Industry's days of stability are over - Square Enix CEO

While many of the prominent Japanese third-party publishers have struggled to adapt to the changing market in recent years, Square Enix has maintained and even grown its marquee name. At E3 earlier this month, it even held its own press briefing, the first for a Japanese third-party in years, where it featured long-awaited projects like Final Fantasy VII Remake and Kingdom Hearts 3, along with Eidos projects Rise of the Tomb Raider and Deus Ex: Mankind Divided. Speaking with GamesIndustry.biz through a translator at the show, Square Enix CEO Yosuke Matsuda explained why the company saw this as the year to once again host a press event at E3.

"We have a lot of titles in our lineup this year and felt we wouldn't be able to express everything just with the booth alone," Matsuda said. "So we decided to move forward with the conference in order to showcase it in the best light. Timing-wise, we have a great lineup which is a good mix of Western and Japan-based titles. It's rare to have publishers that hold a lineup from both regions, so we thought it would be a great opportunity to showcase that lineup to the public."

"We feel those days where the business models were very stable--not just the business but the technology as well--those days are over. That's kind of behind us at this point."

Much of Square Enix's success with Western-developed games can be attributed to Eidos, which the publisher acquired in early 2009. Since then, Tomb Raider, Deus Ex, Hitman, and Thief have all been resuscitated from various states of disrepair, and have given the publisher an enviable stable of franchises for North American and European audiences. But even if the Eidos studios' target audiences tend to differ, Matsuda said the way the company manages them is anything but.

"It's been six years, and at our booth as well as our conference, you can see we are one at this point, essentially," Matsuda said of the company's integration of Eidos. "Phil Rogers and I get on a conference call on a weekly basis with the studio heads to get updates on where development is going, where they are in development, and progress reports here and there. In terms of the treatment and how we're engaged with those studios, it's not any different from how we engage with the Tokyo development staff. And one thing about our company is that a lot of these studios--not just Eidos but all of our Tokyo studios--they all have distinct qualities and are unique in their own ways. And we try to draw on those qualities. In that sense, ever since the Square Enix merger, we've tried to keep our focus on allowing to draw out those personalities and qualities that are unique to each of these studios. And that's probably reflected in these titles we're seeing."

As well-positioned as the company may seem for success with its coming lineup of games, Matsuda knows that there's not much certainty in the games industry.

"We feel those days where the business models were very stable--not just the business but the technology as well--those days are over," Matsuda said. "That's kind of behind us at this point. And given we all have to accommodate to a changing environment, how will we be able to create games that are very Square Enix-like, that are unique to Square Enix? That will be the biggest challenge going forward. The most important point is for us to be able to accommodate and implement what is changing in the environment that surrounds us, but also maintaining our core value, which is to create fun experiences and fun games."

One potentially big change heading for the gaming environment is the arrival of augmented reality and virtual reality. Matsuda said the company is "very interested" in both, but he sees potential for the tech beyond games.

"Within our company we have various types of content," Matsuda said. "Not just games but also art, comics, manga, and that type of media. And we're in the midst of considering what would be the best fit for the AR, how we can utilize that for those type of experiences. One example is how we're partnering with Oculus for Hitman Go. That's something we're trying out right now. But not only with games, we're thinking we could potentially utilize it for manga and those type of media as well. And in terms of games, we're interested in creating new types of experiences rather than existing ones."

"With regards to cloud gaming, that's something of interest to me on par with VR and AR."

Beyond VR and AR, there's another possible source of disruption that Square Enix itself could be ushering along. The company established Shinra Technologies as a subsidiary last year (headed by former Square Enix president Yoichi Wada), with a remit to push forward on cloud gaming as a way to create original experiences that simply couldn't be done on existing hardware otherwise.

"With regards to cloud gaming, that's something of interest to me on par with VR and AR," Matsuda explained. "Of course, cloud gaming is going to become more prevalent moving forward. That said, Shinra is doing something that's a little step beyond that at this point. Speaking with Shinra quite a lot with regards to their model and discussing what they're looking to do, they mentioned that they do want to be considered a platform. So us as a publisher and them as a platform, those objectives differ significantly. So we felt it would be more effective as a business that way, if they're separated as an entity. In terms of procuring the finance and capitalizing on themselves, they felt that Shinra would grow bigger if they're able to maintain themselves."

Despite that interest, Square Enix is not an early adopter of the Shinra platform. The subsidiary has developers like Human Head and Camouflaj working on Shinra-powered games, but Matsuda said Square Enix doesn't currently have developers working on the platform.

"No, not as of now," Matsuda said. "That's still under evaluation and discussion. Of course, Shinra is still discussing their SDKs, etc. and terms of their business model as well. So that's more a future discussion to have. And it's very important as a platform they have a consumer base as well as a market surrounding that platform. So those are elements that would be points of discussion to be had moving forward."