Back in 2014, Square Enix announced Shinra Technologies to a great deal of fanfare. The company touted Shinra as "the next evolution of gaming", which was supposed to harness "the power of a supercomputer in the cloud". The company signed its first developer, Camoflaj, in early 2015 to its prototype accelerator program, intended to help developers create games using Shrina cloud tech. Hardsuit Labs and Human Head also signed on.
Square Enix has finally decided to close Shinra Technologies, killing both subsidiaries: the US-based Shinra Technologies, Inc. and Shinra Technologies Japan Co. Ltd. According to the released notice of dissolution, Shinra is closing due to a lack of third-party investors.
"STI, as a cloud platform operator, has been trying to raise funds necessary for further business operations from third party investors. However, STI has found no prospective investors at this point, and therefore has to discontinue its business," says the document.
The document further lists extraordinary losses due to the venture totaling 2 billion yen ($16.8 million). Square Enix paid in $15 million into the US-based subsidiary and 80 million yen ($675,000) to the Japanese subsidiary. That's a good deal of money lost.
The problem here is Square Enix tried to compete in a space already owned by much larger operators. Amazon's cloud offering is already huge and there are similar companies like Softlayer that provide hosted GPU (Nvidia GRID) and computing services. Cloud computing isn't a space to jump into if you don't have a unique offering.
"One very big point of differentiation between us and previous quote-unquote cloud games is that they weren't able to provide new game experiences," Wada told Gamesindustry.biz in July 2015. "They used the terminology of the cloud, but we're coming at it from a completely different angle of what kind of new experiences the cloud can provide to gamers. They were just taking what could already be done on a local PC or console and moving that to a server, and focusing on streaming distribution. We are focusing on what's possible if you take the computing to the server-side, and what new experiences you can create from concentrating that computation."
The problem is, Microsoft is already doing the same things with its Azure cloud services. Crackdown 3 from Reagent Games uses Azure to calculate the physics that allows players to destroy everything in its urban environments. That's similar to what Shinra was attempting to do according to its statements, but Microsoft has major infrastructure to draw on already. Azure is a global network used for media and enterprise services that Microsoft has been building since 2010.
Shinra was starting from ground zero, trying to build the same. That's a significant capital cost and Square Enix had yet to establish itself as a contender in the space. Perhaps if the company had been starting with the deeper pockets and at least some strength in the hardware space, but Square Enix had neither. And so, Yoichi Wada is seemingly out of a job again.