I originally wrote this as an e-mail to a podcast which was revising its list of the 100 most influential games and taking listener feedback in consideration. Ultimately, a number of messages were not read on-air due to time constraints, and none of what I brought up was addressed on the episode.
Its a topic I'm very invested in, so I ended up going too hard (the below is a revision, the original was over 1700 words); and its all history that hasn't been properly synthesized in English anyway, so I get it. Some of my guidance on this matter came from the GameStaff wiki, which hosts a comprehensive list of every development team under both Square and Square Enix. But the go-to expert on that company history is Ryo Saito. What you read below cribs a fair amount from their researching and mapping of this stuff.
My focus in video games hews towards their stories and overall worldview, while for their history my interest flows towards the people who make them. A case where those two sides came together to drastically shape the future of mostly RPGs was 1995's Tactics Ogre.
That game stands apart from most of its SNES brethren by sheer volume. Unlike its predecessor Ogre Battle—whose story was tailored to fit into whatever ROM space remained after all other assets were in place—the "thinking game" team at Quest allocated a large amount of memory to text, which gave writer-director-designer Yasumi Matsuno a lot of opportunity to spread his wings. And he did so with gusto, laying out an entire political war drama from multiple angles and various outcomes, portrayed by a cast with personalities so multilayered that everybody can be hard to empathize with. There's a specific kind of cynicism & nuance to his writing, and the particular way he goes about portraying the horrors of war, which are hard to find elsewhere in the medium. I've seen Fire Emblem fans point to the Jugdral duology when it comes to unusually mature storytelling for the SNES, but both of them came out after TO. It might very well be the earliest Japanese dark fantasy game to be a hit.
That success carried over not just to Quest, but the leads of the game—Matsuno, character designer Akihiko Yoshida and "memory optimization wizard" Hiroshi Minagawa—who gained admirers within the industry. One such fan was Hironobu Sakaguchi, who offered them a job within Squaresoft to helm another TRPG, as part of the Final Fantasy series. FF Adventure and Mystic Quest were already there, but the former led to the separate Mana series, while the latter was a small-scale dead end. Final Fantasy Tactics—which closely follows TO in game design, art direction and worldview; streamlined and on a smaller scope—truly opened the doors for the franchise to encompass different kinds of play experiences and storytelling, beyond what Sakaguchi or up-and-coming steward Yoshinori Kitase could/would pull off. The anthology finally got the wide variety its format promised.
The fruits of that integration were laid out in the 2000s, as a deliberate shift towards increasing FF titles saw Square→Square Enix take it in various directions. Some of them not by the FFT team, but featuring Akihiko as visual lead, who became as much a definer of not just how the series looks (alongside Yoshitaka Amano and Tetsuya Nomura), but also how SE games look. His designs were a factor behind NieR:Automata becoming one of the biggest games of the past decade; beyond that, games like Harvestella and those made by Creative Studio III employed other artists who match his style closely enough to cause some confusion among players.
Matsuno himself also got his share of fame. There's not much writing on this in English, or even in Japanese that I've come across, but from what I gather, TO might have been part of a trend in the Japanese industry during its own bubble era: auteur-focused marketing. Following the example of film, leads with distinct creative voices were pushed in the press, right as game writing got sophisticated enough to stand toe to toe with other mediums, something Kenji Eno and Hideo Kojima leaned on further by the end of the decade.
And this kind of framing does reflect on the final product: Final Fantasy XII—for which Matsuno was the original writer-director-producer, but ultimately had to retreat to a supervisor role at the overly protracted final stages of development, handing script duties to Mana and Kingdom Hearts veterans—has many good traits and features going for it, but the overall experience is severely hampered by the story. A kind of tale that in his hands could be compelling just lands completely flat when done by someone unsuitable.
But whatever gap his departure from SE left was short-lived, for another hardcore fan of his had a meteoric rise up the corporate ladder. TO mesmerized Naoki Yoshida (no relation to Akihiko) at launch, and for over a decade he wished to create a game like it. His career hewed towards service-type games, culminating in the rescue of Final Fantasy XIV. Since one of the franchise's defining traits is compelling stories, he sought to improve on that front, through new lead writers. This is a key factor draw for genre newcomers and "refugees" from other games, making it one of if not the most played MMORPG. While XIV has showcased a variety of styles across its hefty lifespan, much of the main scenario questlines walk in Matsuno's footsteps. As do a number of sidestories, some by the man himself. Its genre has proven to be a great match for this sort of writing, the various patches and expansions allowing the quest design team a wide berth to explore the world deeper, where packaged titles often stumble in finding enough space for it and the technical cutting edge. After the first few years of success, Naoki was asked to make Final Fantasy XVI, and chose to go further down the dark fantasy path.
While for many the Kitase team(s)' style is still quintessential FF, for almost a decade and a half now, TO has proven to be the foundation of the other big pillar that holds the franchise up today. While this direct lineage on its own makes for a game crucial to the current RPG landscape and SE as a whole, the flip side is just as impactful.
Three developers cannot make their first 3D game on all-new hardware in a timely fashion; with only Matsuno, Akihiko and Minagawa moving over in 1995, they needed a new team to create FFT. Developers from various latter-day SNES Square titles were assembled for the job, but the majority came from the Super Mario RPG team. To say the transition was a tonal 180° shift is an understatement. I cannot prove with 100% certainty that was a factor—some SMRPG devs worked on Final Fantasy VII or Front Mission 2 instead, and the company's management may not have been the most comfortable (even rising stars like Nomura chafed at Sakaguchi's domineering way/position)—but a significant chunk of that team left the company instead.
That same year, some of them opened one of the earliest (if not the first) Square→Square Enix "refugee" studio, LOVE-de-LIC. While it only lasted five years, it started a lineage of RPGs that actively bucked genre conventions: gameplay systems that emphasized love over war, surreal settings based in the modern day over high fantasy, eccentric characters with fleshed out daily routines over bit players in a stage play. In other words, the complete opposite of what TO and FFT indulged. Their games, and those made by its employees in spiritual successor studios, have accrued a cult following over time, but the one that's had the most outsized influence was LOVE-de-LIC's first outing, Moon: Remix RPG Adventure. If the name sounds familiar, it might be from Toby Fox mentioning its ideas as direct inspiration for his own RPG Undertale, which went on to reshape the indie RPG ecosystem into what it currently is.