The topic at hand is "elite studio", and to me that is one that makes ground-breaking, impressive, system-selling AAA games. At the present time, I think there is no question that the leader there is Monolithsoft. Right now they are at the leading edge of RPG gaming, better than S-E. Retro's last title, meanwhile, is one that seems a bit derivative, and hardly had the gaming world buzzing.
Further, when you look at the original mission of Retro, it was to make non-Nintendo style games, games that appeal to the west. I would argue that Monolith is actually doing a better job of that now. DKC is more like a game Nintendo would make in-house, while Xenoblade is the type of title you would see on XBox or PS; the type of game that non-Nintendo fans would talk about.
Ideally I'd like to see both studios expand to two or three full teams, making regular titles. I think Monolithsoft could be the new Squaresoft, with two skilled groups making RPGs. Retro could be the new Rare, making platformers and FPS or TPS/adventures... but they both need more staff. Retro may also need more creative freedom. Monolith, I think, operates with a great deal of autonomy under the lead of Tetsuya Takahashi. I think Retro lacks a clear independent leader, far too often answering to Japan.
