Yesterday, during a Square Enix earnings call, the company explained the recent sale of Crystal Dynamics and Eidos to Embracer Group, which was theirs for the $300 million sale price for the pair.
Their statement is… bizarre to say the least, and according to Square Enix, the sale was “driven by concerns that the titles were cannibalizing sales from the rest of the group and thus could improve capital efficiency.”
as an analyst David Gibson explained in a thread on the call, this makes little sense, especially when by the time the sale is over, Square Enix has tons of cash on hand, more than enough to fund games and studios, and the real reason seems to be making itself a more attractive target. for takeover, but they refuse to say so.
At first, the idea that Crystal Dynamics or Eidos games cannibalize other Square Enix games doesn’t make sense to anyone. First of all, Square Enix is constantly complaining that games from those studios are underperforming and not selling enoughso how can they significantly cannibalize Square Enix’s other games?
Then of course the planning of releases and the genres of the games have literally nothing to do with each other. There is no coherent argument as to what “cannibalize” Tomb Raider, Avengers, Deus Ex, or Guardians of the Galaxy games. The only thing I can even do from a distance remember here is the release of Avengers and Outriders in the same window, two live service marauders, albeit Avengers got the worst end of that stick, and Outriders has been hailed by Square Enix as a success and an important IP for their future. But what do CD/Eidos games have to do with “cannibalizing” other great Square Enix series like Final Fantasy or Dragon Quest?
Again, the overwhelmingly common theory here is that Square Enix and Crystal Dynamics/Eidos haven’t been a good match for years, and that they wanted to offload them to become a slimmed-down, more desirable target for acquisition by someone like Sony. While nothing official has been announced, given the history between the two companies and the current market situation where all independent publishers are being picked up by megacorps, a possible acquisition of Sony would be less than a surprising development. But the fact that Square Enix is so dishonest about what’s really going on here is somewhat tiresome, and at worst business-like.
Meanwhile, Crystal Dynamics is still making Avengers content, Microsoft helping out with Perfect Dark and starting a new Unreal Engine 5 Tomb Raider game for Embracer. Eidos is working on some secret UE5 projects and we could see the return of IPs like Thief of Legacy or Kain from them. Square Enix, meanwhile, plans to release its most famous game in a long time next year, Final Fantasy XVI.
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