ENIX MERGES WITH SQUARE!?!?!? WTF!?

[Logan Leonhart]

Excuse the fanboy title, but this came out of freaking nowhere!!

http://gamers.com/news/1274383

Enix and Square to merge, form new company -- Square Enix Inc.
Japanese RPG giants Enix and Square announced plans on Tuesday to merge operations on April 1st, bringing two of Japan's biggest selling franchises -- Dragon Quest and Final Fantasy -- under one roof: Square Enix Inc.

The deal calls for Square to be absorbed into Enix, with 0.81 shares in Enix being traded for each share in Square. The companies said the move was a bid to strengthen profitability amid stiff competition. What this means is that although the company is named Square Enix Inc., the surviving partner is Enix. How this will affect day to day operations of Square in Japan, or of Square's U.S. subsidiary, Square Electronic Arts, is uncertain.

When contacted for confirmation, a Square representative was unable to provide confirmation, stating that details would be released in the morning. Enix U.S. was also unable to provide insight to the groundbreaking deal.

What does this mean for the gaming world? It means that the two mightiest RPG powerhouses in the industry are now one, bigger RPG goliath. Dragon Quest VI was the biggest-selling game in Japan in 2001 (over 4 million copies sold), while that Final Fantasy series has been known to move a few units.

Check back for more details as we get them.

http://www.gamepro.com/

Enix announced early today that, effective November 26, they will begin to merge operations with Square to form Square Enix, a brand-new company created to compete in the world gaming marketplace on the same level as America and Europe's large third parties. The two companies aim to complete the merger by April 1, 2003 and will aim to build a new firm that will produce 80 billion yen ($656 million) in 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 contents in the world."

As part of the merger, shareholders in both companies will receive 0.81 shares of Enix stock 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. Yoichi Wada, currently president of Square, will head up the new company.

Both Square and Enix are large Japanese companies faced with recent difficulties competing with EA, Activision, Infogrames and the other third-party giants that dominate the game business in America and Europe. Square returned to profit in the last half-year after taking large losses from the failed Final Fantasy movie project, but still faces deep losses in operational profit from the lack of any major hit in 2002. Enix, meanwhile, is the producers 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 ever before.

Square and Enix will be holding a press conference at 3:30pm Japan time (1:30am Eastern time) to make the official merger announcement. Stay tuned for more details.

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What will this mean to us PS2 gamers?! Heck, to gamers of all consoles?

 

[Vince]

Wow, this is awesome.

I think it is a direct result and the Japanese answer to what Ben's been talking about as of late - basically the unobstructed rise of the Western Developer.

My take: Decisive winner is probobly Sony as they most likely have a stake in the combined company - depending on the merger details aswell as getting the lionshare of the company's new content. Nintendo gets a marginal victory in that their 'unofficial' Square connection may grow sizably... depending. XBox gets the shaft from the point-of-view that any possible deal with Enix - as was rumored - must now get past Square and Sony's grasp (both in BoD and investor infleuce). I'd say Japan is lost for awhile.

 

[Logan Leonhart]

I have to wonder, was Enix really that big of a publisher? I always thought Square to be a bigger publisher. I don´t understand much about business, so does this "merger" means that Enix bought out Square? Is it an allianze? What does this mean exactly?

Archie, you hold the answers! I KNOW IT!

 

[Lazy8s]

This is going down on April 1st? Some kind of April Fools' joke?

If Enix can't absorb Square well, Square could end up being a pretty big liability for them. Enix has always been a very stable company with a rather unique and functional publishing set-up. Square, on the other hand, has faced a lot of business turmoil throughout its existence and have practically painted themselves into the corner with their reliance on the Final Fantasy brand as of late. We're talking about a lot of separate ventures and managements coming together under one brand here... it'll be interesting to see how it comes about if this is indeed true.

I wonder how the Sony, EA, and Nintendo deals/relationships will be affected by this.

 

[PC-Engine]

It means Enix bought Square similar to HP buying Compaq. So does this mean SONY's share of Square Enix drops to 16%?

