You've heard this one before: the Japanese game market is shrinking, and Japanese companies need to look to the West to compete. Most of the presidents and CEOs of the NES-era aging titans have said this at one point or another, but few have made such bold statements, and bold moves, as Square Enix president and CEO Yoichi Wada.

Wada, in his Tokyo Game Show 2008 address as chairman of CESA -- Japan's equivalent of America's ESA -- said flat out that the country has "lost its position" as the world leader of game development. "Why has the Japanese industry lost its position?" he asked. "I, as chairman of CESA, shouldn't be saying this, but it's true."

But the move made surprised many -- the company acquired troubled UK-based publisher Eidos, gaining a host of great IP and some strong studios into the bargain. Now, it wasn't that surprising when the company acquired Japanese publisher Taito in 2005. But a huge Western organization? That's more interesting.

But owning doesn't necessarily equate to a meaningful collaboration or any form of understanding. How will the two companies integrate their operations in a meaningful way?

To answer that question, Gamasutra sat down with Square Enix's head Wada and Phil Rogers, CEO of Eidos, at last week's E3 trade show in Los Angeles.

So, obviously, you guys have come together, and it's an interesting time. I've been following the things that you've been saying -- like at Tokyo Game Show and to the media -- about the importance of targeting the western markets, and the Japanese game industry's insularity, so it is interesting to see Square Enix make this step.

I was wondering: how has it been? I'd like to hear from both of you, how has it been so far, and, you know, it's been a very short time that things have really come together, but...

YW: In the sense of the newlywed, we're only third day of the marriage, so we're still sorting out the furniture of the husband and the wife. So when the new contents are born that's the first time that the couple is going to start their lives, actually, and it's going to take a couple more months until that can happen.

And for E3 -- take that as an example -- Eidos [and Square Enix] will be able to be informed by one another as well, and I believe that the accumulation of this kind of experience is going to be beneficial on bothsides.

And there was a technical academy or summit?

Phil Rogers: It's coming. It's coming, yeah. This month.

YW: And there, the Square Enix engineers are going to be participating in that as well, so there is going to be a lot of exchange going back and forth, in that sense.

PR: And although it's only been a little over a month now since the legal closing, you prepare and you think. Obviously, we announced this in February, so we're dealing with the questions in a couple of areas. And I think we're very excited on the announcement -- leading a company through this sort of change. It's great to get a reaction internally that thisis going to be a fantastic thing for the business.

We're trying to reinvent Eidos, as we've seen the industry changing -- we've had to readdress ourselves, and I think that this is really going to allow us to accelerate. Do more; perhaps travel faster, travel deeper.

Clearly, in our sort of industry, the synergies about "how does one and one equal five, or ten?", as opposed to, other times the synergy is... sometimes combinations aren't really achieving.

So, there's tons of excitement. We've loved the pace, internally, that things seem to be [at]. There's a lot of planning and thought leadership. Some initiatives that we talked about: we have anacademy of experts; we're going to take our studio leadership structure and key engineers, and have attendees and participation from the Square Enix side, and that's fantastic.

So there's genuine excitement in the business, and it's lovely to be able to say that, actually. I really love that it's true. We're a very product-focused company now, and this combination feels right.

It opens up a lot of questions. Square Enix has a very strong creative culture, and Eidos does too, but I think that in recent times Eidos maybe didn't have the resources -- as things were a bit troubled at Eidos -- to pursue that creative culture; there were a lot of product cancellations and stuff prior to the merger. How does that creative culture flow in and out from the two organizations together?

YW: One of the reasons that we decided to acquire Eidos was because of this creative culture residing in that company, and that became a decision factor. And so I believe, in that sense, we were a good match, and I believe more and more of the creative cultural exchange going forward between the two companies.

But to nurture this creative culture is the tough part, because if there is too little in the way of resources then we won't be able to nurture that creative culture. But if there is too much of it, then it is going to rot.

And because both of the two companies have been facing tough times, through this exchange we will be able to get an insight from both parties that will fuse, which is going to become a good mix in the quality of the creative culture.

PR: And I think there's more creativity flowing in Eidos today, probably, I'd say in the last two years, as opposed to my 10 years being at Eidos. I think the history is there -- I mean, the narratives, the gameplay, the characters.

And like any story, it's had different chapters, and the chapters of the last three years have been quite tough. I think that the games that you reference -- for cancellation -- that was actually realizing that the creativity wasn't so good in those games. It wasn't so much of an expectation of success, actually; it's been clearing those to allow new things to grow: actually bring some new ideas to market.

And so, I think the creativity right now is at a great place in the group, and this transaction is one that comes with confidence: we can actually bring the titles through to fruition.