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Square Enix sells its western studios and IP to Embracer Group


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Embracer buys Eidos, Crystal Dynamics and Square Enix Montreal

 

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Embracer Group AB ("Embracer") has entered into an agreement to acquire the development studios Crystal Dynamics, Eidos-Montréal, Square Enix Montréal, and a catalogue of IPs including Tomb Raider, Deus Ex, Thief, Legacy of Kain and more than 50 back-catalogue games from SQUARE ENIX HOLDINGS CO., LTD. ("Square Enix Holdings"). In total, the acquisition includes ~1,100 employees across three studios and eight global locations. The total purchase price amounts to USD 300 million on a cash and debt free basis, to be paid in full at closing. Embracer has secured additional long-term debt funding commitments for this and other transactions in the pipeline. The company today reiterates its current Operational EBIT forecast for FY 21/22, FY 22/23, and FY 23/24. The transaction is subject to various regulatory and other external approvals and is expected to close during the second quarter of Embracer's financial year 22/23 (July-September 2022).


Edit: beaten because the linked page was getting hammered

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I think that's potentially good news. Square was badly mishandling those studios. With either Sony or Microsoft they would have been platform exclusive. Embracer is also very likely to do something with the older ip's like Kain, Thief, and Deus Ex. Moreso than the big platform holders, especially Sony. Glass is half full!

 

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I am surprised this is one Microsoft missed out on, given they were such a fan of Tomb Raider and essentially have Crystal Dynamics making Perfect Dark for them at this point. They would have been better with smaller deals like this with studios that had some PC heritage than giant Activision deals that might not even go through IMO

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8 minutes ago, RubberJohnny said:

I am surprised this is one Microsoft missed out on, given they were such a fan of Tomb Raider and essentially have Crystal Dynamics making Perfect Dark at this point. They would have been better with smaller deals like this with studios that had some PC heritage than giant Activision deals that might not even go through IMO


no mobile.

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$300m for Crystal Dynamics and Eidos-Montreal is insane given that’s probably less than their last three games cost to develop. 

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Looks like Square-Enix is retaining Square-Enix Europe (Eidos’ publishing unit) and associated IPs (Just Cause, Outriders, Life is Strange) so it’s not a complete withdrawal from western games development and publishing, although I imagine they will have less to do without their in-house studios and associated IPs.

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$300 million seems crazy. Didn't Sony pay around that for Insomniac alone and acquired basically no valuable IP as part of the deal (Ratchet was already Sony owned IP). 

 

For a similar price they have the Tomb Raider IP, a load of other IP (albeit largely dormant/forgotten about) and multiple studios.

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I wrote a big thing about how reselling nostalgia doesn't work for Saturn and Dreamcast, but it hasn't really taken off for PC retro stuff either.

 

Half of all HL: Alyx reviews were just reviewers moaning that this used to be a big series and no one cares anymore, and I swear announcements like STALKER 2 which were filled with classic sound effects and fan memes were supposed to get people jumping on tables and weeping, but just had tumbleweeds instead. There seems to be limited knowledge of PC gamings history even amongst the staff of most gaming sites.

 

So I don't think they'll really get remakes or sequels (or if they did, they wouldn't make money). For something like Thief, which is a niche of a niche, you'd be talking a NightDive one where it's just the same game again with no real work done for it, but we marked it up to £35 instead of the £1.99 it was going for before on Steam, and we've removed that one from sale, for y'know, reasons - we're all about preservation by the way.

 

Obviously I don't like this nostalgia stuff, so to me this all failing to take off is a feature, not a bug.

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2 hours ago, RubberJohnny said:

I am surprised this is one Microsoft missed out on, given they were such a fan of Tomb Raider and essentially have Crystal Dynamics making Perfect Dark for them at this point. They would have been better with smaller deals like this with studios that had some PC heritage than giant Activision deals that might not even go through IMO

Perhaps not selling to MS was a defensive move by Square to diversify the market?  I might be reaching there.  Maybe Phil Rogers was given a deadline to broker a deal else lose a bonus as well as a job?

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3 minutes ago, Triple A said:

Perhaps not selling to MS was a defensive move by Square to diversify the market?  I might be reaching there.

 

I think Embracer and Tencent own more than MS, they're big for a first party, but nowhere near #1, even with Activision.

 

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If Microsoft wanted their acquisition of Activision to get through the US competition authorities, it would be a bit cavalier to buy another studio in the interim. I would imagine they are probably being cautious in terms of purchases until the Activision thing is done and dusted.

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Yikes.

