Game news Square Enix sells Eidos and Crystal Dynamics, is that good news?
On Monday, May 2, Square Enix announced that it had sold Eidos and Crystal Dynamics for $ 300 million to the Embracer Group. After the surprise and the hot reactions of Internet users, is this decision good news for the Japanese publisher?
- Cloud, AI, blockchain: The new Square Enix projects
- Sale for administrative reasons?
When Square Enix acquired Eidos in 2009, the company acquired Crystal Dynamics and IO Interactive at the same time. After more than a decade of trying to establish itself in the competitive Western AAA gaming world, the Japanese publisher has finally decided to cut costs and sell the remaining studios.after the independence of IO Interactive in 2017. While many were moved by the amount of this transaction, $ 300 million for three studios with 1,100 employees and a list of more than 50 licenses, others expressed their understanding of the rationale behind this financial movement, without hesitating to say that the group left too early.
Cloud, AI, blockchain: The new Square Enix projects
To justify this sale, Square Enix explains in its press release that the amount of the transaction will be used for investments in artificial intelligence (AI), cloud and blockchain. A statement that is not surprising when we remember the wishes for the new year for 2022 from the president of Square Enix, Yosuke Matsuda, with which he had rightly stated that the group seeks to grow in its fields. Words that had caused controversy since the latter had distinguished between players who “play for fun” and those who “play to contribute”. With this second formula, the president of Square Enix clarifies that he designates users who invest in a game to “make it more exciting” and who can receive “a tangible benefit for their creative endeavors” thanks to blockchain-based badges , that is to say … NFTs. Play to make money.
If Square Enix wants to bet on artificial intelligence, the cloud and the blockchain, it is also because the company had already identified in May 2020 that these three technologies were potential growth drivers., to the point of pushing for the creation of the subsidiary Square Enix AI & Arts Alchemy in the spring of 2020, specializing in artificial intelligence as its name suggests. As for the Cloud, we remember that Square Enix used this technology for many games on the Switch, including Guardians of the Galaxy, but also for the Kingdom Hearts franchise. A choice that bothered more than one because if we realized that the Nintendo hybrid console does not have the resources to run Kingdom Hearts III, we had a hard time imagining that titles like Kingdom Hearts, Kingdom Hearts II were released on PS2 or Kingdom Hearts: Birth from Sleep on PSP can not work natively on Switch. Moreover, if the result of the latter is correct in the cloud, it is difficult to say the same for the third episode of KH which suffers from excessive understanding according to DigitalFoundry.
Given the reactions of gamers on social media about NFT, it is surprising to see Square Enix continue in this direction.. However, many studios have already retreated to this point, such as Team 17 (the Worms series), GSC Game World (STALKER 2: The Heart of Chornobyl) and especially Ubisoft with the Quartz platform failing to win the hearts of the public. However, some of the publisher’s already established big games have announced that they will not offer non-exchangeable chips. This is especially true of Final Fantasy XIV, the group’s iconic MMORPG, which represents one of its main sources of revenue thanks to its monthly subscription.
Sale for administrative reasons?
Aside from these official reasons that Square Enix mentions in its press release, an unexpected actor spoke in recent days to discuss another reason that could have led to this sale. For once, it’s a very well-informed source, as is Yoichi Wada, a former Square Enix CEO between 2000 and 2013 who played a key role in the acquisition of Eidos in 2009, but who also left the company after disappointing sales. of Tomb. Raider (2013). So, on his behalf Facebookexplains that he does not understand the maneuver behind this transaction, that is not economically viable unless it is to reduce the administrative and production costs the last seven, eight years.
In light of this information, the sale of Eidos, Crystal Dynamics and Square Enix Montreal to the Embracer Group becomes much clearer. With a mass of over 1100 employees and many locations where they can be hosted, it is obvious that all this represents a significant cost, especially for a company that has a total of 5500 employees. Leaving these structures means a significantly lower cost for Square Enix, especially in projects that have not always been successful in terms of sales over the last decade.. For these reasons, we better understand why the Japanese publisher wanted to part with its structures and licenses for an amount so low in appearance, $ 300 million.
With such large payroll entities, the commercial failure of an AAA game weighs even heavier on the publisher. For this reason, Square Enix has become increasingly accustomed to developing titles externally or co-developing with another studio to minimize losses in the event of poor sales.. TRIANGLE STRATEGY, Babylon’s Fall, Stranger of Paradise Final Fantasy Origin, Valkyrie Elysium, Star Ocean: The Divine Force … examples are legion this year. Thus, in the event of a poor commercial reception, the impact on the group’s finances is less significant because most of these securities benefit from the budget of an AA game, i.e. less than fifty million dollars. Finally, only major projects that serve as key players such as Final Fantasy XVI, Forspoken, Final Fantasy VII Remake Part 2, Dragon Quest XII or Kingdom Hearts IV are developed internally by different industries called Creative Business Units. As for mobile games, the publisher’s main source of income, they are produced both within the company and by external studios.
With the acquisition of Eidos, Crystal Dynamics and Square Enix Montreal, Square Enix wants to use the sales revenue to continue investing in potentially profitable sectors such as cloud, artificial intelligence and blockchain. In addition, this transaction also seems to have been driven by the desire to reduce production costs which has skyrocketed in recent years and has become difficult to pay due to sales figures that are not always satisfactory. Finally, in addition to investing in new technologies, Square Enix therefore seems to be refocusing on Japan through three main types of production: AAA games developed internally based on strong licenses that serve as standard bearers, AA budget titles that are made externally to minimize losses and mobile games designed for maximum profitability, based on both video game franchises and manga. Now all we have to do is wait for the Final Fantasy XVI to show the end of its nose and if the rumors of a takeover from Sony are finally proven.
With TheXsandJournalist jeuxvideo.com