They were "absorbed"? Were there lay-offs? cavia was always a part of AQI, cavia split the business section off which became "AQ Interactive" when MS partnered with them (*cough*gave them a ton of money *cough*) at the beginning of the generation to make Sakaguchi's 360 games and they came to own the developers
cavia, Artoon, and a new studio created out of this relationship, feelplus (which was basically a mix of ex-Shadow Hearts, ex-MGS Japan [Phantom Dust], and some cavia staff). Recently AQI stated they were going to give up on being a publisher and concentrate on development so it makes sense that they absorbed cavia, but they're basically going back to what they originally were. Unless there were heavy lay-offs in the process I don't see the big change here.
It seems that AQI is changing its business structure. Previously, there was a parent company (publisher AQ Interactive) and a number of development subsidiaries, but they're now transitioning to a single company approach. Each development group is now an internal division as opposed to a separate entity.
Artoon = Software Division 1 (production director = Takuya Matsumoto)
Feelplus = Software Division 3 (production director = Ray Nakazato)
Cavia = Software Division 4 (production director = Takuya Iwasaki)
Microcabin continues to exist as a separate company. I have no idea what Software Division 2 might be, but it's got to exist.
I can see some management staff at each subsidiary being laid off (former presidents are now production directors for their respective divisions), as well as reduced autonomy for each studio, but development should proceed as normal.
On a related note, the executive shuffling at the top is INSANE. AQI has gone through four
presidents over two years (Yoji Ishii -> Tomoyuki Takechi -> Kiyoshi Komatsu -> Shuichi Motoda), so they clearly have some serious issues. It's amazing that after ten years, they've yet to get their act together, whether it's in running a publisher or developing hit games.
Not sure if Michio Okamiya is still at AQI, but he's no longer a corporate officer. They're shifting away from the Square-like direction they had been going in five years ago (in particular, Feelplus was established to develop high-profile Sakaguchi RPGs, but they're now making action games), so I wouldn't be surprised if he left or were shuffled out.