Given all they made was CC, I'm not certain if I'd call that hedging their bets. Going by some of the articles and theories posted in this thread, it sounds like SE was merely leveraging Nintendo funding while rebuilding bridges. Which, of course, worked out well for then. As far as Final Fantasy goes however, all we might see is ports from previous gen (FF15 Cloud or the game on Switch 2). However, SE desires lower budget "filler" and Nintendo provides the perfect platform for that. So support will maintain, I think
They didn't have time to make anything BUT CC.
GDS was a front for Squaresoft Production Team 2, aka Kawazu's team.
GDS was useless as soon as Square and Enix merged because the deal with Sony no longer applied.
The reason GDS was creditted for CC was for the use of Q fund AND as proof positive to Sony that Squaresoft wasn't harming the development of a ps2 title with making games for Nintendo's GC.
Bridges were probably already mended with FFTA being GBA bound before they were even done with making FFCC after all.
The thing is FFTA was a GBA game and Sony having no handheld, it couldn't be a game made for ps2 anyway (and chances are it started as Wonderswan project but don't ever quote me on that...or maybe not because we got an Ogre Battle before that and then Quest was bought by Square and they made FFTA afterwards).
With knowledge on working with Nintendo systems they kept at it until it proved unprofitable.
Rings of Fate is pretty much an extension of everything FFCC tried to do and has more ironed out mechanics where FFCC was clearly very experimental.
I look forward to the thread bump in 3 days.
Though Crystal Chronicles is also tied to this "events". From what was mentioned back then, Square also talked to Nintendo. But because Square already had a deal with Sony, the only way they could give money to them was through the Q-Fund, which was for Gamecube development. So they created (the shell) Game Developer Studios to make games for a GCN which resulted in only one game: Crystal Chronicles.
But the thing is GDS was 51% owned by Kawazu (a Squaresoft board member) and 49% by Squaresoft.
They only "created" 1 game because they didn't have time to make another one.
Square and Enix merged before FFCC was released and I think that FFCC in Japan doesn't even have the Square Enix logo while the PAL/NTSC versions do.