Tomb Raider, Deus Ex, Marvel … Square Enix’s complex relationship with its Western studios

Game news Tomb Raider, Deus Ex, Marvel … Square Enix’s complex relationship with its Western studios

On Monday, May 2, we learned that Square Enix had sold Western studios that include Eidos, Crystal Dynamics and Eidos Montreal to Swedish group Embracer. On this occasion, the editorial staff of the JV invites you to look back at this turbulent decade between the Japanese publisher and its products in the West that is considered “disappointing”.

Summary

  • A desire to open up a new market
  • A turbulent decade for Square Enix
  • Too high expectations from a Japanese publisher?

In fact, this start of the year 2022 is placed under the sign of redemption. After Take Two reclaiming Zynga, Microsoft getting their hands on Activision-Blizzard-King and finally Sony becoming the owner of Bungie, there are already enough gains to trouble the video game sector. As the month of May has just begun, new information has once again changed the video game scene. So, Monday, May 2, Square Enix has announced that it has sold Eidos Montreal, Crystal Dynamics and Square Enix Montreal to Swedish group Embracer for $ 300 million.. The transaction is expected to be completed this summer.

A desire to open up a new market

If the announcement has the effect of a small earthquake in the world of video games, it’s also for the value of this sale. 300 million dollars for three studios with 1,100 employees and more than fifty licenses, seems less., especially with prestigious franchises like Tomb Raider, Deus Ex, Legacy of Kain, Thief, Sleeping Dogs … This is even more the case when we compare these numbers to other acquisitions like Insomniac (Marvel’s Spider-Man , Ratchet & Clank: Rift Apart …) by Sony in 2019 for 229 million or the 1.3 billion dollars spent by the Embracer Group to get their hands on Gearbox (Borderlands 3, Tiny Tina’s Wonderlands …). On the one hand, we have to keep in mind that Eidos and Crystal Dynamics have gone through some pretty complicated times over the past decade.

Tomb Raider, Deus Ex, Marvel ... Square Enix’s complex relationship with its Western studios

If we go back in time, in 2009 Square Enix invested in Western development studios with the acquisition of Eidos, which also includes Crystal Dynamics and IO Interactive. Following this acquisition, the first title to come out of this collaboration was Deus Ex: Human Revolution in 2011, the return of a big name immersive-sim signed Eidos Montreal. With 2.18 million copies of it sold worldwide in November 2011, pushing the publisher to describe the sales as “favorable results”. Unfortunately, it was from the next game that things started to go bad. In 2012, it was IO Interactive’s turn to launch Hitman Absolution which was a disappointment for Square Enix as the title only sold 3.6 million copies on March 26, 2013, which was lower than initially expected. Same thing the following year with Tomb Raider (2013) which sold 3.4 million copies worldwide, the franchise’s highest sales record, but failed to achieve the goals set by the company.

A turbulent decade for Square Enix

Tomb Raider, Deus Ex, Marvel ... Square Enix’s complex relationship with its Western studios

The following years will improve since 2014 Thief has “favorable” sales despite its poor critical reception, while Rise of the Tomb Raider launched in 2015 is very good because the commercial success of the game can be considered satisfy Square Enix. In addition to publishing Lara Croft’s new adventure, Microsoft also spent $ 100 million to make the title exclusive to Xbox within a year.. An amount that puts things in perspective when you see the acquisition of these Embracer Group studios. Unfortunately, the following projects will have a hard time establishing themselves in the video game scene. Whether it’s Hitman and its episodic formula or Deus Ex: Mankind Divided, 2016 will be considered disappointing for the Japanese publisher on the side of its Western productions. If Shadow of the Tomb Raider manages to raise the bar with more than four million copies sold by the end of 2018, the 2020s and the fulfillment of the Marvel collaboration won’t have the expected impact.

