Square Enix has reportedly revealed that its sale of studios Crystal Dynamics and Eidos Montreal was driven by concerns their games would "cannibalise" sales of the rest of the company. Looking forward, it also looks like Square Enix may look to sell stakes in some of its studios to improve ‘capital efficiency’ all while resources shift from US and European studios to Japan.
As shared by MST Financial senior analyst David Gibson on Twitter, Square Enix has delved further into the rationale of its decision to sell the Tomb Raider and Deus Ex studios during a recent conference call for investors. According to Gibson, the company felt that sales from the pair would "cannibalise" sales of the rest of the company and that selling them would allow Square Enix to improve "capital efficiency".
That brings us to the next phase of Square Enix’s plan. The cost of creating games is only rising, so Square Enix wants to be more selective with resources and limit expansion to diversify its studio capital structure. The effects of that will reportedly be felt by European and American studios, with Japanese games benefiting from the additional resource.
As part of the initiative, Gibson also shares that Square Enix is looking to sell stakes in its studios to “improve capital efficiency”, which is notable with Sony and Tencent expanding.
Whether any possible sale comes to pass remains to be seen, though we haven’t been short of acquisitions of late. Tencent has made a habit of snapping up studios, and Sony recently grabbed headlines with its acquisition deal with Destiny 2 studio Bungie. Square Enix clearly has a good working relationship with Sony, so rumours of that acquisition are a favourite, though we’ll have to wait and see how that unfolds.
From the vault, Sony buying Bungie is about way more than games.
