Square Enix sells Tomb Raider, Deus Ex studios to Embracer for $300 million

By Kes Eylers-Stephenson,

Square Enix is selling its three major western studios: Crystal Dynamics, Eidos, and SE Montréal, along with its associated IPs, including Tomb Raider and Deus Ex, to Embracer Group for a paltry $300 million.

Announced on Embracer's site, the new deal will put Square Enix's western studios Crystal Dynamics, Eidos Montréal, and Square Enix Montréal into the hands of Embracer Group. The size of the studios is notable here, with "1,100 employees across three studios and eight global locations" moving employer to Embracer Group.

The games escaping Square Enix include "a catalogue of IPs including Tomb Raider, Deus Ex, Thief, Legacy of Kain, and more than 50 back-catalogue games." Square Enix's press release states that "the transaction enables the launch of new businesses by moving forward with investments in fields including blockchain, AI, and the cloud."

Deus Ex, Tomb Raider, and other game IPs bought in a $300 million deal

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Square Enix has long held the belief that its western studios have been underperforming. Apparently, Crystal Dynamics' fantastic Tomb Raider reboot didn't hit the target despite selling millions of copies, nor did Marvel's Avengers. The Japanese publisher has now sidelined Crystal Dynamics by letting them work on the Perfect Dark project at Microsoft in a support role for the crumbling The Initiative studio. Square also didn't like Eidos' Guardians of the Galaxy numbers, either.

Square Enix is, oddly, going to "continue to publish franchises such as Just Cause, Outriders, and Life is Strange." The studios that develop those games — Avalanche Studios, People Can Fly, and DontNod/Deck Nine — are all independent developers that aren't owned by Square. Each team only had their game published by the Japanese company.

Square Enix sold three studios for how much?

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For everybody in the industry, the biggest surprise has been the price of the deal. In this inflated market, $300 million is not a lot at all — even Insomniac cost Sony the same amount before the inflated prices of the last two years. Microsoft threw 6 billion at Bethesda and much, much more for Activision Blizzard, and Sony bought Bungie at $3.6 billion.

So, to see three teams of high quality with IP and staff included on retainer for $300 million is not only a surprise — it's a bit farcical. The IP alone would have probably been worth more to some companies. On top of that, while Embracer has money and is growing rapidly, a question has to be raised about where on earth the big guns of the industry were for this deal. There is also the question of just how valuable $300 million is for Square Enix for "blockchain investments," which are notoriously insecure.

At the end of its own announcement, Embracer stated it has "secured additional long-term debt funding commitments for this and other transactions in the pipeline." This suggests there are similar announcements coming, though the acquisition has yet to go through regulation. It is likely to be wrapped up by September this year.

Well, we are seeking an acquisition of our own: your comments! Let us know your thoughts and feelings with your business nuance. We are confused by all of this, so maybe you can help clear up what might be the biggest scalping in the industry so far.
Kes Eylers-Stephenson
Written by Kes Eylers-Stephenson
Editor Kes is our resident expert in PlayStation and other gaming news. He writes about PS5 exclusives like The Last of Us and Horizon, PS Plus news, and his favorite games — The Witcher, Assassin’s Creed, and God of War — before an evening swim.
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