"We started the in-house development team a couple of months ago and we're starting with downloadable content because the team is still small," Yamamoto told GamesIndustry. "All formats--Xbox Live, WiiWare, PlayStation Network--are all viable formats for us," he added.

The Los Angeles development team is very small, with "a skeleton crew of only three members." The publisher reportedly wants to boost that team up to 30 inside the next year.

Square Enix's newest studio will also be charged with researching middleware following the commercial and critical success of The Last Remnant, which runs on Epic's Unreal Engine.

"Western middleware is much more advanced compared to Japanese middleware. So we will study and feed back information to Square Enix in Japan," Yamamoto explained.

Yamamoto also commented on Square's westward expansion in the wake of a deal to publish Gas Powered Games' Supreme Commander 2. "We're not only working with Gas Powered Games, we're also contacting multiple studios in England, other European countries, and the US and Canada. We're talking with other studios right now," he said.