Luminous Studio is similar to a full engine like Unreal Engine or Unity. In other words, it has all the tools for the various game development processes, from asset editing on. The developers are working to make the engine high quality, easy to use, flexible, high speed, compact, and supporting both manual and automatic methods.
The engine is a Square Enix Japan project. However, Iwasaki, Iwata and Hashimoto did travel to IO Interactive in Denmark and Eidos Montreal in Canada to see those studios' technologies.
The engine is being developed separately from IO's Glacier 2 Engine and Crystal Dynamics' CDC Engine. However, the Japanese tech staff is is sharing source code with their overseas counterparts, and will be making use of the overseas technology. An example is a procedural approach animation demo that was shown at last year's CEDEC developers conference). This was mostly technology adopted from the overseas studios. You can see a video of the procedural approach animation demo in the Impress Watch article.
Luminous Studio will be compatible with any hardware that can handle programmable shaders. It will work with PS3, Xbox 360 and Windows PC, for instance. When asked about working with hardware like Wii and 3DS that don't have programmable shaders, Hashimoto said they're actively looking into making it compatible.
Regarding next generation hardware, Luminous Studio is being made Direct X 11 generation ready to a high degree. The graphics engine component has a Direct X 11 native mode.
The Luminous Studio team is placing a lot of emphasis on animation. They believe that things like high quality lighting, shading and modeling will be standard stuff in the coming generations, and having unnatural animation will stand out. The studio will include systems for procedural animation, full body IK, and so forth.
Another major focus is artificial intelligence.
At present, there is no plan to license Luminous Engine for external use. It will be used within Square Enix Group, says Hashimoto. However, it will also be used by external studios who work on Square Enix projects.
Square Enix hopes to publicize Luminous Studio to make it into somewhat of a brand. This will involve showing to the public the engine's logo (which isn't finalized yet) and the technology demo they're currently working on.
Regarding the technology demo, this is being worked on by Square Enix's Visual Works staff, the group that's known for its CG movie work. They currently haven't decided on the specifics about whether they'll make the technology demo target Direct X 11 generation GPUs exclusively, or also be scalable to earlier generation hardware.
Hashimoto expects to be able to show the technology demo in late 2012 or 2013. He wouldn't say when Luminous Studio will be complete or what its first game will be, but he did promise many details to come in 2012.
Although not mentioned in Nishikawa's article, this year's CEDEC development conference will kick off in Yokohama on September 6. First details on Luminous were shared at last year's CEDEC, so you may want to be on the lookout for more bits and pieces this year.
Real (top) vs. Luminous Engine (bottom)