 

Nothing is going to happen with these metaverse things, right? We've got a cost of living crisis and are nearly in the next recession, the big one, pretending everyone was going to be buying Gucci NFTs to dress up their avatars when they're really trying to pay energy bills or deal with rising food costs reeks of bubble exuberance, the same way all the big skyscrapers got built directly before crashes.

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The rumours are that embracer are building a portfolio of IP and studios to pump the value of before a sale. Though the other speculation is that SE are trying to make themselves a bit smaller so they’re a more attractive acquisition, which I think makes more sense. They’ve done a poor job with these IPs and most of them aren’t really big blockbuster names anymore. It’s basically a nostalgia fire sale.

 

58 minutes ago, Majora said:

$300 million seems crazy. Didn't Sony pay around that for Insomniac alone and acquired basically no valuable IP as part of the deal (Ratchet was already Sony owned IP). 

 

For a similar price they have the Tomb Raider IP, a load of other IP (albeit largely dormant/forgotten about) and multiple studios.

 

It does seem cheap, but Insomniac are making games that actually sell very well, where these studios are working with huge IP like Marvel brands and still failing to create big hits. Now that might be because SE we’re making bad decisions at a managerial level, but given how good the Japanese branches are at monetising old brands and creating things like FFXIV that are huge service games, it might just be that these studios are a bit crap. Plus as much as oldies like us think Deus Ex and Tomb Raider are huge names, there’s a whole generation of younger gamers who spend tonnes of money who don’t give a shit about them.

 

18 minutes ago, Triple A said:

Perhaps not selling to MS was a defensive move by Square to diversify the market?  I might be reaching there.  Maybe Phil Rogers was given a deadline to broker a deal else lose a bonus as well as a job?

 

Maybe MS don’t want them? 

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So what IP has been sold here? Tomb Raider, Deus Ex, Thief, Legacy of Kain, Gex. Is that it? Because $300 million seems like a fair price for some studios whose games consistently underperform, two franchises that haven’t seem a successful game in 20 years, two franchises that have a cult following (one of which had some moderately successful games quite recently), and the TR franchise which has been overvalued consistently since it was briefly very popular 25 years ago. 

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1 hour ago, Broker said:

So what IP has been sold here? Tomb Raider, Deus Ex, Thief, Legacy of Kain, Gex. Is that it? Because $300 million seems like a fair price for some studios whose games consistently underperform, two franchises that haven’t seem a successful game in 20 years, two franchises that have a cult following (one of which had some moderately successful games quite recently), and the TR franchise which has been overvalued consistently since it was briefly very popular 25 years ago. 


Yeah I think what this deal demonstrates is that the valuation of videogame developers is kind of exponential depending on how successful they have been. Quality studios aren’t enormously valuable in and of themselves - it’s all about whether they’ve demonstrated they can make a genuine mega-hit (especially in the GAAS space), or have IP that could be used for such.

 

That’s why Bungie and Gearbox were acquired at such high prices relative to this Square deal.

 

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3 hours ago, K said:

If Microsoft wanted their acquisition of Activision to get through the US competition authorities, it would be a bit cavalier to buy another studio in the interim. I would imagine they are probably being cautious in terms of purchases until the Activision thing is done and dusted.

This. Isn't this obvious? 

 

Microsoft won't do anything major until the Activision acquisition clears with all the authorities. 

 

They did the same with Bethesda. 

 

And they have plenty of cash so they can just buy what they want at top price whenever the Activision one has been completed. 

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Square Enix making a possible dunderhead decision to sell off IP cheap in the hope of concentrating on a volatile emergent ecosystem to try and make mad bank? That doesn't sound like something they'd do.

 

 

Spoiler

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3 hours ago, gossi the dog said:

So Embracer is the parent of THQ Nordic. I’d never heard of them. 

Afaik they ARE THQ Nordic, they just changed the name and rearranged stuff a bit. They own loads of developers now.

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Dark Horse Comics as well.

 

Just checked and in total they own 111 development studios across 10 subsidiaries. They're like the anti-activision who only had about 6 teams working on three properties before they were bought.

 

 

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3 hours ago, Broker said:

So what IP has been sold here? Tomb Raider, Deus Ex, Thief, Legacy of Kain, Gex. Is that it? Because $300 million seems like a fair price for some studios whose games consistently underperform, two franchises that haven’t seem a successful game in 20 years, two franchises that have a cult following (one of which had some moderately successful games quite recently), and the TR franchise which has been overvalued consistently since it was briefly very popular 25 years ago. 

 

The last 3 TR games have sold more than 38m copies and the last two Deus Ex more than 12m. 

 

I'd say "consistently underperforming" is way off the mark.

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