It’s been (another) big week for gaming news. On an unassuming Monday morning, the industry learned that Square Enix has agreed to sell Tomb Raider, Deus Ex, Lara Craft Go, along with the studios that create the games, to the Embracer Group.
Although Square Enix will retain some of its Western IP, namely Just Cause, Life Is Strange, and Outriders, it’s clear that the publisher was keen to shed many of its more notable brands. And it makes sense; Square Enix has been publicly disparaging its Western studios in recent years. He almost felt like a disappointed parent complaining about his children to the other parents at the school gates.
Whether it was Tomb Raider, Deus Ex, Marvel’s Avengers, or Guardians of the Galaxy, Square Enix would release statements (loudly) calling them “sales disappointments” or talking about how unimpressed it is with the performance of the live service aspect of the games. games. Even in 2013, the Tomb Raider reboot sold 3.4 million units in just four weeks, and that was still a flop in the eyes of Square Enix. Eesh.
But, following Embracer Group’s deal to buy the big three studios (Eidos Montreal, Square Enix Montreal, and Crystal Dynamics) from Square Enix, along with a host of IP, the investment company shared a timeline of the Tomb franchise. raider. Fill in some sales information that we haven’t seen presented in this way before.
According to the timeline, Tomb Raider has sold 88 million units since the first game launched way back in 1996. A significant portion of that number, some 38 million sales, is attributed to the Reboot Trilogy alone, which began with Tomb Raider. (2013) and went on to spawn Rise of the Tomb Raider and Shadow of the Tomb Raider.
TL;DR? It is a popular series, with a lot of potential. So why was Square Enix so eager to download it, and for so little money? Let VG247’s friend and gaming business veteran Chris Dring put it in easy-to-understand terms.
In football, a financially strapped club will often sell their best player for a cheaper fee if they can get paid up front. It takes an expensive player off the salary bill and gives them an instant cash injection. I hope that helps explain the price of Square’s western studios.
— Christopher Dring (@Chris_Dring) May 3, 2022
Square Enix, it seems, is eager to free itself from a set of expensive studios and get a nice injection of cash at the same time. It’s been clear for some time that the Japanese publisher doesn’t know what to do with these studios, so having Embracer pay a nice lump sum to acquire them is kind of a win for all sides, right?
Axios’ Stephen Totilo also weighs in on matters. Considering that in 2021, Embracer paid more than double what it paid Square Enix for over 50 IPs and three studios… for a mobile gaming company called Easybrain.
Last year, Embracer paid more than double for a mobile gaming company called Easybrain https://t.co/uoCSMDfppq
– Esteban Totilo (@stephentotilo) May 2, 2022
Given that Square Enix notes that its studios generated roughly $200 million in revenue last year (but less than $8 million in operating income), it’s easy to see why the publisher wanted to transfer these studios to Embracer, a company that clearly has enough cash. invest in these companies in a way that Square Enix seems reluctant to do.
The long and the short? Square Enix did a deal with Embracer for $300 million, which is tiny compared to megaton deals like Sony’s $3.6 billion acquisition of Bungie. Especially when you consider that Embracer is also picking up the rights to the Tomb Raider movies (there are already three, and we’ll see about a fourth), Lara’s status as a cultural icon, and the potential for a Deus Ex movie to come.
That’s actually a lot of cash, but Embracer has really found a gold mine here thanks to Square Enix looking for a quick cash injection. And if all goes according to plan for the company, we may even see other legacy game series appear on modern consoles.