I wouldnt say square enix wasnt broken entering this gen, because they were. Id say that their attempts to repair themselves have only made things worse.

Part of the problem is that these japanese game studios have fallen so far behind their western counterparts that they cant keep up.

:'(

They used to have 20%, then they merged with Enix which cut Sony's share to 8%.  But even then when Sony did have the 20% Square started to decline.  They should never have let Sakaguchi go, like demote him yes, but he was the quality control at Square, now that it's gone we've been getting practically nothing out of them.  Though if Square wasn't as big as they were (publishing arm, manga, anime, developer) I'd say Sony buy them out and restructure.  Square has great franchises.  It's just a shame they don't have anyone there to properly utilize them.

waste of time an money by the looks of it, but who knows really SE could of got there return in investment from the studio.

Most likely tho they are cutting down on operational costs and they were in the firing line.

The problem is with japanese developers is that they are no good at making western games, which no one wants to have them make western titles, how about they make good japanese titles and have a good localistation team then they wouldn't have many issues of trying to get the western auidence and failing and there own japanese audience being alienated and not liking it either so the games bomb. 

just make good games to start with, dont go out making games for certain audiences, especially audiences many dont understand and only understand though cliches and streotypes. If you just make a good game that is fun then people will buy it no matter if they live in different parts of the world and have different cultures

It's a Kingdom Hearts reference. Not really related to FFVII.

 Exactly, I dont think they are way behind, actually for my taste they are still on top, is just that they are going behind the wrong customers, they should focus on what they do best and everybody loves from them.  SE is a big example, where are all the great JRPGs they are well known for?... I cannt blame SE when it comes to the DS, because the DS has an amazing amount of great quality titles from them... But all the other consoles?

Japanese Obsession with Overseas Success. They are trying too hard to capture the Call of duty and Halo crowds in exchange for alienating their long time loyal fans.

Kojima sums it all up in here.
http://gamrconnect.vgchartz.com/thread.php?id=130826&page=1

Hahahahaha! Man left field comment for the win! Please comment on FFXIII!

I would add the PSP as well both Handled Consoles have been very well supported by SE this Gen it i the Home Consoles that are SE Game starvedhis Gen.