Square Enix feared Eidos, Crystal Dynamics games cannibalized other sales

Square Enix feared Eidos, Crystal Dynamics games cannibalized other sales

Square Enix executives, in their first quarterly call since the sale of the Tomb Raider and Deus Ex franchises and the studios that created them, explained that decision to investors Friday.

The publisher’s reasoning according to analyst David Gibsonis that the western studios and their products could cannibalize the sales of the rest of the group, so selling them “could improve capital efficiency” — essentially making more money relative to what the company spends making more money.

Square Enix transferred Eidos, Crystal Dynamics and the IPs they owned to Embracer Group in early May. The two studios are the latest major acquisition for Sweden-based publishing conglomerate, which already owns Gearbox Software, Saber Interactive, Plaion (formerly Koch Media) and Deep Silver, as well as comic book publisher Dark Horse and tabletop game maker Asmodee.

The sale followed a long period in which Square Enix’s western operations would publish an AAA game and headquarters would criticize the sales performance in the next conversation with investors. miracle‘s Guardians of the Galaxya critical success developed by Eidos, “below our initial expectations,” Square Enix’s Yosuke Matsuda said in February.

Before that Eidos . had Marvel’s Avengers was “disappointing,” the company said in its 2021 annual report; in a quarterly call from 2019, Matsuda said: Shadow of the Tomb Raider ” got off to a weak start ” after selling 4.12 million units in the previous four months. Matsuda also blamed Shadow of the Tomb Raider and Just cause 4 (developed by non-Square Enix studio Avalanche) for a ‘disappointing neighborhood’.

Early 2017, apparently Deus Ex: Mankind Divided‘s sales weren’t enough to save that franchise from hiatus, despite favorable reviews and positive response from the community. And while it doesn’t own the studio that made their second attempt at a live service game, 2021’s outsidersSquare Enix told People Can Fly a year ago not to expect any royalties, and the studio confirmed it wasn’t profitable for 2021, despite selling between 2 and 3 million units.

Square Enix told investors that after the $300 million sale of Crystal Dynamics and Eidos, the company will Have $1.4 billion in cash on hand and no debt. Gibson, the analyst, said the studio sale is “phase one” of a plan to get back on track; “Phase Two” will “finance extensive game investments” without having to sell studios or interests therein to competitors.

Square Enix’s latest quarterly report, released Friday, said sales and operating income were down 16 and 17 percent from the same quarter last year, and as sales of the HD games category continued to decline, the MMO unit rose. thanks to the increased ‘paying subscriber’. numbers” for Final Fantasy 14, year after year.

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