Square Enix announces merger with 'I am Setsuna' developer 1

Square Enix announced it is merging with its subsidiary Tokyo RPG Factory, officially dissolving the latter in the process.

A report from Japan-based gaming media site Gamebiz mentioned that Square Enix will take on Tokyo RPG Factory’s rights and obligations as part of the two companies’ merger deal. The deal will also mean the dissolution of Tokyo RPG Factory after almost a decade of game development.

The deal follows Square Enix’s decision to shut down and merge Luminous Productions, the developer of the badly-received game Forspoken, into itself in March 2023. Gamers may recall that Forspoken suffered lackluster sales numbers before Square Enix dissolved Luminous Productions; PC Gamer theorized that the former probably didn’t see much value in letting the latter have another chance to develop another game. 

Interestingly, despite previously reporting 154 million yen in total losses in fiscal year 2020 and other periods, Tokyo RPG Factory has been financially solvent in the past three years, per Automaton. As such, it could recover from these losses and still have enough to keep it operational. 

However, the company was still “in the black” for a third consecutive time, which may have contributed to Square Enix’s decision to merge the subsidiary into itself and dissolve it. Because of the merger (and dissolution), Square Enix will be the one to answer to its former subsidiary’s financial obligations.

Square Enix established Tokyo RPG Factory in 2015 to make smaller-budget JRPGs – something Square Enix was allegedly falling away from back then. The games Tokyo RPG Factory developed didn’t attract much public attention, but they are praised by critics nonetheless. These games are I am Setsuna, Lost Sphear, and its latest release, Oninaki. 

It is unknown what will happen to Tokyo RPG Factory’s employees, as both companies have yet to address the merger on their own respective websites as of press time. However, some may work for Square Enix directly on some of its projects. 

Whether the merger deal between the two companies would mean that Square Enix’s future works will have components similar to those found in Tokyo RPG Factory’s games is unknown. However, it is likely to happen as the same is true for Luminous Productions’ dissolution; its games use the Luminous Engine, the same one Final Fantasy 15 ran on. 

Nevertheless, Square Enix’s decision to merge yet another subsidiary into itself is its latest move in its plan to make alterations to its organization. Gamers may recall that the company sold three of its western studios (Crystal Dynamics, Eidos Montreal, and Square Enix Montreal) to Swedish Gaming Group Embracer, per The Guardian. The deal also includes various intellectual properties like Tomb Raider, Deus Ex, Thief, and Legacy of Kain.

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