Game news Tomb Raider, Deus Ex, Marvel … Square Enix’s complex relationship with its Western studios
On Monday, May 2, we learned that Square Enix was selling its Western studios, including Eidos, Crystal Dynamics and Eidos Montreal, to the Swedish band Embracer. On this occasion, the editorial staff of JV invites you to take a look at this turbulent decade between the Japanese publisher and its western producers, which is considered “disappointing”.
- Desire to open in a new market
- A turbulent decade for Square Enix
- Too high expectations from the Japanese publisher?
Decisively, this beginning of the year 2022 is marked by the acquisitions. After Take Two took over Zynga, Microsoft took over Activision-Blizzard-King and finally Sony became the owner of Bungie, there were already several acquisitions to upset the video game industry. While May is just beginning, new information has once again changed the landscape of video games. So, on Monday, May 2, Square Enix announced that it had sold Eidos Montreal, Crystal Dynamics and Square Enix Montreal to the Swedish group Embracer for $ 300 million.. The transaction is expected to be completed this summer.
Desire to open in a new market
If the announcement resulted in a small earthquake in the world of video games, it is also about the amount of this sale. $ 300 million for three studios with 1,100 employees and more than fifty licenses does not seem like much., especially for prestigious franchises such as Tomb Raider, Deus Ex, Legacy of Kain, Thief, Sleeping Dogs … This is all the more true when comparing these figures with other acquisitions such as Insomniac (Marvel’s Spider-Man, Ratchet & Clank: Rift Apart …) from Sony in 2019 for the 229 million or $ 1.3 billion spent by the Embracer Group to take over the Gearbox (Borderlands 3, Tiny Tina’s Wonderlands …). On the one hand, we must remember that Eidos and Crystal Dynamics have gone through quite complicated times in the last decade.
If we go back in time, It was in 2009 that Square Enix invested in Western development studios with the acquisition of Eidos, which also included Crystal Dynamics and IO Interactive. After this acquisition, the first title that emerged from this collaboration is none other than Deus Ex: Human Revolution in 2011, the return of a big name to Eidos Montreal with an immersive-sim signature. With 2.18 million copies sold worldwide in November 2011, prompting the publisher to describe the sales as “favorable results”. Unfortunately, from the next game, things start to go wrong. In 2012, it was IO Interactive’s turn to release Hitman Absolution, which was a disappointment for Square Enix, as the title sold only 3.6 million copies on March 26, 2013, which is lower than initially expected. The same thing next year with Tomb Raider (2013) which sold 3.4 million copies worldwide, the franchise’s highest sales record, but failed to meet the goals set by the company.
A turbulent decade for Square Enix
The coming years will improve since in 2014 Thief will have “favorable” sales despite its poor reception, while Rise of the Tomb Raider released in 2015 will do very well because the commercial success of the game will be judged satisfactory by Square Enix. In addition to the release of Lara Croft’s new adventure, Microsoft also spent $ 100 million to make the title exclusive to Xbox for a year.. An amount that puts things in perspective when you see the acquisition of these studios by the Embracer Group. Unfortunately, the following projects will be difficult to establish in the video game landscape. Whether it’s Hitman and its episodic formula or Deus Ex: Mankind Divided, 2016 will be considered a disappointing year for the Japanese publisher alongside its Western producers. If Shadow of the Tomb Raider manages to raise the bar with more than four million copies sold at the end of 2018, the 2020s and the implementation of the partnership with Marvel will not have the expected result.
With Marvel’s Avengers coming out in September 2020, Square Enix is testing its Western gaming service with a huge license to support its initiative. Unfortunately, the studio behind the project, Crystal Dynamics, is not specialized in this kind of production. As a result, the title comes out in a complicated situation and lacks a lot of content in the release, despite the effective main campaign and gameplay.. If a year and a half later the game is still in service, it continues to suffer from a lack of activity that prevents it from attracting new audiences. In November, Square Enix acknowledged that Crystal Dynamics “did not have the necessary skills to work“in this kind of production, that explains”disappointing result“and the fact that sales of the game”were less than we expected and did not fully offset the depreciation of game development costs“. Despite its radically different formula and the positive reception from the press and players, the Guardians of the Galaxy will also have sales that will be considered disappointing by Square Enix.. Fortunately, the title has recently been the subject of intense public interest thanks to its release on the Xbox Game Pass.
Too high expectations from the Japanese publisher?
After this short story, you will understand that Square Enix never seems to be really satisfied with the sales of Western toys. One of the reasons that can explain this reaction is first of all the great hopes that the Japanese publisher places in his western productions.. As proof, Yosuke Matsuda, president of Square Enix since June 2013, himself admitted that for Tomb Raider (2013), the company’s expectations were “extremely highReading that sales of Western games are disappointing, gamers have become accustomed to the fact that the Japanese publisher is never satisfied with these titles. In this sense, the acquisition of Eidos, Crystal Dynamics and Square Enix Montreal by Embracer The group is not surprising, as it happened with IO Interactive in 2017. After the disappointing results of Hitman (2016), Square Enix decides to break away from the Danish studio which is then bought by its leaders to become independent. license rights and production of Hitman 2.
To understand why Square Enix has such high expectations for its Western games, you need to take a look at its Japanese productions. When we see that NieR Automata exceeded 5 million sales in December 2020 while the title only benefited from an AA budget, it is the jackpot for the company. And even if we do not know the exact cost of development, the director, Yoko Taro, had indicated that the developers did not have enough money to work on a major DLC. So, if this is a double A production, then we can estimate that the budget was less than $ 50 million. Inevitably, this is a much more lucrative project than a Western AAA game that is struggling to sell millions of copies quickly. In addition, recently, Square Enix seems to be turning to this type of production with more reasonable budgets, which are often developed externally, such as Babylon’s Fall, Stranger of Paradise Final Fantasy Origin, Valkyrie Elysium, etc. Thus, in case of commercial failure , the losses are less significant for the publisher than an AAA in which he would have bet a lot.
The same in relation to the company’s mobile games which are now one of its main sources of revenue. Content that is even more profitable because it costs little to maintain and is based on strong franchises such as Final Fantasy, Dragon Quest, Kingdom Hearts SaGa or even NieR. Recently, a new free mobile game was released by Mana / Senken Densetsu with Echoes of Mana. And then, if Square Enix wanted to try to create new service games, it is also trying to replicate the success of Final Fantasy XIV, which continued to attract new players from its redesign in 2013 and which is a significant source of revenue for their company thanks to its monthly subscription.
Since the acquisition of Eidos and its studios in 2009, Square Enix has been releasing a Western AAA game every year. Despite several major blockbuster productions, such as Rise of the Tomb Raider, the Japanese publisher has never been really happy with the commercial reception of these titles, perhaps due to very high expectations. After a frustrating attempt at the service gaming world with Marvel Avengers, the company finally decided to cut the cost of selling its studios to Embracer to invest in artificial intelligence, the Cloud and the blockchain. A wish consistent with the words of the President of Square Enix expressed during his wishes for the New Year. It now remains to be seen what Embracer will do with the recently announced Tomb Raider or a possible Deus Ex 3 that has been rumored for several years.
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