Enix and Square announced early today that, effective November 26, they will begin to merge operations and form Square Enix, a brand-new company created to compete in the world marketplace on the same level as America and Europe's large third parties. The two companies plan to complete the merger by April 1, 2003; their aim is to build a new firm that will produce 80 billion yen ($656 million) in yearly sales and 15 billion yen ($123 million) in profit by fiscal 2005.
"In the ever-changing world of entertainment software, the most important issue facing companies today is how quickly they can grow as the marketplace and opportunities for business expand and diversify," said a financial statement released by Enix today. "Enix and Square's response to this issue is the merger announced today...Together, we will aim to become producer of the highest-quality digital content in the world."
As part of the merger, shareholders will receive 0.81 shares of Enix stock in exchange for every Square stock they hold. Square, in its current company structure, will be disbanded, and (on paper, anyway) Enix will absorb Square's assets and liabilities. However, Yoichi Wada, current president of Square, will head up the new company, suggesting that Square will have more power than Enix in the merger's final structure.
"Starting around August, people inside the office started saying that there'd be huge buzz if we went together with Square," commented Enix chairman Yasuhiro Fukushima at a press conference this afternoon. "So after I talked it over with Mr. Wada from Square, we realized we could make some incredible games together." "Our styles our different, but our ways of thinking are the same," added Enix president Keiji Honda. "I want to make games that the whole world will say are great."
Both Square and Enix are large Japanese companies having difficulty competing with EA, Activision, Infogrames and other Western software giants. Square returned to profit in the last half-year after taking a major hit from the failed Final Fantasy movie, but still faces deep losses in operational profit from the lack of any major hit in 2002. Enix, meanwhile, is the producer of the blockbuster Dragon Quest series in Japan but hasn't been capable of releasing any other major sellers. Together, the two companies will form a massive third party that will virtually corner the market for RPGs in Japan, a springboard they will undoubtedly use to challenge the Western market more seriously than before.
Wada commented that the merger is "an offensive move" for both companies--we'll see exactly what kind of offense the new company has in mind over the next couple of days.
