Square Enix: Breaking through

Charles Darwin put it like this: It’s not the strongest that survive, nor the smartest, but the ones most responsive to change. That’s possibly the best advice you could offer in the modern games industry, which itself is evolving at a speed and volatility few had prepared for.

Take, for example, the dinosaur-sized EA, which had been bleeding money for twelve consecutive financial quarters.

Or even the nimbler independent studios such as Realtime Worlds, Free Radical and Grin, which all met extinction in the last two years.

With the stakes pushed to an all-time high, so far it has been the social and mobile companies – such as the infamous Zynga and Angry Birds powerhouse Rovio – which have been most successfully responsive to a games market in a rapid state of flux.

But for Square Enix the belief remains that the old triple-A studio model can still thrive; it just needs to change.

The company’s president, Yoichi Wada, explains to Develop that triple-A game businesses need to expand their view, or get caught in the margins:

“There are many companies out there who focus business on America and Europe, and there are some companies which focus on Japan – nobody but us covers both,” he says with clear sense of pride.

“What we want to do is create something globally appealing. And if our development teams can create something that appeals to a global audience, I think that is the next step in our business”.

INTERNATIONAL AMBITION
Square Enix believes that its studios – dotted across the US, Canada, Europe and China – can work together in building new, globally-focused, successful franchises.

Early in 2009 CEO Wada wouldn’t have had the resources to approach such a task, but just a few months into last year the Japanese RPG specialist had sealed a £84m acquisition of Britsoft publisher Eidos, and became a transcontinental enterprise almost overnight. No one knew at the time how deep an impact that had on Square Enix’s new studios.

“Wada-San is very curious about Eidos Montreal,” says the Canadian studio’s general manager, Stephane D’Astous.

“In fact, with all the studios in Europe and the US – he took a lot of time out to visit each studio. In about the space of a year, I’d say he had about 40 people fly over from Tokyo.

“At a certain point after the acquisition, I remember we had people from Square Enix fly over every month – from different departments – to take a look at our company and how we operate. We had people from IT, HR, development – we had all kinds of people come over and take a look.”

This marked the beginnings of Square Enix’s ambitious new battleplan; to save costs by sharing technology and information between teams, and widen opportunities by spreading products across the boundaries of numerous continents.

D’Astous has that philosophy drilled into him, but he’s not ignoring the risks: “In our future projects we’ll have to look very carefully at how we can build games of
global appeal in all territories. The danger is that you lose focus if you spread your game to appeal to different cultures, so it’s a fine line to walk.”

WEIGHT OF THE WORLD
Square Enix Europe CEO Phil Rogers says the firm has taken great care in implementing fundamental changes to an operation of its size, and insists the weight of this global ambition won’t rest on the shoulders of any single studio.

“I think, at the global level now, we have to encourage cross-studio collaboration, but that hasn’t been forced from the get-go,” he tells Develop.

Rogers suggests that changes have been made by leading from the front, by exhibiting what can be done, rather than through a send-to-all email entitled ‘new philosophy’.

“Across Square Enix we have this collaborative process that has been led by certain teams working together, and it has created a healthy intrigue from our studios,” he reveals.

“When all our teams see the result of that collaboration, it creates a whole new kind of vision for our studios to work more closley with each other.

“So the pace of our collaborative work has started quite slowly with purpose, but for the next 12 months there will be a lot of great collaboration going on.

“We have international meetings based in Tokyo, with studios travelling from North America, and vice-versa. What’s most impressive is that it doesn’t feel forced. It’s quite natural, and that’s important to get initiatives driving.”

There’s tremendous potential for saving costs and improving product through collaboration, says D’Astous. He explains that the Deus Ex project is being built with an engine made by Crystal Dynamics, but the studio received more than a good editor.

“There’s some really good tech there, but the best thing is that the whole project got a kick-start because the Crystal Dynamics team helped us figure out how to use it all. We’re sharing a lot of data, a lot of tech, and a lot of best-practices among each of the studios. That’s what happens at the start, and when a project’s in place we branch off from the group and do our own thing.”

He insists, however, that this engine share was Eidos Montréal’s preference, and not a case of enforced hand-me-downs from within the Square Enix group.

“Of course, as Eidos Montreal’s general manager, I don’t want to put all my eggs in one basket. It’s risky if you focus too much on one technology, so Deus Ex uses Crystal Dynamics tech, while our other project, Thief 4, won’t.

“It’s certainly much easier to recruit people if you use a standard external third-party tool, so we have looked at this for Thief.”

GLOBAL COLLABORATION
Wada admits that, with this philosophy implemented across the entire company, third-party tool use has not been so easy to encourage back in Japan.
“We have worked very hard to convince our developers to use external tools more, but in actuality our teams very seldom used them,” he says.

