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Square Enix never fell behind.
Gaming did.

Seriously, I don't blame their developers for falling behind the times, I just feel like the genre of JRPG has hit a brick wall and no one has any clue on where to take it now. Seriously, how many good console RPGs have you played this generation? Like really good ones, not ones where the devs are testing the next gen waters with a new concept that either hits or misses. Valkyria Chronicles and Demon's Souls are two of my favorite PS3 games, but they were really just new ideas that happened to come together well in the end rather than not. Plenty others have failed. This is why we're seeing all the big RPG developers retreating to handhelds (or the Wii) so they can keep working with familiar technology where they can work within some kind of known boundaries of what they can do. Like I said in another thread, I don't think your typical turn based or strategy RPG where all the characters stand around waiting for orders would cut it anymore.
As far as what I'd like to see in a restructuring, take off all team members from Final Fantasy. No one makes Final Fantasy. Milk social/mobile games and Eidos franchises like Tomb Raider, Deus Ex, an Legacy of Kain while you're doing this. Let Hiroshi Minagawa make a team out of people he selects. Demote Kitase from Producer to Director and let him pick a team of who he wants. Call Matsuno's attorneys to arrange a meeting and possible negotiation of a new contract. Tell Mistwalker you want to publish their next game. Have all of these people make a new IP on PS3/360 (preferrably PS3
). Make sure these people are working with people they chose so there's no "communication between creative leads and programmers" crap they talk about in that article. Once all these new IPs are done testing the waters, exploring new ideas for JRPGs, then you have enough data to know how to make a next generation Final Fantasy. Sequelize the games that were really good. Move members of the team whose games weren't so good around to help out on the things they did right. Hopefully this will all be done by the time you can't milk those Eidos franchises anymore, then we have a strong Square Enix poised to reclaim its dominance of the video game market.
It just seems to me like before every FF they made a game that tested out the engine and worked out some ideas. Like Parasite Eve looked a lot like FFVIII and even had similar sound effects for finding items I believe. The Bouncer came out before X with a similar style. And as in the other thread, I hold on to my belief that FFVII was large a product of experience gained after working on Chrono Trigger! Square needs to do this again, instead of gathering data from other Final Fantasies in order to make the next Final Fantasy. You need fresher ideas and I hope this would be a way to do it.
Until then, I'll be having a blast playing Dragon Quest V on DS and Tactics Ogre on PSP (SE never fell behind).
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