of EA's titles they distributed in Japan. It was a very lucrative deal for both sides.
The deal with EA was dropped because Wada wanted to turn Square into a EA/Activision sized international publishing powerhouse. That is why he began making moves to join with Enix, who was at the time a less productive version of what Atlus is today. Instead of having a healthy stable of in-house teams along with some smartly chosen subs like Atlus they had almost no in house development staff and relied entirely on subs. Both are heavily tied to the success of their cornerstone JRPG franchise, Dragon Quest and MegaTen/Persona respectively. Atlus has done what Enix has failed at for decades on two counts by making MegaTen/Persona a successful brand globally and by splitting MegaTen into a multi-pronged IP with titles like Nocturne under the MegaTen name directly, the Persona franchise, and other spin offs that have had solid market success (Digital Devil Saga) and strong legs on re-releases (Devil Summoner, Devil Survivor). The notion behind this being that by consolidating the two major players in the then very popular JRPG genre they would have all the muscle needed to gobble up market share and other smaller publishers.
This is also why they have picked up Quest, Taito, and now Eidos. It is all part of Wada's plan to make Square into a dominant 3rd party.
Eidos to date has paid off for them pretty well, but the production of Square's internal studios has been bad by the already low standards of Japanese 3rd parties this generation,. The benefits of merging with Enix have never arrived as they were unable to leverage the Square name or FF brand to build the Dragon Quest brand in the U.S., the only successful spinoff (Dragon Quest Monsters) has also failed to make any real headway outside Japan.
The only substantial gains shown by their purchase of Quest was the release of Tactics Ogre: Let Us Cling Together on the PSP.
Their purchase of Taito basically amounts to a half billion dollar investment that has done nothing to strengthen the company.
As a result of all this the Final Fantasy brand has suffered irreparable damage due to poor quality, inconsistent release dates, and in general blatant milking of the IP. Kingdom Hearts, which not long ago was poised to become a major IP, has failed to fully develop due to muddled direction and platform ambiguity. Dragon Quest is still a Japan-centric IP that is profitable but capped out as a single player IP. Both major franchises (FF and DQ) are now being leveraged in the MMO market, which is an expensive and very fickle mistress. Well known Square IPs (namely Chrono and Mana) have languished and lost a ton of marketing clout.
In short other than Eidos they're entirely reliant on two IPs, one of which is in full on decline and the other beginning to stagnate due to an inability to cross markets. The only time they break outside this box is within the relatively low risk handheld segment that also happens to be shrinking at an alarming rate globally. Their clout with Sony has all but evaporated and are now more or less doggedly dependent on Nintendo's handheld consumers for any legitimate brand recognition, when not so long ago the Squaresoft logo alone could move significant units.
Wada aimed for global domination without knowing how to get there and has ran headlong into every "growth" opportunity he's had available to him. They got DAMN lucky the Eidos buyout happened when it did, as if Eidos had held on just a few more months their releases (most notably Batman: Arkham Asylum) would have given them renewed life.
There is no reason to assume that the company will change direction any time soon. They have lost the pulse of consumers and rely on the smattering of talent still in house to carry them to any kind of success, which is inconsistent and unreliable. The golden age that Sakaguchi presided over came to an end when the failure of Spirits Within allowed Wada to seize power.
I expect that much like Sony it won't be too long before Square Enix is back in real financial trouble. All it will take is a drop in production by Eidos, who has never been able to maintain success and has already been cut out of their most successful recent title, since Batman: Arkham City was a Warner Bros/Rocksteady deal sans-Eidos. All it will take is Wada pushing a $50M budget Call of Duty rival onto their books in his pursuit of global appeal to start sending them down the same failed path as the parent company Square Enix.