Square Enix Selling Off Western Companies

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Square Enix selling off western companies
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By RadialArcana 2022-05-02 09:26:17
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Embracer Group to acquire Crystal Dynamics, Eidos Montreal, and Square Enix Montreal from Square Enix

Acquisition includes intellectual property such as Tomb Raider, Deus Ex, and Legacy of Kain.

Embracer Group has entered into an agreement to acquire Crystal Dynamics, Eidos Montreal, and Square Enix Montreal from Square Enix, as well as a catalogue of intellectual property including Tomb Raider, Deus Ex, Thief, Legacy of Kain, and more than 50 back-catalog titles, the companies announced (2). The total purchase price for the studios and intellectual property amount to $300 million on a cash and debt-free basis, to be paid in full when the transaction closes between July and September 2022.

“We are thrilled to welcome these studios into the Embracer Group,” Embracer Group co-founder and CEO Lars Wingefors said in a press release. “We recognize the fantastic intellectual property, world class creative talent, and track record of excellence that have been demonstrated time and again over the past decades. It has been a great pleasure meeting the leadership teams and discussing future plans for how they can realize their ambitions and become a great part of Embracer.”

Square Enix America and Europe CEO Phil Rogers added, “Embracer is the best kept secret in gaming: a massive, decentralized collection of entrepreneurs whom we are thrilled to become a part of today. It is the perfect fit for our ambitions: make high-quality games, with great people, sustainably, and grow our existing franchises to their best versions ever. Embracer allows us to forge new partnerships across all media to maximize our franchises’ potential and live our dreams of making extraordinary entertainment.”

Going forward, Square Enix’s development functions will comprise its studios in Japan, Square Enix External Studios, and Square Enix Collective. Its overseas studios will continue to publish franchises such as Just Cause, Outriders, and Life is Strange. Square Enix also said the transaction enables the launch of new businesses “by moving forward with investments in fields including blockchain, artificial intelligence, and the cloud.”

Here is Embracer Group’s full background and rationale for the acquisition:

Quote:
The collection of studios represents a world-class creative team of approximately 1,100 employees across three studios and eight global locations, including two of the most reputable AAA studios across the industry in Crystal Dynamics and Eidos Montreal. The studios possess a unique ability to deliver blockbuster hits decade after decade. The acquisition brings a compelling pipeline of new installments from beloved franchises and original intellectual property, including a new Tomb Raider game. The acquisition builds on Embracer’s mission of creating a leading independent global gaming and entertainment ecosystem. Embracer has been particularly impressed by the studios’ rich portfolio of original intellectual property, housing brands with proven global potential such as Tomb Raider and Deus Ex, as well as demonstrating the ability to create AAA games with large and growing fan bases. There are compelling opportunities to organically grow the studios to maximize their commercial opportunities.

The portfolio of intellectual property consists of iconic franchises appreciated by critics and players alike. For example, two original intellectual property, Tomb Raider and Deus Ex, have sold AAA units of approximately 88 million and approximately 12 million, respectively. Embracer sees an opportunity to invest in these franchises, as well as the additional acquired intellectual property such as Legacy of Kain, Thief, and other original franchises. The acquisition also includes the continued sales and operations of the studios’ more than 50 back-catalogue games.

Founded in 1992, Crystal Dynamics consists of almost 300 employees across San Mateo, California; Bellevue, Washington; and Austin, Texas. The studio is committed to creating narrative-focused AAA action–adventure games and is led by 30-plus year veteran Scot Amos. Prior AAA releases from the studio include Rise of the Tomb Raider and Legacy of Kain Defiance. Crystal Dynamics is actively working on several AAA projects, including the next mainline Tomb Raider game that will deliver next-generation storytelling and gameplay experiences.

Founded in 2007, Eidos Montreal consists of almost 500[1] employees across Montreal, Canada; Sherbrooke, Canada; and Shanghai, China. The studio focuses on creating memorable AAA experiences focused on unique stories and strong characters within the action-adventure and RPG genres. The studio is led by David Anfossi, who has 26 years of industry experience. Prior AAA releases include Thief 4, Deus Ex Human Revolution, and Shadow of the Tomb Raider. The studio is working on a host of AAA projects including both new releases from beloved franchises and original intellectual property.

Founded in 2011, Square Enix Montreal consists of almost 150 employees across Montreal, Canada and London, UK. The studio focuses on building mobile games that players will want to return to for years to come. The studio is led by Patrick Naud, who has 24 years of industry experience. The studio is uniquely talented in creating mobile experiences based on traditionally PC and Console intellectual property such as Hitman, Tomb Raider, and Deus Ex. The studio will continue to develop and operate memorable mobile games based on AAA intellectual property.