 

[zurich]

Wow, that definitely came out of no where.

I don't really get it. I typed up a long paragraph full of questions and speculations, but instead I'll wait for Ben or someone similar to hammer out a solid essay on this, because I'm too flabergasted to try and think right now.

 

[V3]

Not suprising, that Square would merge, since they are in a bad position for quite some times. But Enix absorbing them, that was suprising.

This is actually a pretty bad move on Enix part. But I have to read up on the detail. Enix probably want the Square PlayOnline thingy, since they did talk about establishing their own network before. Well just don't let Square handle DQ8.

 

[Vince]

Not suprising, that Square would merge, since they are in a bad position for quite some times. But Enix absorbing them, that was suprising.

This is actually a pretty bad move on Enix part. But I have to read up on the detail.

It was my understnaing that Square has returned to profitability - whats the bad position?

 

[archie4oz]

It was my understnaing that Square has returned to profitability

Yes this it true...

I have to wonder, was Enix really that big of a publisher? I always thought Square to be a bigger publisher.

Yes Enix is a big publisher... In fact Square is a bit of a dwarf vs. several other publishers (Konami is a monster and I won't go into Nintendo or Sega).

Wow, that definitely came out of no where.

I think it is a direct result and the Japanese answer to what Ben's been talking about as of late - basically the unobstructed rise of the Western Developer.

Not really... This has been brewing for a long time (the merger). Square and Enix have had a very close relationship for a long time. In fact you could add Namco to that as well. All three companies own mutual stock, and while don't expect Namco to merge right away, I wouldn't be surprised if it happened in the near future (they may still want to keep their brand differentiation)...

 

[V3]

It was my understnaing that Square has returned to profitability - whats the bad position?

Returning to profit, doesn't mean in good position.

So does this mean SONY's share of Square Enix drops to 16%?

No, it will be alot less than that.

 

[iscariot]

Enix to Buy Square for $764 Mln to Add Video Games (Update5)
By Hiroshi Suzuki

Tokyo, Nov. 26 (Bloomberg) -- Enix Corp. agreed to buy Square Co. for 93.2 billion yen ($764 million) in cash and stock, combining the makers of ``Dragon Quest'' and ``Final Fantasy,'' Japan's most-popular role-playing video-game series.

Square has sold more than 42 million copies of the ``Final Fantasy'' games worldwide, while Enix has sold 30 million copies of ``Dragon Quest.'' Both are played on Sony Corp.'s PlayStation 2 video-game consoles.

Video game developers need to share costs to maintain their share of a $20 billion industry, where the combination of faster computer chips and jaded game fanatics demand Hollywood-style production techniques. Analysts say the typical budget for a hit game is 1 billion yen ($8 million).

``Game making is a hit-or-miss business, and they want to spend more money to produce attractive games that can become hits,'' said Jun Terasaka, who helps manage $163 million at Toyota Asset Management Co. and declined to say if he holds shares of Square or Enix.

Square President Yoichi Wada will head the new company, Square Enix, in which Enix shareholders will own a 55 percent stake.

Sony

Sony, the biggest maker of video-game consoles, holds 18.6 percent stake in Square through a game unit, Sony Computer Entertainment Inc., making it the second-largest shareholder. Sony Computer Entertainment will hold 8.4 percent stake in the new entity.

``The merged company will make better games for us and for the industry,'' said Kenichi Fukunaga, a spokesman at Sony Computer.

Square shareholders will get 0.81 of an Enix share and 30 yen in cash for each of their 60.2 million shares. That values Square at 1,548 yen a share based on yesterday's closing Enix share price. Nomura Holdings Inc. acted as a financial adviser on the transaction.

Enix shares rose 300 yen, or 16 percent, to 2,175 yen at the close of trading on the Tokyo Exchange. The shares were untraded in the afternoon as the number of investors wanting to buy them outnumbered those seeking to sell. They were allocated among investors by the exchange at the end of trading at 3 p.m. Square shares rose 6.4 percent, or 121 yen, to 2,005 yen.

