Embracer Studio Acquisitions and Divestitures

C

cheapchips

Veteran
Embracer keep growing. They've entered into an agreement to buy Square Enix's western studios for $300m. Bargain!

Embracer Group AB (”Embracer”) has entered into an agreement to acquire the development studios Crystal Dynamics, Eidos-Montréal, Square Enix Montréal, and a catalogue of IPs including Tomb Raider, Deus Ex, Thief, Legacy of Kain and more than 50 back-catalogue games
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https://embracer.com/release/embrac...nd-square-enix-montreal-amongst-other-assets/


Square are going to invest the cash in NFTs and other bollocks.
 
It's a really good get, especially at that price IP and all.
A lot of people assumed due to collaboration with, xbox's the initiative that MS would pick them up.
The way the market is now, you snooze you lose.
 
Jay said:
It's a really good get, especially at that price IP and all.
A lot of people assumed due to collaboration with, xbox's the initiative that MS would pick them up.
The way the market is now, you snooze you lose.
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I'd be surprised if MS hadn't had talks. Maybe the Activation deal needed to go through first, for regulatory smoothness and just the sheer work involved. It could also be that they just don't have the relationships with the ex-Square teams they prefer. The Blizzard senior management was starting to fill with ex-MS staff after all.

There are rumours floating about that Square are trying to make themselves ready for a buyout. The Japanese side of the company has more value to MS really, to propergate further rumours!
 
cheapchips said:
I'd be surprised if MS hadn't had talks. Maybe the Activation deal needed to go through first, for regulatory smoothness and just the sheer work involved. It could also be that they just don't have the relationships with the ex-Square teams they prefer. The Blizzard senior management was starting to fill with ex-MS staff after all.

There are rumours floating about that Square are trying to make themselves ready for a buyout. The Japanese side of the company has more value to MS really, to propergate further rumours!
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I believe there's some connections between the initiative and crystal dynamics, studio head used to work there or something.

Like you said, could be due to the Activition deal. I would have thought that this is small enough not to rock the boat though.
If this is the reason, could also mean they may miss out on some of the WB sales (if that's a thing)
 
So why did no one else step up like Sony, Tencent, Take Two, EA?
 
They cost a lot to operate and barely make a profit, with low profit margins. The IP is also believed to not be valuable, once you remove gamer nostalgia from the mix. Embracer Group expects them to only break even this year and next.

For reference, Crystal Dynamics had a profit margin of 3.6% in 2021 while Eidos Montreal had a profit margin of 0.65% in 2021.
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https://twitter.com/x/status/1521091428574769155
 
Shortbread said:
Didn't Microsoft spend like $100M to secure [timed exclusivity] rights for the Rise of The Tomb Raider? More than likely left a bad taste in their mouth.
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They did long ago and some gamers reactions showed hypocrisy of timed exclusives. From that moment on Microsoft was mostly sealed into not renting games but owning them.
 
I think there is some good IP in this deal but it will take some talent to bring them to back to relevancy.

The next purchase out there from a group is most likely WB Games. Although I heard that Amazon has been sniffing around Ubisoft
 
BRiT said:
They did long ago and some gamers reactions showed hypocrisy of timed exclusives. From that moment on Microsoft was mostly sealed into not renting games but owning them.
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It is interesting to think that "gamer" reaction to the timed exclusivity on Tomb Raider may have started the ball rolling on MS being more willing to just straight out buy studios instead of just paying them for timed exclusive content.

Especially when it's a case like Tomb Raider where the studio was in a position where it could not afford to finish the title due to budget reasons (Square Enix was in a pretty bad place financially back then).

Regards,
SB
 
BRiT said:
So why did no one else step up like Sony, Tencent, Take Two, EA?
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Sony may be buying Square-Enix Japan. Just speculation of course but I had a feeling that if Square started selling off it's western studios the purchase of their Japan studios seemed very likely.
 
BRiT said:
I am still amazed they sold what they did to get $300 million to ultimately put into NFTs. :rolleyes:
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LOL, pretty much.

That aside, it seems SE probably felt those studios weren't worth the time, fight or value on keeping around.

Companies hate to carry around a drag on their profitability, but that doesn’t mean they instantly sell off underperforming business units. Square Enix had the choice of figuring out what to do next with Crystal Dynamics and Eidos. But this deal suggests that Square Enix ran out of ideas.
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The publisher already went from having Crystal Dynamics and Eidos working on their own IP to working on Disney’s major Marvel brand. The cost of that license almost certainly contributed to the low profitability of the studios. But more than that, you get the sense that Square Enix is saying, “if Marvel couldn’t make these studios profitable, nothing can.”
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https://www.google.com/amp/s/venturebeat.com/2022/05/02/square-enix-is-lucky-it-has-ff14/amp/
 
Dr. Nick said:
Sony may be buying Square-Enix Japan. Just speculation of course but I had a feeling that if Square started selling off it's western studios the purchase of their Japan studios seemed very likely.
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I know Sony fanboys want Square-Enix squarely in Sony's first-party corner, but is it truly necessary? I mean, wouldn't the tighter and more recent Japanese governmental regulation towards preserving Japanese companies suffice for Sony? Thus, putting any acquisition monies towards other buyouts.
 
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