Shortly before E3 2012, Square Enix revealed "Agni's Philosophy," a tech demo for the company's newest engine, Luminous Studio. Luminous, the company said, was being used to create "next generation quality games." The following E3, Square Enix unveiled Final Fantasy 15 and Kingdom Hearts 3, two projects for the new consoles that were likely candidates for Luminous development.
Speaking with Famitsu, Kingdom Hearts 3 director Tetsuya Nomura said that development on the game has been switched to Epic Games' Unreal Engine 4. Nomura noted that development is "progressing smoothly" despite the switch-up, which he stated was done for multiple reasons.
"Due to the impact of changing the game engine to Unreal Engine 4, which we did for various reasons, there is some difficulty rendering images," Nomura said. "And with the full support of Epic Games, we'll be able to progress smoothly."
Square Enix recently announced that Nomura had been taken off production of Final Fantasy 15 in order to fully focus on Kingdom Hearts 3 and other titles. Hajime Tabata, director of Final Fantasy Type-0 and Crisis Core: Final Fantasy 7, is now heading 15.
In November 2011, Epic announced that Square Enix had licensed its engine for "multiple games." The company has used the engine for The Last Remnant, Airtight Games' Quantum Conundrum and Murdered: Soul Suspect, the Thief reboot and Drakengard 3. Most recently, Square Enix used Unreal Engine 3 to develop this year's multiplayer action game Nosgoth as well as Life is Strange, which is set to launch next year.