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Square Enix sells Eidos, Crystal Dynamics and Square Enix Montreal (including Tom Raider, Thief, Deus Ex IPs) to Embracer Group for $300m.


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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 from SQUARE ENIX HOLDINGS CO., LTD. (“Square Enix Holdings”). In total, the acquisition includes ~1,100 employees across three studios and eight global locations. The total purchase price amounts to USD 300 million on a cash and debt free basis, to be paid in full at closing. Embracer has secured additional long-term debt funding commitments for this and other transactions in the pipeline. The company today reiterates its current Operational EBIT forecast for FY 21/22, FY 22/23, and FY 23/24. The transaction is subject to various regulatory and other external approvals and is expected to close during the second quarter of Embracer’s financial year 22/23 (July-September 2022).

 

Embracer will hold a webcast presentation for investors, analysts and media on 2 May 2022 at CET 09.00. Please find details in a separate invitation that will follow this release. 

 

”We are thrilled to welcome these studios into the Embracer Group. We recognize the fantastic IP, world class creative talent, and track record of excellence that have been demonstrated time and again over the past decades. It has been a great pleasure meeting the leadership teams and discussing future plans for how they can realize their ambitions and become a great part of Embracer,” says Lars Wingefors, Co-founder and Group CEO, Embracer Group.

 

”Embracer is the best kept secret in gaming: a massive, decentralized collection of entrepreneurs whom we are thrilled to become a part of today. It is the perfect fit for our ambitions: make high-quality games, with great people, sustainably, and grow our existing franchises to their best versions ever. Embracer allows us to forge new partnerships across all media to maximize our franchises’ potential and live our dreams of making extraordinary entertainment,” says Phil Rogers, Square Enix America and Europe CEO.

Background and rationale 

 

The collection of studios represents a world-class creative team of ~1,100 employees across three studios and eight global locations, including two of the most reputable AAA studios across the industry in Crystal Dynamics and Eidos Montréal. The studios possess a unique ability to deliver blockbuster hits decade after decade. The acquisition brings a compelling pipeline of new installments from beloved franchises and original IPs, including a new Tomb Raider game. The acquisition builds on Embracer’s mission of creating a leading independent global gaming and entertainment ecosystem. Embracer has been particularly impressed by the studios’ rich portfolio of original IP, housing brands with proven global potential such as Tomb Raider and Deus Ex, as well as demonstrating the ability to create AAA games with large and growing fan bases. There are compelling opportunities to organically grow the studios to maximize their commercial opportunities.

 

The portfolio of IP consists of iconic franchises appreciated by critics and players alike. For example, two original IPs, Tomb Raider and Deus Ex, have sold AAA units of ~88M and ~12M, respectively. Embracer sees an opportunity to invest in these franchises, as well as the additional acquired IPs such as Legacy of Kain, Thief, and other original franchises. The acquisition also includes the continued sales and operations of the studios’ more than 50 back-catalogue games.

 

 

https://embracer.com/release/embracer-group-enters-into-an-agreement-to-acquire-eidos-crystal-dynamics-and-square-enix-montreal-amongst-other-assets/

 

 

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The price blows my mind, given how colossal so many of these acquisitions have been recently.

 

I’m intrigued by the IPs that Square Enix is keeping, like Just Cause and Life Is Strange.  Those seem like the sorts of franchises that Embracer would love to get their hands on.  
 

I’m still hoping for a Guardians of the Galaxy sequel, if that’s in the cards post-acquisition.

 

Given that SqEx said that at least some of that $300M is going to be reinvested into NFTs and blockchain…ugh, these studios are better off.  

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Hopefully this is good news for the people at those studios.  It does seem like a cheap acquisition given the numbers that have been thrown around recently, but if it means that they get to make the games they want, then it's a good thing I suppose? 

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300 million just seems absurdly cheap for the IP and studios on offer. I would have guessed Tomb Raider alone would have netted most of that! I mean, Microsoft paid more for Rare back in the day.

 

However, considering that Square has always been a bit lost/ambivalent with what to do with its Western arm, this may be a good thing and it opens the possibility of seeing the return of some long lost IP’s like Legacy of Kain and more recently, Deus Ex.

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7 minutes ago, Romier S said:

However, considering that Square has always been a bit lost/ambivalent with what to do with its Western arm, this may be a good thing and it opens the possibility of seeing the return of some long lost IP’s like Legacy of Kain and more recently, Deus Ex.

 

That would be a great series to see resurrected. 

