Square Enix has been working on a next-gen game engine of its own and they've already provided an ambitious teaser of what Luminous Studio is capable of, if a studio really puts their minds to it.  That said, the JRPG publishing giant announces it has signed an "long-term" agreement with Epic Games to license Unreal Engine 3 as well as the upcoming Unreal Engine 4 for use in game development, making Square Enix the first confirmed third party licensee of the forthcoming tech.

Acquiring the services of UE4 certainly doesn't prevent Square Enix from leveraging its own Luminous Studio for future game development, and in fact the announcement highlights how the developer intends to use Epic's engine to supplement its own proprietary tools.  Square Enix intends to license Epic's tools over the next few years to produce several titles "across all major platforms," so they've commited to making the most out of the partnership.