Square-Enix sells all of its Western game studios – and their games – to Embracer
On Monday, Japanese game publisher Square-Enix confirmed that it was selling its three Western video game studios, along with many major game series and IPs attached to those studios, to European game publisher Embracer.
The sale includes game studios Crystal Dynamics, Eidos Montreal and Square-Enix Montreal. All three were previously 100% owned by Square-Enix, and Embracer will acquire their entire staff of around 1,100 plus popular IPs such as grave robber, Deus Exand Kain’s Legacyand a game publishing catalog of “over 50 games”, for $300 million.
However, not all of the intellectual properties in the deal have yet been confirmed, and an announcement from Square-Enix says its Western operations “will continue to release franchises such as just cause, Ridersand life is strangeThis suggests that Square-Enix will retain some of its Western-specific intellectual property, and that future collaborations with Western game makers will be through publishing deals with outside developers.
… or a quarter of a gearbox
While console makers Microsoft and Sony have grabbed headlines with their own acquisitions of megaton game makers over the past few years, Embracer has quietly built its own slate of predominantly European studios over the past decade – and was better known as THQ Nordic from 2014, after reclaiming the rights to the name from that fallen publisher (but not all of its games). Its biggest acquisitions over the past 12 months have included video game maker Gearbox Software and board game producer Asmodee Games.
Looking at the balance sheet, however, those two deals each exceeded $1 billion, while today’s Square-Enix deal is well below that figure. The discrepancy seems curious in light of Square-Enix itself announcing that grave robber lifetime game sales had exceeded 85 million by October, as part of the series’ 25th anniversary celebration. For comparison, that sales number is neck and neck with one of Square-Enix’s most beloved game series, dragon quest, which had sold over 83 million games as of August last year. Since this is a complete intellectual property acquisition, Embracer will likely also claim the rights to grave robberLara Croft’s Legacy as a Hollywood movie series, although the company has yet to confirm whether Lara Croft-related live-action and anime productions are still in the works.
Square-Enix’s recent handling of Western properties has run into some problems, especially after putting a ton of eggs from its Western studios into the game’s uneven basket as a service. Marvel’s Avengers– only to see its 2020 launch well below critical and commercial expectations. This was followed by the critical darling of 2021 Marvel’s Guardians of the Galaxy, helmed by Eidos Montreal, below sales expectations. Between these disappointments and the total silence of Deus Ex as a sci-fi adventure series since 2016, perhaps Square-Enix’s estimate of the value of its combined Western studios had plummeted.
Yet Embracer wasted no time beating the drum of its newly acquired intellectual property. Its announcement of the deal confirmed that development has already begun on “the next major line grave robber game,” featuring “next-gen storytelling and gameplay experiences,” while several other “AAA” projects were announced to be in development by the combined studios.
And shortly after the announcement went live, Eidos Montreal confirmed on an Embracer conference call that its next major game would be set in the world of Deus Ex. The announcement did not specify exactly how Crystal Dynamics’ recently announced work on Microsoft’s published product perfect dark after take this agreement into account.
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