You do realize that Enix was on the verge of going bankrupt in 2001 right?

Merger with Square

In June 2001, Enix expressed interest in partnering with both Square and Namco in online ventures to deal with mounting development costs.[11] That same month, Enix invested in the company Game Arts, acquiring ¥99.2 million worth of stock shares in order to publish the latter's Grandia series.[12] Despite Enix's marketing of Dragon Quest VII in 1999, the game was delayed numerous times and not released until 2000. As a result the game didn't (as had been expected) contribute to the fiscal year 1999, cutting the company's previous profit-to-sales ratio in half and causing its stock value to drop by 40% in early 2000.[5][13] Enix was further hurt by a delay of Dragon Quest Monsters 2 in Japan in 2001, dropping its first-half 2001 fiscal year profit by 89.71%.[14]

Enix's competitor Square also suffered financially in 2001, mainly from the box office failure of its feature film Final Fantasy: The Spirits Within. This made Enix hesitant to join with the company.[15] However, it was announced on November 26, 2002 that the two companies would merge the following year in order to mutually decrease development costs and to compete with foreign developers.[16] The merge was delayed until April 1 2003, when the new merged entity Square Enix came into being.[1] The merger between Enix and Square had apparently been considered since at least 2000.[15]
They screwed up DQ VII and Monsters II and had little cash on hand and interest was puttering out on it's products. Enix also doesn't have an internal development study, they hold IP only and instead hire out to outside development studios to make their products. DQ was actually made by Chunsoft.

Squaresoft has it's own development studio's and prefers to keep everything in-house. So even though SWI was a commercial failure (technical success though) it didn't put a ding into their cash reserves nor did it effect the market value of their various products. Squaresoft could of walked away from Enix and still kept on producing Final Fantasys, Mana's and just about anything else they wanted. Enix on the other hand was looking to insolvency if they couldn't produce a successful product soon. Without the merger Enix would of either went under, or split its video game division off (it's Manga division makes a decent profit).

About SWI
Square Pictures rendered the film using some of the most advanced processing capabilities available for film animating at the time. A render farm consisting of 960 workstations was tasked with rendering each of the film's 141,964 frames. It took a staff of 200 and some four years to complete the film. Square intended to make the character of Aki Ross into the world's first photorealistic computer-animated actress, with plans for appearances in multiple films in different roles.

The Spirits Within debuted to mixed critical reception, but was widely praised for the realism of the computer-animated characters. Due to rising costs, the film greatly exceeded its original budget towards the end of production, reaching a final cost of US$137 million, of which it made back only $85 million at the box office. The film is blamed for the demise of Square Pictures,[2] and has been called a box office bomb.[3]
Horrible idea for a video game company to make a movie on it's own, technology wise they had it down pact, but story and script was pretty bad. It was a techno demo that never should of made it to a movie.