Square would have made more Xenogears. The condition was a million units, the game came in slightly under it, and the sequel that the ending so plainly wanted was never approved. The team didn't stop working. It stopped working there.
What happened next runs across twenty-five years, three publishers and two more series. The people who built Xenogears left, founded a studio called Monolith Soft, nearly destroyed themselves making the follow-up, moved to Nintendo, and made the game that finally worked. What survived all three eras wasn't a story. It was a method.
The Sequel That Was Never Approved
Xenogears was a rejected pitch. Around 1995, Tetsuya Takahashi and Soraya Saga — his wife and his co-writer — put a proposal in front of the Final Fantasy VII project, and it was judged too dark for that series. Hironobu Sakaguchi, then Square's Executive Vice President, liked it enough to hand them a separate production line and put Takahashi in a director's chair for the first time. The team assembled to build a Chrono Trigger sequel became the Xenogears team instead.
Takahashi had come up as an artist, not a planner — Nihon Falcom from 1988, then Square from 1990, graphic director on Final Fantasy VI and on Chrono Trigger. Xenogears was the first thing that was his.
It also ran out of money — the second half stops staging its events and starts narrating them over stills, and anyone who has reached that stretch has felt the budget give way underneath the story. The sequel needed a million sales to justify itself, it didn't get them, and Square's attention was on the properties already working.
So in 1999 Takahashi talked to Hirohide Sugiura, another Square veteran with the same complaint about creative room, and they left. They deliberately didn't go independent — they wanted a publisher with weight behind them. Most of the companies they pitched said no, on the grounds that a studio like theirs ought to stand alone. Namco wanted them as a dedicated subsidiary and took the logistics and marketing off their hands; its founder, Masaya Nakamura, backed them personally.
Monolith Soft was founded on 1 October 1999 by Takahashi, Sugiura and Yasuyuki Honne, who had been art director on Xenogears. It opened with roughly twenty people, most of them new hires with almost no experience, in half a floor of Namco's Yokohama complex that had been abruptly walled off with a security door. The Tekken team was two floors up.
Xenosaga Nearly Ended Them
The rendering engine came in late. Not late by weeks — Xenosaga Episode I's engine was finished six months before the master-up deadline, on a project that had been running since 2000. The programmer who got it working had joined shortly before that, and Takahashi has said flatly that without him the game probably wouldn't have been completed at all. Which left about six months to build everything you actually play.
That is the real reason the opening runs twenty to thirty minutes before it hands you the controller. Half of it is staging, and Takahashi will defend that half. The other half is that pre-rendered sequences don't need an engine, and cutscenes were the only work that could safely proceed while the technology underneath was still being written.
Namco knew the studio was drowning and chose not to help. The executive who backed the founding held that a new company has to survive a hard environment before it can stand alone, and made himself sit on his hands — a decision he later described as steeling his heart. Monolith Soft ran Episode I on continuous overtime with no days off, and was financially strained the whole way.
What came next is the part that actually broke the series. After Episode I the studio swung hard the other way, and nobody ordered it — the mood simply became do what fits the schedule and the budget. Episode II shipped on time and on budget with no all-night working, and the reaction was brutal. The mood swung back, but Episode III was already in production and the correction arrived too late to finish.
The restructure came in May 2003. Takahashi took a board seat and stepped out of directing; he and Sugiura had decided their leads were too senior for a company built to give young staff their shot. The team that inherited Episode III cut the six-episode plan to three and shipped the last one in 2006.
The cost shows up in the staff list. Monolith Soft numbers employees in hiring order, and of roughly the first three hundred, about a hundred had gone — the heaviest losses in numbers fifty to one hundred, the people who joined around Episode II.
How They Ended Up at Nintendo
Their backer retired in 2002. Nakamura stepped down as head of Namco that year, and by Sugiura's account relations cooled from that point — three full years before the Bandai merger that usually gets blamed for it. The merged company was less willing to take creative risks. A Baten Kaitos game for Nintendo DS was cancelled; a third Baten Kaitos, in early development for a long stretch, went the same way.
So Monolith Soft went looking. The conversation that moved them was with Shinji Hatano, an executive director at Nintendo, who told them to keep making innovative things. What they agreed was explicit rather than sentimental: creative freedom in exchange for developing exclusively on Nintendo hardware.
The purchase was announced in April 2007 and took effect on 1 May. Nintendo took eighty per cent, Namco Bandai kept sixteen and stayed on as a development partner. Namco Bandai sold its last four hundred shares in 2011, and the buyout completed in December 2024. Iwata's stated reason was the relationship with Sugiura, and that both companies developed games the same way.
Sugiura has been honest about the cost. Building for one family of consoles is a real constraint, offset by a publisher that sets a hardware target and then supplies the resources to hit it. The first three releases under the new owner all landed in 2008, including Disaster: Day of Crisis, still the only non-RPG the studio has made.
What Carried Over
An RPG is its map. That line sits at the top of Monolith Soft's recruitment page under Takahashi's name, and it isn't a slogan — it's the method the studio has used since Xenogears. On the original PlayStation, full 3D wasn't viable. The Final Fantasy VII team walked 3D characters across 2D pre-rendered backgrounds. The Xenogears team did the opposite: locations in 3D, 2D characters on top. Takahashi's reason was immersion in the place, and he still calls that choice the studio's pivot foot.