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13 minutes ago, Romier S said:

300 million just seems absurdly cheap for the IP and studios on offer. I would have guessed Tomb Raider alone would have net most of that! I mean, Microsoft paid more for Rare back in the day.

 

However, considering that Square has always been a bit lost/ambivalent with what to do with its Western arm, this may be a good thing and it opens the possibility of seeing the return of some long lost IP’s like Legacy of Kain and more recently, Deus Ex.


There's some good breakdowns on the finances of Crystal Dynamics floating around. (which just got posted saving me doing so). 

CD is south of San Francisco and is likely extremely expensive to run as a result. They opened up an office in Austin to try to attract more talent (doh, now Austin's extremely expensive too). 

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The upfront 300 million isn't the only cost associated, either. I was reading that Embracer also secured additional funding upwards of 600+ million to fund operation/logistics to continue the longer term operation of the studios in question. The 300 million is just the upfront cost. I think folks are just a bit shocked at the "low" cost considering some of the big money deals we've seen up until this point, really.

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Just now, Romier S said:

The upfront 300 million isn't the only cost associated, either. I was reading that Embracer also secured additional funding upwards of 600+ million to fund operation/logistics to continue the longer term operation of the studios in question. The 300 million is just the upfront cost. I think folks are just a bit shocked at the "low" cost considering some of the big money deals we've seen up until this point, really.


That debt was posted by Matthew Bell + he deleted his tweet. So no clue about that. 

Again, there's likely reasons why the big buyers chose to not go for these studios.

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10 minutes ago, dogbert said:


That debt was posted by Matthew Bell + he deleted his tweet. So no clue about that. 

Again, there's likely reasons why the big buyers chose to not go for these studios.

 

Well, after watching Square Enix mismanage them for years...yeah. Folks also put a bit too much value on the IP in question, I think. You remove Tomb Raider out of the equation and you're left with what? Deus Ex has its fans (I'm one of them!) but there's a reason that a new game isn't or hasn't come. The previous game simply didn't sell well and it wasn't an issue with quality as both games were generally well regarded. Legacy of Kain has been dormant for what? Two decades now? Thief? 

 

 

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Some interesting sales stats from the Tomb Raider franchise surfaced today as well. 88 million total lifetime sales across the entire franchise for the [Jim Sterling voice]triple A[/Jim Sterling voice], with 38 million of that coming from the reboot trilogy (Tomb Raider [2013], Rise of the Tomb Raider, and Shadow of the Tomb Raider).

 

tomb-raider-sales-1651512719938.thumb.png.16eeb45c961b2231a4808d61e16a33bb.png

 

Source

 

I'd be interested to know the breakdown in sales between those three games. Like, did the first one sell really well only to see sales taper off in the two sequels? Or did sales increase with each installment? Or did all three sell relatively equally?

 

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12 minutes ago, JFo said:

 

 

I'd be interested to know the breakdown in sales between those three games. Like, did the first one sell really well only to see sales taper off in the two sequels? Or did sales increase with each installment? Or did all three sell relatively equally?

 


Hard to pin down exact figures but yes, it’s a case where the original sold well and then diminishing returns…

 

Tomb Raider (2013) 2013 14.5 [6]
Rise of the Tomb Raider 2015 11.8 [7]
Shadow of the Tomb Raider 2018 8.9 [8]


14.5 million copies down to just under 9.

 

https://vgsales.fandom.com/wiki/Tomb_Raider#cite_note-8

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25 minutes ago, JoeyN said:

The original also was sold for dirt cheap in sales, and also given away for free. Wonder how much that factors into it.


I think this was true for all three games. I have the entire trilogy across both PS4 and Xbox One thanks in part to PS Plus and Games with Gold.

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36 minutes ago, JoeyN said:

The original also was sold for dirt cheap in sales, and also given away for free. Wonder how much that factors into it.

I wonder how many people bought it twice too, since it launched in one gen and was quickly ported to the next.  (I bought it twice, anyway.)

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Embracer says that both Avengers and Guardians of the Galaxy will be part of the studio acquisition pending Marvel approval of the license.

 

 

Interestingly, Embracer owns Dark Horse Comics.

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28 minutes ago, Romier S said:

Embracer says that both Avengers and Guardians of the Galaxy will be part of the studio acquisition pending Marvel approval of the license.

 

 

Interestingly, Embracer owns Dark Horse Comics.


yep it was purchased recently .

 

we now know the reason the updated Avengers roadmap has not been released.

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