Why Square Enix Sold Its Western Studios
The gaming industry can't seem to go a month without big acquisition news, but the most recent of these was surprising for a different reason. Square Enix suddenlysold all of its Western studios--Crystal Dynamics and Eidos--to the Embracer Group. That includes high-profile franchises like Tomb Raider and Deus Ex. The move largely exits Square Enix from Western-made games, trimming its sails with an apparent focus on its own internal Japanese development. Analysts tell GameSpot that the move is somewhat of a «head-scratcher» financially, but ultimately suits its long-term goals of slimming down the organization and pursuing new revenue streams.
Lewis Ward, gaming research director at IDC, says that Square's revenue growth and profits were decent over the last nine months, which may have prompted the company to sell «most of the crown jewels.» But then, he says, the sale price was surprisingly low if that's the case.
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«The problem I have with this scenario is that $300 million for a company that generated well over $2.4 billion last year doesn’t feel like a great haul at all,» Ward said. «If Embracer was throwing tons of money their way it would make sense to sell in this heightened M&A atmosphere, but $300 million strikes me as a price tag for a highly-distressed company given their recent revenue results. It’s closer to Activision’s proposed buyout by Microsoft from this perspective. So there must be more to the story that I just know about that
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