After closing this transaction, the US will be Embracer’s #1 country by number of game developers and Canada will be #2. In total, post pending closings, Embracer will have more than 14,000 employees, 10,000 engaged game developers, and 124 internal studios. Embracer’s upcoming content pipeline includes more than 230 games with more than 30 AAA games. This acquisition will bring additional scale to Embracer’s current AAA segment, and Embracer will have one of the largest pipelines of PC and Console games content across the industry, across all genres. As Embracer’s pipeline matures, this will be a key driver for organic growth in net sales, operational EBIT, and free cash flow.

Currently, Embracer’s development resources are fully utilized either by ongoing internal development projects or by projects financed by external publishers. Embracer’s teams dedicated to work-for-hire services to external studios and publishers are also fully utilized across all territories. The lack of available resources in the industry and demand for these services exceeds our available capacity. Through this acquisition, Embracer will augment its development capabilities specifically within the AAA segment, which will provide opportunities to accelerate organic growth.

Embracer believes there will be an increasingly strong demand for high-quality content, including AAA single-player games, over the decade. We aim to continue working with leading platforms and license holders and to form deeper strategic relationships with a handful of leading companies in the industry. Furthermore, synergies across Embracer’s ecosystem benefit our people and companies. Our approach is that quality comes first in games development, which is why we believe our decentralized operating model of empowering management teams while facilitating synergies positions Embracer for sustainable long-term success.

https://www.gematsu.com/2022/05/embracer-group-to-acquire-crystal-dynamics-eidos-montreal-and-square-enix-montreal-from-square-enix

Literal who company.

Either Square Enix are completely stupid, selling all this for 300m or they are upto some malarky. Most likely involving block chain, nfts etc
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By Fenrir.Richybear 2022-05-02 10:16:49
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absolute balderdash, straight poppycock
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By Aoibhe 2022-05-02 10:23:13
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What a ridiculous move. Latest TR series was a cash cow and they’re working on the next game already… Selling the whole Tomb Raider IP sounds insane to me.

Also Deus Ex is crying out for a VR version.
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By Lakshmi.Avereith 2022-05-02 10:29:45
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By RadialArcana 2022-05-02 10:35:24
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As stupid as it may sound it's possible they wanted to get rid of these companies they own, to keep Sony or Microsoft from buying them out. Cause this was a very real possibility.

That's the only reason I can think of why they would sell to a nobody for so little.
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By Aoibhe 2022-05-02 10:54:51
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I’ve just seen something that said their profit margins were under 1% - mostly due to SEs horrific mismanagement and pushing Avengers to bring a “live service” game. Would explain why they sold it all off so cheap, no one else would buy it. Too much risk.

Ironically this probably puts SE as a more attractive prospect to purchase, from a strictly profit based perspective.
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By Lakshmi.Sahzi 2022-05-02 11:35:06
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 Asura.Jdove
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By Asura.Jdove 2022-05-02 11:54:16
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Aoibhe said: »
Ironically this probably puts SE as a more attractive prospect to purchase, from a strictly profit based perspective.
Maybe they wanna be bought out, who knows.
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By Lakshmi.Xaya 2022-05-02 12:43:00
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NOOOOOOOOOOOOOOOOO They sold Tomb Raider. ; ;

Oh well, SE's portrayal of Indigenous Inuit is inaccurate anyway.
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By Shiva.Haldarn 2022-05-02 13:18:05
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Have we got enough cash between us now to buy out S-E and force a new FFXI expansion?

People are gonna be confused by all the roman numerals in FFXVII anyway, so why go forward when you can go back.
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By Rips 2022-05-02 13:29:04
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Obviously they needed that money because a large portion of it is going into FFXI development for the next generation of expansions.

I mean, c'mon now.
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By Pantafernando 2022-05-02 13:32:20
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Shiva.Haldarn said: »
Have we got enough cash between us now to buy out S-E and force a new FFXI expansion?
.

We are going bankrupt this way
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By Pantafernando 2022-05-02 13:33:54
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Rips said: »
Obviously they needed that money because a large portion of it is going into FFXI development for the next generation of expansions.

I mean, c'mon now.

Just sell FFXI and change the name Initial Fantasy Online
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By Viciouss 2022-05-02 14:02:29
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Makes sense to get rid of these studios, it frees Square Enix of the Avengers disaster. I'm sure the buyer wanted at least one good IP in exchange for that burden, so SE threw in Tomb Raider. Which is fine. Those games are alright, but they have been free a couple of times on various platforms. Whenever the next one comes out, it will be a single player game that will see a price drop pretty quick. This is no big deal.
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By Ragnarok.Jessikah 2022-05-02 14:22:38
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Pantafernando said: »
Just sell FFXI and change the name Initial Fantasy Online
Real talk, I'm not opposed to that lol...
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By Sakinah79 2022-05-02 15:37:41
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If SE is bought out by either of the big two ( Sony, Microsoft ), shutting the company's least profitable content down would be a top priority.
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By RadialArcana 2022-05-02 16:02:34
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Sakinah79 said: »
If SE is bought out by either of the big two ( Sony, Microsoft ), shutting the company's least profitable content down would be a top priority.

