In a surprising announcement made just this morning, To kiss Group acquired almost all of Square-EnixThe west wing of which includes several studios and their IPs. This offer includes Crystal Dynamic, Eidos-Montreal, Square Enix Montrealand a catalog of intellectual properties that Square Enix has owned for decades, including grave robber, Deus Exand Legacy of Kain.
The real kick here is that Embracer Group managed to grab all of these assets for just 300 million US dollarsa price that seems incredible considering the value and potential of what these franchises are worth. Insomniac Gamesa studio that only had one IP address at the time of its purchase, Sunset Overdrive, was acquired by sony for $230 million usd. And here we have some of the world’s best studios and most iconic IPs that were sold to Embracer for what, in hindsight, seems like a small sum.
We are delighted to welcome these studios to the Embracer group. We recognize fantastic intellectual property, world-class creative talent and a track record of excellence that has been demonstrated time and time again over the past decades. It was a great pleasure to meet the management teams and discuss future plans on how they can achieve their ambitions and become a big part of Embracer. – Lars Wingefors, co-founder and CEO of Embracer Group.
The best secret in the game
As for the buyer, acquiring has-been franchises is somewhat the business of Embracer Group. With over 580 franchise to its credit, the Swedish company is no stranger to owning defunct publishers and studios, including THQ, Gearboxand Nordic games license. We all know Square Enix wasn’t doing a great job with the esteemed developers they had, selling them for just $300 million is an example of that, so maybe this could mark the start of a new era.
Embracer said it has entered into an agreement with Square Enix to acquire these assets in July-September of this year when the transaction closes. According to the company, they see these franchises as massive prospects that will benefit from greater investment. As a result, Embracer will have large sums of capital to fuel the growth of these IP addresses, but will allocate resources more efficiently to ensure maximum return on investment.
The transaction will help the company adapt to ongoing changes in the global business environment by establishing a more efficient allocation of resources, which will improve the value of the company by accelerating the growth of the company’s core businesses in the field of digital entertainment.
What’s a little more concerning are the reasons Square Enix is selling its studios and franchises. Unfortunately, one of the contributing factors was block chain and Square Enix’s willingness to invest in technology. the company mentions in its press release how this purchase would allow them to explore new avenues largely untapped before, including AI and cloud computing, and of course the dreaded blockchain which is associated with plagues like NFT.
The transaction will help the Company adapt to the ongoing changes in the global business environment by establishing a more efficient allocation of resources, which will improve business value by accelerating the growth of the Company’s core businesses in the field. digital entertainment. In addition, the operation enables the launch of new activities by continuing to invest in areas such as block chainAI and the cloud.
Overall, the acquisition of three of Square Enix’s western studios and some of the company’s (former) biggest franchises accounts for around 1100 employees in total, it would now work under Embracer Group. The press release mentions organizational restructuring several times, so we can expect at least some level of redundancy as a product of this deal.
Once the purchase is completed in the third quarter of this year, Embracer Group will then have more than 14,000 employees, 10,000 game developersand 124 internal studios to his name. According to the company, it has more than 230 games in development in these studios, and more than 30 are AAA securities. Embracer has also described himself as “The Gaming Industry’s Best Kept Secret » and that claim has some merit, given that 95% of people won’t recognize the name.
Square Enix Stance
As for Square Enix, well, they’re not completely stuck after this Embracer heist. Square Enix will always retain publishing rights to games created by third-party developers that it publishes. This range includes franchises such as just cause, Life is Oddand Riders, and more. It’s clear that Square Enix wants to focus on its Japanese operations and wants to reduce the scope of the business, seeing how they’re clearly struggling to run it effectively.
Going forward, the company’s development function will include its studios in Japan, Square Enix External Studios and Square Enix Collective. The company’s overseas studios will continue to release franchises such as JUST CAUSE, OUTRIDERS, and Life is Strange.
Again, $300 million for three massive studios and three of gaming’s most iconic franchises is still unfathomable and I can’t imagine how Embracer was able to pull this off. Bungiethe developer and owner of the Destiny series, has been acquired by sony for more $3 billion just two months ago, and I’m quite certain that the items included in this Square Enix deal are worth more than that, which makes this purchase even more confusing.
Embracer is expected to pay the US$300 million to Square Enix primarily in cash as an aggregate amount upon closing, which is expected to be approximately July-September, 2022. The press release coinciding with this announcement includes extensive details and in-depth insights into the company’s finances and its plans with the newly acquired properties. If you want to know everything, you can consult the press release here.
The future
With this acquisition, Square Enix’s talent is finally freed from the shackles of a meme-worthy company. At Embracer, studios have a real chance, a kind of rebirth, to finally develop the best games possible using their now owner’s vast portfolio of investments. Deus Exa franchise completely neglected by Square Enix in recent years, is perhaps the most promising prospect of this situation.
The acquisition brings a compelling pipeline of new installments of beloved franchises and original IPs, including a new grave robber Gaming. The acquisition builds on Embracer’s mission to create a leading independent global gaming and entertainment ecosystem. Embracer has been particularly impressed with the studios’ rich portfolio of original IP, home to brands with proven global potential such as grave robber and Deus Ex, while demonstrating the ability to create AAA games with large and growing fanbases. There are exciting opportunities for studios to grow organically to maximize their business opportunities.
As the quote above makes clear, Embracer realizes the value of solid, big-budget single-player experiences in this post-modern world of multiplayer cash grabs. There’s a new Tomb Raider game in development at Crystal Dynamics, powered by the Unreal Engine 5which will transfer production from Square Enix to now under Embracer Group just hope this deal doesn’t affect that in any way shape or form because Tomb Raider is arguably the only thing Square Enix hasn’t messed up in these last years.
Not only that, we can now see even more games entering development at these studios soon. Q2 2022 which would only keep the spirit of the workers alive as every day a new business is bought under their shoes. Whether these new games, perhaps even a new Deux Ex, will be any better than the festival of mediocrity Square Enix has been churning out lately remains to be seen.
