In light of Square-Enix's recent financial woes, I felt it would be a good time to take a look at an ongoing problem the company doesn't seem to register in its reports. And that is how the company has been hemorrhaging talent for more than a decade, despite various acquisitions, which in turn can be felt in the games published over the last two generations.
The PlayStation era saw Squaresoft lose key staff from games like Final Fantasy and Chrono Trigger to the independently-spirited Love-de-Lic. They produced some very unique titles on the PS1 and Dreamcast before dissolving into Skip, Vanpool, and Punchline. Skip and Vanpool have since become 2nd party to Nintendo and have had a hand in many of Nintendo's more original titles, like the Artstyle games, Giftpia, Chibi-Robo and (Vanpool) Tingle's Zelda offshoots and Paper Mario Sticker Star.
Many of Squaresoft's most beloved titles published during the PlayStation era were produced by none other than Hironobu Sakaguchi. After the disastrous gamble on the Final Fantasy: The Spirits Within, he was essentially forced out of the company. He went on to form Mistwalker, which has produced titles for Microsoft and, more recently, Nintendo. Mistwalker has been hit-or-miss, but The Last Story (Wii) and Lost Odyssey (Xbox 360) were considered by many gamers superior to Square-Enix's best output this gen.
There's no denying that Squaresoft on PS1 was fantastic, but that their PS2 line-up failed to recapture that same magic or enthusiasm for new ideas. The problem got even worse with the current generation, and judging by their new direction things are only going to get worse.
More talent was shed during the PS2/Gameboy Advance era. Staff from the Xenosaga team became Monolith, and the Mana team branched off to form Brownie Brown (now 1up Studio), both of which are now 2nd party developers to Nintendo. They of course are now responsible for Nintendo RPGs Baten Kaitos, Xenoblade, and upcoming X, and the less celebrated Magical Vacation series (and Mother 3) respectively. Furthermore, other staff who worked on beloved SNES titles like Super Mario RPG left to form AlphaDream, which quickly became 2nd party to Nintendo after their first GBA title, a cute RPG called Tomato Adventure - and would develop the Mario & Luigi games.
Another major loss came when Matsuno left the company mid-development of Final Fantasy XII (reappearing to collaborate with Level-5 on Guild 01), and it appears that Hideo Minaba (artist, FF9) has also left the company around the same time (working on titles like A.S.H. and Little King's Story). Around this time Matsuno's mainstay composers (Sakimoto + Iwata) left to form Basiscape, and mostly do work with Vanillaware these days. S-E seems content to release versions of their past successes, like Final Fantasy Tactics and Tactics Ogre, but where does Team Ogre go from there without them?
Meanwhile, Tri-Ace has had a string of failures in this past generation which puts their future in jeopardy. They have shed key staff who have gone on to make cool titles like Radiant Historia on Nintendo DS. GameArts has also not published a new entry in the Grandia series, and has been relegated to releasing an endless stream of remakes of Lunar but are showing promise on PS Vita.
Another collaborater[sic], Level-5, is no longer working much with the company since the announcement that Dragon Quest X would be developed internally. It could be said that Level-5 was responsible for some of Square-Enix's best games of the past two generations, namely Dragon Quest VIII and IX. They seem to embody the spirit of the old Squaresoft by regularly developing new franchises with fresh concepts, as well as RPGs like Ni no Kuni.
The result has been a steady decline in original, compelling titles from Square-Enix over the past two console generations.
So who's left?
Well, Yuji Hori (of Dragon Quest fame) is still there, which is pretty important. They also have Tetsuya Nomura (but he seems to have lost the ability to self edit).
But I think the most important people left at the company are the teams responsible for the portable games - the best output by the company in recent years - who have been working on games like Final Fantasy III + IV remakes, Final Fantasy 4 Heroes of Light, and Bravely Default. Mainly Tomoya Asano and Akihiko Yoshida. Yoshida is an incredible artist, and should he leave for greener pastures that will leave only Nomura to handle most design work - yuck! And Asano, who has been working with outsourcing companies like Matrix, could easily leave to work for them on original titles. So things are looking pretty grim.
I'm sure fellow Gaffers could easily expand and expound on this list, but suffice to say Square-Enix isn't the company it once was, and it seems like the majority of their former staff now work at companies which are 2nd party (or have extremely close ties) to Nintendo.