Tomb Raider, Deus Ex, Marvel ... Square Enix’s complex relationship with its Western studios

With the launch of Marvel’s Avengers in September 2020, Square Enix tried its hand at Western -style game service with multiple licenses to support its initiative. Unfortunately, the studio behind the project, Crystal Dynamics, does not specialize in this class of products. As a result, the title will come out in a complicated situation and very lacking in launch content, despite an effective main campaign and game.. If a year and a half ago the game was still in service, it continued to suffer from a lack of activity that prevented it from attracting a new audience. In November, Square Enix recognized that Crystal Dynamics “no work skills required“in this type of production, which explains it”disappointing result“and the fact that the sale of the game”lower than we expected and did not fully recover the amortization of game development costs“. Despite its very different formula and the positive reception from the press and players, Guardians of the Galaxy also has sales that are considered disappointing to Square Enix.. Fortunately, the title has recently been the subject of a rapid rise of interest from the public thanks to its release on Xbox Game Pass.

Too high expectations from a Japanese publisher?

Tomb Raider, Deus Ex, Marvel ... Square Enix’s complex relationship with its Western studios

After this little history, you can understand that Square Enix is ​​never satisfied with selling games in the West. One of the reasons that may explain this reaction is first of all the great hopes placed by the Japanese publisher on its productions in the West.. As proof, Yosuke Matsuda, president of Square Enix since June 2013, admitted himself that for Tomb Raider (2013), the company’s expectations are “you are too tall“. By reading that the sale of games in the West is disappointing, players have become accustomed to the fact that the Japanese publisher is never satisfied with these titles. In this sense, the acquisition of Eidos, Crystal Dynamics and Square Enix Montreal’s Embracer The group isn’t too surprising, as this is also what happened to IO Interactive in 2017. After the disappointing results of Hitman (2016), Square Enix decided to separate from the Danish studio which was immediately purchased of its leaders to become independent, maintain licensing rights and create Hitman 2.

Tomb Raider, Deus Ex, Marvel ... Square Enix’s complex relationship with its Western studios

To understand why Square Enix’s expectations are so high for Western games, you need to look at its Japanese products. If we see that NieR Automata exceeded 5 million sales in December 2020 while the title only benefited from an AA budget, this is the jackpot for the company. And even if we don’t know the exact cost of the development, the director, Yoko Taro, points out that the developers don’t have enough money to work on a significant DLC. So, if it is a double production of A, then we can estimate that the budget is less than 50 million dollars. Inevitably, this is a much more lucrative project than a Western AAA game that struggles to sell many millions of copies quickly. In addition, in recent terms, Square Enix seems to be turning to this type of production with more reasonable budgets, which are often developed externally, such as The Fall of Babylon, Strangers in Paradise Final Fantasy Origin, Valkyrie Elysium etc … So, in the event of commercial failure, the losses are less important for the publisher, than for an AAA where he can bet a lot.

Tomb Raider, Deus Ex, Marvel ... Square Enix’s complex relationship with its Western studios

Same thing about the company’s mobile games are now one of the main sources of revenue. The solution is more profitable because it costs less to maintain and relies on strong franchises. such as Final Fantasy, Dragon Quest, Kingdom Hearts SaGa, or even NieR. Recently, a new free-to-play mobile from the Mana/Senken Densetsu license was launched with Echoes of Mana. And then, if Square Enix wants to try to make new games on the service, it’s also trying to replicate the success of Final Fantasy XIV that has continued to attract new players since the redesign. it in 2013 and that constitutes a significant source of revenue for the company thanks to its monthly subscription.

Since the acquisition of Eidos and its studios in 2009, Square Enix has tried to release one Western AAA game every year. Despite many products with high sales such as Rise of the Tomb Raider, the Japanese publisher was never satisfied with the commercial acceptance of these titles, perhaps because of very high expectations. After testing the world of service games that Marvel’s Avengers deemed disappointing, the company finally decided to cut the costs of selling its studios to Embracer to invest in artificial intelligence, the Cloud and the blockchain. A desire in line with the words of the President of Square Enix expressed during his New Year’s wishes. Now it remains to be seen what Embracer will do with the recently announced Tomb Raider or a possible Deus Ex 3 that has been rumored for years.

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