Chuo University Speech(Nov 25th, 2011)
"The Structural Transformation of the Game Industry"


Slide 3 shows the company history. I have been serving as the CEO of Square since 2001. I merged Square with another game publisher called Enix, to form Square Enix effective April 2003. Three years later, Taito (listed on TSE1 at the time) came on board the group. The group was reorganized to a holding company structure in 2008, and the following year, UK's Eidos (listed on LSE at the time) joined the group. M&A is an important strategic option for the company. Each of the acquisitions to date served different purposes, so the integration steps were completed with different approaches.

When Square Enix was formed through the merger of Square and Enix, the intention was to mutually fill in the functionality gaps to navigate through that era at the time. Hence, the two were merged seamlessly into a single organization. A merger of this nature is normally cumbersome, creating two sides, one comprised of ex-Square people and the other of ex-Enix people. I became the new CEO, and the CEO of ex-Enix assumed the deputy CEO position. If there were a divide at this level, people in the organization, starting from the board members, executive officers, general managers to section chiefs would all be looking in different directions. In Japan, many large companies were formed as a result of merger since many decades ago, but most of the human resource decisions are still based on the pre-merger entities. Many of you in the audience may be looking for a job in the banking industry, and I can tell you that it's pretty tough out there. I made very detailed efforts because I didn't want to see such divide. For instance, I didn't have an office of my own. I physically shared the office with the deputy CEO, which was surrounded by glass walls. As such, people who were reporting to us didn't have to waste their time thinking about to whom he should report. I also completely ruled out the practice where the important positions are granted in a rotating manner, switching back and forth between the ex-Square and ex-Enix camp. This is how Square Enix was formed, coupled with some carefully thought initiatives.

Taito acquisition was intended to fill in the function that Square Enix lacked, namely the management of game arcades and it's role as a supplier and manufacturer of games to the arcade operators. Yet, the brand image being so different, Taito is still very much an independent company, being positioned under the holding company, Square Enix Holdings.

Square Enix Holdings was established in October 2008, so that we can reap the benefit of a holding company structure facilitating such business reorganization.

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