The red button will be pressed.
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 Cerberus.Balloon
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By Cerberus.Balloon 2022-05-02 16:14:07
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Having a slower paced Final Fantasy MMO that has gating around slow levelling and slow skill ups?

I could see it going either way. Love it or loathe it FFXI (especially a classic version) would be ripe for turning into a F2P MMO.
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By Musashi232 2022-05-02 16:36:00
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Ragnarok.Jessikah said: »
Pantafernando said: »
Just sell FFXI and change the name Initial Fantasy Online
Real talk, I'm not opposed to that lol...
NOOOOOOOOOOOOOOOOO
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By Fenrir.Velner 2022-05-02 16:51:27
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Pantafernando said: »
Rips said: »
Obviously they needed that money because a large portion of it is going into FFXI development for the next generation of expansions.

I mean, c'mon now.

Just sell FFXI and change the name Initial Fantasy Online

I half wish they would. . . the only reason a lot of older MMOs are still up and running is because they were eventually moved to smaller studios i.e. Ultima Online and Everquest.

Of course, XI could end up in the hands of Gamigo. . . that'd be a disaster.
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By Valefor.Prothescar 2022-05-02 17:06:16
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Gamigo: MMO Hospice

Except instead of being pumped with morphine and happy pills they make them work out in the fields for the rest of their short lives
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 Phoenix.Iocus
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By Phoenix.Iocus 2022-05-02 18:50:16
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They are a JP company that understands JP markets and how much some western players enjoy their content. I see them cutting their losses and focusing on what they are actually good at again.

I think the price is low, but i can see why they would do it for the long game.
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By Asura.Karbuncle 2022-05-02 22:23:35
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Lakshmi.Xaya said: »
NOOOOOOOOOOOOOOOOO They sold Tomb Raider. ; ;

Oh well, SE's portrayal of Indigenous Inuit is inaccurate anyway.

Plus the Raptors in the first game didn't have feathers and were too big. Disgraceful.
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By RadialArcana 2022-05-03 15:03:05
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Square Enix this week sold its Western studios - Crystal Dynamics, Eidos Montreal, and Square Enix Montreal - for $300 million to Embracer Group. The sale includes over 50 IPs like Tomb Raider, Deus Ex, Thief, Legacy of Kain, and many more.

$300 million for those studios and IPs compared to other recent acquisitions seems like a a steal for Embracer Group, however, it appears this could be due to the losses Square Enix incurred with some recent releases.

Industry analyst David Gibson via Twitter reports that Square Enix lost $200 million on the two Marvel games - Marvel’s Avengers and Marvel’s Guardians of the Galaxy.

Marvel - that’s the reason why Square sold its NA team for $300m," said Gibson. "Because in a little under two years they lost $200m on two Marvel games. But it still looks like a low price given the optionality on probably 4 AAA titles coming through."

https://www.vgchartz.com/article/453510/square-enix-reportedly-lost-200-million-on-avengers-and-guardians-of-the-galaxy/
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By Viciouss 2022-05-03 15:20:55
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It's a good move by SE. I read an article that said Shadow of the TR cost 100m to make and another 35m to market, and it suffered a price drop in less than six months. None of these IPs are selling well, and they cost too much to make.

Guardians was a good game, it undersold and cost a shitload to make. Deus Ex is dead. Hitman is on life support. The market for single player games isn't as large as it used to be. And the appetite to pay full price for them is even smaller.

Not just that, the next game from any of these studios is years away. They literally just announced a new TR game on Unreal 5, but it's nowhere near release. There is no money coming in for at least two years. Why not sell now?
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By Draylo 2022-05-03 17:56:12
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Why was Avengers so bad? I have bought it day1 and never started it, not sure why.
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By Pantafernando 2022-05-03 18:32:34
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Wasnt the game buggy as hell?

Like Superman 64 2.0
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By Phoenix.Iocus 2022-05-03 21:29:44
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It was live service game = unfinished crap full of promises that never get kept.

Plus the base models for the characters looked like weird knock offs since MCU has firmly cemented what these characters look like in 3d.
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By Felgarr 2022-05-03 21:34:31
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This is FFXI's 20th anniversary update. Please enjoy it.
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By Afania 2022-05-04 08:05:17
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Viciouss said: »
Guardians was a good game, it undersold and cost a shitload to make. Deus Ex is dead. Hitman is on life support. The market for single player games isn't as large as it used to be. And the appetite to pay full price for them is even smaller.


SE ruined the IP anyways. Would rather see another company gets it.
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