Square Enix just sold off a load of its studios and IP (all Western in nature) to the Embracer Group, a video game holding company that also owns THQ Nordic and Gearbox. Included in this deal were Crystal Dynamics, Eidos Montreal, and Square Enix Montreal alongside IP like Tomb Raider, Deux Ex, Thief, and more. In this article, we'll explain Square Enix selling Tomb Raider, Deus Ex, and everything else you need to know.
The Square Enix-Embracer Group Deal Explained
Square Enix, the legendary Japanese gaming company known for gaming heavyweights like Final Fantasy, has just sold off the bulk of its Western business in a $300 million dollar deal with the Swedish video game holding company Embracer Group.
U.S. studio Crystal Dynamics, responsible for games like Tomb Raider, Eidos Montreal, responsible for games like Deus Ex: Mankind Divided, and Square Enix Montreal, responsible for mobile games like Deus Ex Go were all included in the deal. Embracer also bought the IP for Tomb Raider, Deus Ex, Thief, Legacy of Kain, and 50 back-catalog Square Enix games.
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This deal will reportedly add over 1,100 staff to Embracer Group, bringing its global headcount to more than 14,000 employees, which approaches the size of Ubisoft and is a larger operation than Activision-Blizzard. While Embracer may not be a household name, it's now a heavyweight in the gaming world.
As you might recall, Square Enix, in recent years, has made a deal with Disney to produce Marvel games like Avengers and Guardians of the Galaxy. It's not officially clear if this deal is now in the hands of Embracer, but it's likely to be the case, though this was not part of the official announcement of the deal.
The purchase is expected to close by the end of 2022, but naturally, this could change, and there isn't an exact date when it's expected to be finalized. However, there isn't reason to expect the deal won't go through.
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Embracer Group owns a shocking number of gaming companies already, adding this Square Enix property to its roster of companies that include THQ Nordic, Gearbox, Dark Horse Media, Koch Media (which owns companies like Deep Silver and Warhorse Studios), Saber Interactive, and many more.
Why Did Square Enix Sell?
First and foremost, Square Enix's AAA Western games in recent years, while successful, have continued to fail to meet expectations. From games like Deus Ex: Mankind Divided to Marvel's Avengers to Guardians of the Galaxy and more, Square Enix releases routinely fail to meet expectations, not doing as much business as Square Enix wants.
This is the familiar case of a games company investing so much money into a game's development and marketing that the game has to sell an astonishing amount of copies to be considered a success. Accordingly, while beloved, these franchises and studios have not been huge moneymakers for Square Enix, while its Japanese business remains a lot more reliable.
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On a more unsettling note, Square Enix noted in its own press release about the purchase that the company, at least in part, sold off these studios and IP to help facilitate the company's newfound focus on blockchain, A.I., and cloud technology. This comes after Square Enix's controversial New Year's letter from the company's president that detailed an interest in bringing blockchain/NFT tech to games.
Unsurprisingly, the backlash to this announcement was swift and severe. More surprising is the fact that Square Enix doesn't seem to be backing away from blockchain/NFT tech in games, while many studios and publishers have changed their tune as soon as the public backlash hits them.
Ultimately, though, this all comes down to a matter of dollars and cents. Square Enix's Western business hasn't been doing that well, and managing the development of a variety of games across studios with over a thousand employees is a time-consuming, expensive process. It makes business sense for Square Enix to prefer to invest in spaces where it can reliably expect to make money.
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Will This Purchase Change Square Enix?
Yes and no. The perpetual fear when a major gaming company acquires studios or IP is that new leadership will bring an increased focus on monetization, on squeezing every last dollar out of a franchise. In the case of Square Enix, though, they've been increasingly trying to monetize their games through major debacles like Avengers without much success, and their singleplayer offerings like Guardians of the Galaxy haven't been doing much better.
Ultimately, with Square Enix looking to triple-down and get into the crypto space to, well, make more money, it becomes tough to say that Embracer Group is a much worse home for beloved franchises like Deus Ex. Generally speaking, Embracer has a reputation for being relatively hands-off, which makes sense considering Embracer is a video game holding company and not a publisher itself like an EA or Ubisoft.
Plus, fans have been crying out for another Deus Ex game for years, while Square Enix has put the franchise on ice. With a change in leadership, many are speculating that we could see a new Deus Ex game, and fans are generally excited for the next Tomb Raider game that's currently in development, regardless of the corporate ownership structure.
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Suffice it to say that this Square Enix-Embracer Group deal doesn't necessarily mean bad news for anybody. Square Enix's properties, in the West, haven't been doing all that well, and considering how much love there is for the formerly Square Enix IP, a change in leadership could be just what's best for everyone involved.
Naturally, we'll have to wait and see if/when the deal formally goes through, and then we'll have to wait years more to see how these studios and games actually turn out, but there's reason to believe we'll see good games come out of this deal, even if massive gaming companies continue to become more massive.
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