Company: Monolith Soft
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Monolith Soft was originally owned by Namco, but their relationship took a negative turn after Masaya Nakamura stepped down as president of Namco in 2002, three years prior to the company's merger with Bandai. As the company underwent changes, Monolith Soft felt that they were being given less creative freedom due to the newly-created Bandai Namco being less willing to take creative risks. They received consultation from Nintendo executive director Shinji Hatano, who advised them to continue making innovative projects. This inspired Monolith Soft to break away from Bandai Namco in favor of becoming a Nintendo subsidiary: Monolith Soft was allowed creative freedom in exchange for developing software exclusively for Nintendo platforms.
Initially, Nintendo had acquired an 80% share of the company, while Bandai Namco retained 16% of the company and remained as a development partner in part to strengthen their relationship with Nintendo. The remaining 4% was divided between the company's founders: Tetsuya Takahashi, Hirohide Sugiura, and Yasuyuki Honne. However, by April 2011, Nintendo had acquired the remaining 400 shares from Bandai Namco, granting them 96% ownership of Monolith Soft. The acquisition as a whole was notable for contrasting Nintendo's previous approach of not taking part in mergers and acquisitions of other companies. In a statement on the matter, former Nintendo president Satoru Iwata stated:
Initially, Nintendo had acquired an 80% share of the company, while Bandai Namco retained 16% of the company and remained as a development partner in part to strengthen their relationship with Nintendo. The remaining 4% was divided between the company's founders: Tetsuya Takahashi, Hirohide Sugiura, and Yasuyuki Honne. However, by April 2011, Nintendo had acquired the remaining 400 shares from Bandai Namco, granting them 96% ownership of Monolith Soft. The acquisition as a whole was notable for contrasting Nintendo's previous approach of not taking part in mergers and acquisitions of other companies. In a statement on the matter, former Nintendo president Satoru Iwata stated:
"When we say we do not do M&A, there are always exceptions, so let me explain about it. We have never said that we will never do M&A in any situation. Actually, we are not against M&A if Nintendo can absorb the real value of the company. However, in most cases, the value of software developing companies is attached to its people, not the company, which is merely a vessel for its people. So, when we purchase a company, we can purchase the vessel, but we cannot necessarily purchase the contents. Even if we should compete with others to purchase a software company, although we might be able to increase the sheer number of our developers and to gain a short-term result, we do not think it will do good for us in the long run. We have been repeatedly saying that we will not do that kind of M&A.
In the case of Monolith Software, Mr. Sugiura, the president, and Nintendo have a long-term relationship. How Mr. Sugiura thinks is close to how Nintendo thinks. The software Mr. Sugiura would like to create is in line with what Nintendo would like to have for its platform. So, we thought that Nintendo should support this idea, and we decided to take action.
If certain conditions are met, we may do the same thing in the future (M&A). However, we will be very careful and selective, so that we will only partner with people with whom Nintendo can create a long-term working relationship."
In the case of Monolith Software, Mr. Sugiura, the president, and Nintendo have a long-term relationship. How Mr. Sugiura thinks is close to how Nintendo thinks. The software Mr. Sugiura would like to create is in line with what Nintendo would like to have for its platform. So, we thought that Nintendo should support this idea, and we decided to take action.
If certain conditions are met, we may do the same thing in the future (M&A). However, we will be very careful and selective, so that we will only partner with people with whom Nintendo can create a long-term working relationship."
Monolith Soft-Namco-Nintendo relationship:
http://www.siliconera.com/2017/08/21/monolith-soft-executive-producer-going-namco-nintendo/
Nintendo buying Monolith Soft:
https://www.gamespot.com/articles/nintendo-buys-monolith-soft/1100-6169813/
Company shares:
https://web.archive.org/web/20110927000419/http://www.monolithsoft.co.jp/company/plofile.html
Iwata quote:
https://web.archive.org/web/20080229082722/http://www.nintendo.co.jp/ir/en/library/events/070427qa/index.html
http://www.siliconera.com/2017/08/21/monolith-soft-executive-producer-going-namco-nintendo/
Nintendo buying Monolith Soft:
https://www.gamespot.com/articles/nintendo-buys-monolith-soft/1100-6169813/
Company shares:
https://web.archive.org/web/20110927000419/http://www.monolithsoft.co.jp/company/plofile.html
Iwata quote:
https://web.archive.org/web/20080229082722/http://www.nintendo.co.jp/ir/en/library/events/070427qa/index.html
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According to president and co-founder Sugiura Hirohide, the company was formed after the release of the Squaresoft film "Final Fantasy: The Spirits Within" proved to be a box-office bomb. With the film losing $94 million at the box office, Squaresoft had very little money left to create a sequel to Xenogears, thus causing Hirohide to leave the company and create Monolith Soft along with Tetsuya Takahashi, also a former employee at Squaresoft.