The DeanBeat: The crazy sanity of the Square Enix and Embracer Group deal
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“Why am I seeking logic or sanity here?” I asked myself. “There hasn’t been any so far.” — Endymion, by Dan Simmons, 1996.
I happen to be reading Dan Simmons’ science fiction novel Endymion, and that line immediately struck me when I heard about The Embracer Group buying all of Square Enix‘s Western game studios for $300 million this week.
Square Enix made a huge strategic bet that seemed both crazy and sane this week. And how you view it depends on what you think the outcome of the video game frenzy will be. I can’t make up my mind myself over the seriously low price that Square Enix sold its Western game studios and intellectual property to The Embracer Group for.
I’ve been trying to figure out who got a better deal. We are either in the golden age of gaming, which I talked about at our GamesBeat Summit 2022 event, or at the edge of a hype cycle that could turn out really bad.
At first, some observers believed that the price didn’t include some other financial agreements, like the assumption of debt. But Lars Wingefors, CEO of The Embracer Group, confirmed in an email that nothing else was in the purchase price.
For that $300 million, The Embracer Group got game studios including Crystal Dynamics, Eidos-Montréal, and Square Enix Montréal. Embracer also purchased major intellectual properties from those companies, including Tomb Raider, Deus Ex, Thief, and Legacy of Kain. In all, it got more than 50 game properties and 1,100 developers. I guess that Square Enix now has about 4,400 employees.
It seemed like such a steal. But observers have noted that it was kind of a distress sale. Square Enix never really spelled out
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