Two of the biggest Japanese game publishers will join forces early next year.
Enix and Square have revealed plans for a merger that will take effect next April. The merger will exchange Square shares for Enix shares, so Enix will be the dominant corporation when the deal is complete.
Enix produces the Dragon Quest (Dragon Warrior in the U.S.) series that has been wildly successful in Japan. By comparison, Square's Final Fantasy series and its other role-playing games haven't generally sold nearly as well as the Enix games in Japan, but they have a broad following in the U.S. and Europe.
The surprise deal is being explained as a way for Square to get an influx of capital and for Enix to secure more popular franchises to develop for future games, since Enix has in the past relied upon a small number of very successful series.
Square's financials have been rocky since the company took significant losses in 2001 from its movie venture, Final Fantasy: The Spirits Within. Square's online game, Final Fantasy XI, also hasn't met expectations. In the fiscal year ending in March 2002, Enix posted a profit of $35 million on sales of $203 million, as compared to Square's loss of $139 million last year on $298 million in sales. However, Square's most recent financial results have shown a sharp turnaround, and from March to September the company posted a profit of $3.2 million, largely due to strong sales in the US and Europe of games such as Kingdom Hearts.