Square Enix expects net income of 12 billion yen on sales of 61 billion yen in the year ending March 31, 2004, Square and Enix said in a press release.

``They are best-of-breed players in the role-playing game genre,'' said Zachary Liggett, an analyst at West LB Securities Pacific Ltd.

Square returned to profit in its fiscal first-half from a net loss a year ago as sales in the U.S. and Europe beat its expectations. Still, overall sales fell to 12 billion yen from 19.6 billion yen a year ago.

Square exited the movie business last year after its first feature-length film flopped. Square's ``Final Fantasy: The Spirits Within'' was a computer animated movie based on the ``Final Fantasy'' game series. The film failed to recoup its $135 million in development costs.

 

[zurich]

Enix Corp. agreed to buy Square Co. for 93.2 billion yen ($764 million) in cash and stock

$764 million?! Thats it?! At one point Square wanted a billion or two from MS for a minority stake in the company! Man, if MS paid what it did for Rare, imagine how much they'd pay to get their hands on Square (and yes I'm biased, but I truly think Square is worth more to MS than Rare [wierd, they rhyme]).

I still don't get the merger in terms of "fighting off foreign competition". In otherwords, if Enix has no interests outside of Japan, and Square is pulling in roughly 50% of their sales world wide, with virtually nil threat of like Baldurs Gate tearing up the Degenki console charts, then why merge [to fend off foreign competitors]?

Is this simply to cut operating costs and consolidate business?

 

[Ozymandis]

I get home from work and look what happened. Wow.

Sony stands to gain the most from this I think. Although of course it's not like they have any real competition in Japan anyways, I'd assume that this new company will likely support Sony with the vast majority of its RPGs.


Playstation will probably dominate the Japanese market forever!

(well, at least a very long time)

 

[PC-Engine]

I think they're more likely to go multplatform after all the dust settles.

 

[Ozymandis]

I think they're more likely to go multplatform after all the dust settles.

Hmm. I don't know what kind of incentive there would be to release significant amounts of RPGs on any platform besides Playstation2. From my experience, the vast majority of RPG fans own a Ps2 (of course).

 

[PC-Engine]

Well Square has already started making games for Nintendo even before this announcment. Square will be disbanded after this and SONYs share of the company will be a lot less now. Less SONY control means a higher chance of making games for other consoles in the future. Installed base hasn't limited EA among others from multiplatform development.

 

[Rodéric]

That's not necessarily a good thing.

Let's wait and see.
(Dragon Quest on GameCube ?? ^^ )

BTW, Ozymandis, how good is Resident Evil Zero ?

 

[PC-Engine]

That's not necessarily a good thing.

Let's wait and see.
(Dragon Quest on GameCube ?? ^^ )

BTW, Ozymandis, how good is Resident Evil Zero ?

Why not? DQ started life on the Super Famicom just like FF

Regarding RE0, it's pretty good especially the buddy system and the new inventory system. As to the game...well it's RE just like all the other REs. The backgrounds have more animation than RE Remake and the realtime cutscenes don't have the stuttering problem that Remake had.

 

[Blade]

Enix did commit to make games for GameCube already, according to their president/PR department.. and Square claimed to have "more than one" GCN game in development.. (the one so far being Nintendo's FF:CC, of course)

With Sony's hold on EniSquare () down to 8%, I doubt that you'll see any limitations on EniSquare (such as "you can't develop for GCN or Xbox") stick around for very long. I think that GCN is definitely getting more games.. and EniSquare might also wisen up and see how well Xbox is faring in th' States and Europe, and to decide to develop for it.

 

[marconelly!]

Well Square has already started making games for Nintendo even before this announcment.

Yes, but the game for GC they are making seems more like an afterthought so they can tap into the GBA market.

I think this new company will develop for PS2 first and foremost and do the similalr busines on GC/GBA that Square pulled.

As for Xbox - DQ was never popular outside the Japan and FF was never to be on it, for other reasons than Sony involvement. I wouldn't count much would change now, especially if the reason for the merger is 'fending off' foreign companies.