With the recent announcement that the Embracer Group is acquiring Square Enix‘s North American studios and IPs, there’s a lot to unpack. That’s especially true given the involvement of studios like Crystal Dynamics and Eidos Montreal, as well as the IPs that have traditionally been associated with them, such as Tomb Raider and Deus Ex, among others. One particular aspect of the transaction that has drawn the attention of many is the fact that the total cost of the transaction is only $300 million, which, given the enormity of the transaction and the names involved, appears to be a startlingly low figure.
However, given the losses that Square Enix has suffered in recent years as a result of its western output, it appears that the price is starting to make more financial sense. Even industry analyst David Gibson revealed on Twitter that the Marvel license was the key reason Square Enix agreed to the amount they did in order to complete their acquisition of the company.
The commercial underperformance of both Marvel’s Avengers and Marvel’s Guardians of the Galaxy, as well as the significant financial losses caused by the former’s failure, in particular, have been openly discussed by Square Enix since 2020. According to Gibson, the two films have collectively resulted in losses of $200 million for Square Enix in less than two years.
Despite this, as Gibson also points out, the price appears to be significantly lower than expected when considering the potential of the IPs associated with the two studios as well as the upcoming AAA games that are in the works at both Eidos Montreal and Crystal Dynamics (with the latter confirmed to be working on a new Tomb Raider game).
On the surface, it appears that the massively popular Tomb Raider franchise would be sufficient in and of itself to dramatically increase that figure. Add to that the fact that Square Enix intends to use the money from this transaction to invest in blockchain technology, and the arrangement becomes even more perplexing to comprehend.
Marvel – that’s the reason why Square sold its NA team for $300m. 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. #SquareEnix #Embracer
— David Gibson (@gibbogame) May 2, 2022