Update from 7.6. 2022:
In the financial report for fiscal year 2021/2022, Square Enix had commented on the sale of studios Eidos Montreal and Crystald Dynamics to Embracer Group. Now not only the presentation but also the accompanying briefing is available in English translation. In it, President of Square Enix announced Yosuke Matsuda don’t just think of a new one Just cause is in development, but also commented on plans for the $300 million raised by the sale.
In an earlier statement, it was said that Square Enix wanted to invest the capital in future markets, with keywords such as blockchain and cloud being mentioned. But Matsuda now corrected:
Rather than using the proceeds of the divestment to invest in new areas of investment such as NFT and blockchain, we plan to use it primarily to support our efforts to build solid brands and strengthen our development opportunities in the core segment of digital entertainment. We plan to raise capital for the new investment areas separately from our core business.
Original news from May 18, 2022:
In its final financial report for fiscal year 2021/2022, Square Enix commented on the deal with Embracer Group for the sale of studios Crystal Dynamics, Eidos Montreal and mobile developer Square Enix Montreal, including associated IPs Tomb Raider, deus ex and Co.
In the corresponding presentation, a reason for the sale reappears, which Square Enix already mentioned in the press release at the time: investing in new fields such as blockchain, artificial intelligence and cloud technology. In addition, however, it was about optimizing the distribution of company resources in order to “develop appealing titles that are better tailored to the needs of our customers” and thus increase profits. That sounds a lot like: the studios weren’t profitable. This is entirely consistent with statements made by the analyst David Gibson by MST Financial that Square Enix lost over $200 million on its Marvel games. This is primarily due to the failed service game Marvel’s Avengers (in the test, grade 5.0) from Crystal Dynamics and not on Marvel’s Guardians of the Galaxy (In the test, grade 8.5) by Eidos Montreal – even if the latter also initially did not meet the sales expectations, according to the Narrative Director Mare DeMarle has found a growing audience since its release in Microsoft’s Gamepass.
The presentation goes on to say that Square Enix will now better coordinate global game releases with its Tokyo headquarters, including overhauling governance structures and communications. Going forward, Square Enix intends to make its role as a publisher more effective with a Chief Publishing Officer and accelerate decision-making through new internal group management. This should not only be about strengthening the existing brands, but also about establishing new ones. There are also plans to open new studios or to acquire them through mergers and takeovers in order to increase their own capacities for developing games. But that could also apply to mobile studios, since Square also has a strong presence in the mobile games sector.
Other interesting data from the report: Out of 279.6 billion yen (about 2 billion euros) in revenue from game sales, only about a tenth (27.2 billion) came from physical game sales. Elsewhere, merchandise sales rose from 9.4 to 14 billion yen (about 102 million euros). Among the major releases in the category are the collector’s editions of Final Fantasy 14 – Endwalker and Nier Replicant v1.22 (in the test, grade 9.0) counted.
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