The moving and shaking in the game industry is continuing with an unexpected move today. On May 2nd, noted Japanese developer and publisher Square Enix agreed to sell a number of its western-based intellectual properties and studios to the Sweden based Embracer Group. For the tune of $300 million, Embracer will acquire Crystal Dynamics, Eidos Montreal, an Square Enix Montreal.
Along with this comes notable gaming franchises like “Tomb Raider,” “Deus Ex,” and forgotten ones like “Gex” and “Legacy of Kain.”
We previously reported on other acquisitions in the video game world, such as Sony’s purchase of Bungie and Microsoft’s purchase of Activistion/Blizzard. We also reported on Embracer Group and their gradual expansion in video games and other markets. In late 2021, Embracer added Dark Horse Comics to their corporate umbrella after having previously acquired gaming companies like Deep Silver and Gearbox. Unlike the other purchases, this current acquisition plan isn’t aimed at an entire company; Square Enix would be worth a lot more than $300 million, but instead is taking a part of the company that perhaps Square Enix wasn’t really that happy to have around anyway.
Back in the late 2000s and early 2010s, there was a push for Japanese gaming companies to try and embrace western gamers more. This led to things like Capcom’s “Bionic Commando” reboot in 2009, “Resident Evil: Operation Raccoon City” in 2012 and in a major move by Square Enix, acquiring Crystal Dynamics and Eidos Interactive in 2009. This would eventually lead to the “Tomb Raider” reboot in 2013 alongside other Western oriented releases like 2012’s “Sleeping Dogs” and “Hitman: Absolution.” Incidentally, all of these titles would end up failing to meet Square Enix’s sales expectations.
Almost a decade later and it seems like some things haven’t changed. Square Enix had secured some high profile projects from Marvel including “Marvel’s Avengers” and “Marvel’s Guardians of the Galaxy.” The problems with the former have been well known since its release with many people complaining about the title’s “live service” model, lack of content, grind heavy approach, and push for micro transactions. The latter received much stronger critical reception, but “GoTG” has not sold as well as Square Enix or Eidos-Montreal had hoped for.
In part, this could be seen as Square Enix dumping something that they ultimately weren’t happy with. They already did this in 2017 when they gave up their interest in IO Interactive. One would think that the Tomb Raider IP itself would be worth more than $300 million dollars given its popularity, but for Square Enix to sell it off along with 3 development studios and the rest of their IPs seems like an undervaluation; almost as if they wanted to ditch the companies and didn’t want to haggle about it even.
The official explanation for the sale from Square Enix is a load of corporate jargon that says nothing while trying to sound important.
“The transaction will assist the company in adapting to the changes underway in the global business environment by establishing a more efficient allocation of resources, which will enhance corporate value by accelerating growth in the company’s core businesses in the digital entertainment domain. In addition, the transaction enables the launch of new businesses by moving forward with investments in fields including blockchain, AI, and the cloud.”
In other words, Square Enix didn’t want to sink anymore money or effort into these companies an instead of chasing after the trend of Marvel games or action adventure titles, now they want to chase after blockchain stuff and NFTs. Is it a terrible idea? Yeah, probably. There was really no reason for an Avengers game to fail, and they only have themselves to blame for it by turning it into a live service title that no one asked for. It’s probably the bad taste that left in people’s mouths that stopped “Guardians of the Galaxy,” a legitimately awesome title, to underperform. But instead of realizing how they went wrong, they sell it off and want to dump it into the blockchain and AI without really explaining what that means.
Let’s see if Embracer Group can manage to do a better job with these properties than Square Enix did; through that’s a really low bar.