In practice, the first thing they work out is where the places with something in them go, and the route between them. That route is the game flow. Everything else is fitted to it.
The map is also the budget. A ten-hour RPG needs a minimum number of locations; cost one location, multiply out, and you have the price of the project. If the money available is half that, the answer is a shorter story or fewer places — and that call comes from the map, not the script.
Three series, three publishers, no shared characters and no shared plot — and still recognisably built by the same hands, because what carried over was a method rather than a mythology. — Pierre
The other thread is Yasunori Mitsuda, and it's thinner than most people assume. He scored Xenogears at Square, went freelance in 1998, founded Procyon Studio in 2001, scored Xenosaga Episode I in full and Soma Bringer after that. Then look at what he actually did on Xenoblade Chronicles.
| Game | Year | Mitsuda's role |
|---|---|---|
| Xenogears | 1998 | Full score |
| Xenosaga Episode I | 2002 | Full score |
| Soma Bringer | 2008 | Full score |
| Xenoblade Chronicles | 2010 | One track — the ending theme |
| Xenoblade Chronicles 2 | 2017 | Music producer and composer |
| Xenoblade Chronicles 3 | 2022 | One of six composers |
One track. Manami Kiyota led with fifty pieces, ACE+ wrote twenty-nine, Yoko Shimomura eleven, and Mitsuda wrote the ending theme, "Beyond the Sky" — Japanese lyrics by Takahashi, vocals by Sarah Àlainn. That song exists because of the title change: once the project became a Xeno game, Takahashi wanted it to share something with the two series before it, and decided the ending wouldn't land without a vocal theme. The entire musical continuity between Xenogears and Xenoblade Chronicles is four minutes long and sits over the credits. He came back properly on Xenoblade Chronicles 2, and was one of six composers on Xenoblade Chronicles 3.
What Got Left Behind
The six-part plan died twice. Xenogears tells you so itself: the title card at the end reads Episode 5, one instalment of a planned six. Xenosaga was a rebuild of what had been planned as Episode 1 — a reconstructed parallel version, not a continuation — and it was then laid out as six episodes of its own before the team that inherited it cut that to three.
The three series now sit with three owners, each holding its own rights. There is no connecting storyline — shared words, recurring shapes, ideas that rhyme, nothing that resolves.
The people thinned out too. Soraya Saga co-wrote Xenogears and Xenosaga Episode I; a mobile spin-off called Pied Piper was her last work on the series. Takahashi stepped down as director in 2003 and didn't direct again until Xenoblade Chronicles — eight years between credits. The narrative-heavy approach went with him. It had been called old-fashioned, and Xenoblade Chronicles was where the studio moved to building around play instead.
Even the name arrived late. The game was called Monado: Beginning of the World, and a trailer went out under that title in 2009. Iwata had it renamed Xenoblade to acknowledge what Takahashi had made before. The "Xeno" in Xenoblade was applied at the end, by the publisher.
Play the opening hour of Xenogears and the opening hour of Xenoblade Chronicles back to back, and watch what the camera does with space rather than what the plot does with characters. The continuity lives in the level design.
The studio that came out of all this does two jobs. First Production, over 140 people under Takahashi, makes the Xenoblade Chronicles games. Second Production works behind Nintendo — around fifty staff on The Legend of Zelda: Breath of the Wild, roughly a hundred and ten on Tears of the Kingdom, each time supporting more than four hundred Nintendo EPD developers.
The sequel is never coming. What exists instead is a working method you can now see in everything they touch — and First Production is currently building something new.
Common Questions
Is Xenoblade Chronicles a sequel to Xenogears?
No. The project was called Monado: Beginning of the World and had a trailer under that name in 2009; Iwata renamed it to honour Takahashi's earlier work, and the "Chronicles" suffix was added later for English-language regions. The three series have three different publishers, each holding its own rights, and no connecting storyline. What they share is a director, a composer, recurring words, and a way of building maps.
Who founded Monolith Soft, and when?
Tetsuya Takahashi, Hirohide Sugiura and Yasuyuki Honne, on 1 October 1999, with about twenty staff. Takahashi directed and co-wrote Xenogears; Honne was its art director; Sugiura handled the business side and is still the studio's CEO. Namco funded them as a dedicated subsidiary after several other publishers turned the pitch down.
Why did Monolith Soft leave Bandai Namco for Nintendo?
Their patron at Namco, founder Masaya Nakamura, retired in 2002 and relations cooled from there. After the Bandai merger the parent grew risk-averse and killed two Baten Kaitos projects. A Nintendo executive, Shinji Hatano, told them to keep taking creative risks, and they moved — trading platform exclusivity for creative freedom. Nintendo took 80% in May 2007 and completed the buyout in December 2024. They went looking; they weren't rescued.
Does Monolith Soft still make its own games?
Both. First Production, over 140 people under Takahashi, builds the Xenoblade Chronicles games. Second Production supports Nintendo — about 50 staff on Breath of the Wild, around 110 on Tears of the Kingdom. The Kyoto studio's thirty-odd artists handle assets for Splatoon, Pikmin 3 and Animal Crossing. The support work is a deliberate second line of business, not a sideline.