Square Enix has reportedly revealed that it sold Crystal Dynamics and Eidos Montreal out of concern that their games would “cannibalize” sales from the rest of the company. Going forward, it seems likely that Square Enix may also sell some of its studio stakes to improve “capital efficiency” while resources are being moved from US and European studios to Japan.
As David Gibson, senior analyst at MST Financial Twitter (opens in new tab), Square Enix further explored its rationale for its decision to sell Tomb Raider and Deus Ex there during a recent investor call. According to Gibson, the company believes the couple’s sales will “cannibalize” sales in the rest of the company, and selling them will allow Square Enix to be “capitally efficient.”
This brings us to the next phase of the Square Enix project. The cost of making games is only going up, so Square Enix wants to be more selective about resources and limit expansion to diversify its studio capital structure. Studios in Europe and the U.S. will reportedly feel the impact, and Japanese games will benefit from the additional resources.
As part of the plan, Gibson also said that Square Enix is looking to sell a stake in its studio to “improve capital efficiency,” notably in the expansion of Sony and Tencent.
While we haven’t been short on acquisitions lately, it remains to be seen whether any possible sales will take place. Tencent has made a habit of snapping up studios, and Sony recently made headlines with its deal with Destiny 2 studio Bungie. Square Enix clearly has a good relationship with Sony, so rumors of an acquisition are the most popular, though we’ll have to wait and see.
from the vault, Sony acquires Bungie Not just games.
