Square Enix feared Eidos, Crystal Dynamics games cannibalized other sales

polygon.com:

Square Enix executives, in their first quarterly earnings call since selling the Tomb Raider and Deus Ex franchises and the studios making them, explained that decision to investors on Friday.

The publisher’s reasoning, according to analyst David Gibson, is that its Western studios and their products might have been cannibalizing sales from the rest of the group, so selling them off “could improve capital efficiency” — basically, making more money relative to what the company spends to make more money.

Square Enix offloaded Eidos, Crystal Dynamics, and the IPs they owned to Embracer Group at the beginning of May. The two studios are the latest big-name acquisition for the 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 sell-off followed a long stretch where Square Enix’s Western operations would publish a AAA game and headquarters would poor-mouth its sales performance in the next call with investors. Marvel’s Guardians of the Galaxy, a critical success developed by Eidos, “undershot our initial expectations,” Square Enix’s Yosuke Matsuda said in February.

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

In early 2017, apparently Deus Ex: Mankind Divided’s sales weren’t enough to save that franchise from