Square Enix Will Make Blockchain Games — But That’s Not All It Does
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Square Enix is offloading some of its biggest studios. The publisher has announced the sale of Crystal Dynamics and Eidos to European mega-publisher Embracer Group for $300 million. The deal allows Square to take these less profitable teams off the books. This is especially important during a costly reload phase for Crystal Dynamics and Eidos, according to Niko Partners analyst Daniel Ahmad.
“Square Enix’s western studios have underperformed in IP-owned triple-A games, and more recently licensed IP like Marvel,” Ahmad told GamesBeat. “With high operating costs and a minimum of two years before we see the studios next triple-A releases, it’s likely Embracer Group will take on more than just the $300 million price tag in the near term. Embracer will try tap into the talent pool and IP in these studios to generate long-term returns.”
But what’s next for Square Enix? In a note to investors, the publisher echoed what Ahmad said. Getting rid of Crystal Dynamics and Eidos frees up resources for more profitable projects. But Square also claims it will pursue “blockchain, AI, and the cloud” instead. Again, the company believes those areas can optimize its net income.
“Square Enix plans to use the proceeds to streamline its gaming business and invest in both its core development teams in Japan and future trend areas such as cloud, AI and Blockchain,” said Ahmad. “Square Enix is still experimenting with blockchain, and this was cited as an additional long-term focus.”
Of course, it’s possible that this is just a boast from Square. Blockchain is trendy among investors, and perhaps the leadership at the publisher is looking to capture some of that excitement. But dr. Serkan Toto, Tokyo-based consultant at Kantan Games, thinks Square Enix is taking its interest in emerging technology seriously.
“I think they will really invest significantly in the blockchain and metaverse space. Their president has announced this move often enough now,” Toto said.
Square Enix President Yosuke Matsuda revealed that the company is investigating blockchain and NFTs in a New Year’s letter to fans and investors†
“Let’s hope they focus more on high-quality games made in Japan that can be exported to the rest of the world,” said Toto.
However, Square Enix’s Japanese efforts haven’t turned out to be much better than what it’s done at Crystal Dynamics or Eidos. Those teams and partnerships have produced critically panned products such as Balan Wonderworld, The Quiet Man, Left Alive, and Babylon’s Fall.
But maybe Square Enix can re-invest in quality now that it’s not dividing its focus as much.
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