“Over the past three years I think our people have just begun at last to have more understanding for external tool use. I don’t think using external tools will necessarily bring costs down – some of them can be very expensive. What’s most important is the standardisation, for all our studios to use common tech within.”

Rogers steps in: “There’s a lot of tech sharing, and we bring our studio general managers together on a very regular basis and look at all our projects together, but we try to strike a balance of having focus within our individual teams, and at the same time have those teams talk to each other. We really can’t force that. We can’t just force cross-border partnerships. In a way, our collaboration is driven by a need to solve problems, a need for different solutions.”

Example? How about that Deus Ex: Human Revolution trailer? The one that launched at E3 and single-handedly pushed the game’s hype to mountainous heights.

It was made, D’Astous explains, somewhere thousands of miles away from Eidos Montreal, within another segment of the Square Enix group.

“One of our first collaborative efforts with Square Enix was with Visual Works [the firm’s Tokyo-based CG movie production department], who made the trailer for Deus Ex: Human Revolution that everyone went crazy about,” he says.

“People loved the video, it won so many awards at E3, so as you might of guessed, so far I’ve been very happy to collaborate.”

From Develop’s discussions with all the general managers of Square Enix’s studios, it’s apparent that this philosophy of collaboration is now fully embedded into studio culture.

Nils Jorgensen, the general manager at Denmark studio IO Interactive, makes that abundantly clear.

“The future games market is going to be global. It has a target audience that crosses national borders,” Jorgensen says.

“And at IO we actually have to employ a lot of foreign talent to the studio. I’d say more than 30 per cent of our employees are from countries other than Denmark.

“In all I think we have people from more than 20 different countries here. So the atmosphere and culture is quite international, and I think it’s easier for us to develop games that are for a broader market, because we understand a lot of different cultures.”

AMERICAN DREAM
Few know this, but Square Enix now has a small development team based out in Los Angeles, working under the management of the firm’s new US CEO Mike Fischer.

Fischer tells Develop that a start-up team like this, in particular, can greatly benefit from Square Enix’s global-studio philosophy.

“Because they are a small team you don’t necessarily have a wealth of resources,” he says, “but what makes it happen is that there things across the whole Eidos organisation that they can rely on – from usability testing teams all the way through to senior technology mentoring.

“None of this we had access to before the acquisition.”

Fischer, who was appointed in July, points out that this collaboration isn’t just within its development teams.

“There’s an experienced licensing person who’s been at Eidos for years,” he says.

“I’m reaching out to him now to look at some licensing opportunities for other IP as well.”

Of course, this issue of IP – and indeed new IP – may prove to be the open window in Square Enix’s carefully-built fortress. The three CEOs tell Develop they want the firm to become a top-three publisher within five years by leveraging its own brands and, possibly, creating new ones. This, of course, is a plan against an era where only top licenses and star-IP are fully trusted to sell.

Jorgensen, however, believes other studios will envy the challenge his studio faces: “We developed the Hitman IP, Kane & Lynch, Mini Ninjas and Freedom Fighters back in 2002 with EA. That our games have made it as movies shows the potential of the IP that we create,” he adds.

“We’ve just been allowed to build this incubation department at our studio. Its sole purpose is to look at new IPs and how we can evolve existing IPs. The great thing about our partnership with other studios is that we can meet colleagues to discuss some of our different ideas or help each other solve problems. It’s really inspiring, actually.”

CRYSTAL CLEAR
Darrell Gallagher, the studio head at Crystal Dynamics, explains that his studio has already evolved one of Square Enix’s most iconic IPs.

“The question for us is how can we bring creativity and innovation to the Tomb Raider franchise,” he says.

“It was important for us that the Tomb Raider games had changed their direction – we want to be excited by what we do at work, and that will resonate externally. If we’re excited by a game, so will our audience be.”

Gallagher insists that, despite Square Enix undergoing a top-to-bottom transformation, there remains much faith in Tomb Raider.

“Lara still resonates very strongly with the audience,” he says.

“As a character she’s up there with Mario in terms of audience recognition – I think they’re head-to-head. So I think it’s really important that we keep the IP fresh and don’t rest on our laurels.”

Not resting on one’s laurels perhaps defines the mood best at Square Enix, a publisher that seems to be fully appreciating just how much the industry has shifted and scattered in the last five years.

Even in regards to cross-studio collaboration – something which is clearly being championed by everyone at the top of the company – CEO Wada is not putting all in one basket.

“I do not think that cross-studio collaboration is indispensible for Square Enix projects, but it is something we should have,” he says.

“And since nobody else has the resource for east-west collaboration like we do, I think this can be the differentiating factor for the company.”