Cognition Dissemination: The Square Enix/Embracer Deal Will Benefit Everyone

The acquisition and consolidation train in the gaming industry will never stop chugging. In the newest example: Embracer Group announced their intention to acquire Crystal Dynamics, Eidos Montreal, and Square Enix Montreal from Square Enix. The purchase should be finished in the third quarter of this year (the second quarter in business year terms), though it already sounds like a done deal given the wording both companies are using. This has come as a big surprise considering Square Enix’s prior desire to have a development foothold in western markets. But it’s more shocking than it should be. Square Enix’s never-ending disappointment with their software sales, a running theme, and how much they might have lost with Marvel’s Avengers and Guardians of the Galaxy games made this inevitable.

These companies and their franchises will be owned by Embracer Group in a deal that cost a mere $300 million, an incredible steal. To put this into perspective: This same company paid more than four times this amount for Gearbox Software and Borderlands. Either no one was willing to outbid them or Embracer played Square Enix like a fiddle. Now, it’s time to imagine what the future will be for them and popular franchises like Tomb Raider, Deus Ex, Thief, Legacy of Kain, and Gex (it’s time, baby). The future is actually quite bright.

An easy way this deal will be better for the companies? Putting those franchises to use. This hasn’t been an issue for Tomb Raider, the last release being the Eidos Montreal-developed Shadow of the Tomb Raider in September 2018. Crystal Dynamics, who handled the first two games in the rebooted series, announced a new title that will utilize Unreal Engine 5 a month ago. But other franchises have been missing in action. Embracer will ideally give these teams the freedom to develop new installments, be they reboots or continuations, in addition to establishing new properties.

There’s at least a better chance of these developers putting out games regularly again, something they haven’t been doing for the last several years under Square Enix. Both Crystal Dynamics and Eidos Montreal have been occupied with the aforementioned Marvel titles. It’s been no secret that the Avengers game wasn’t well received, and has been limping along to try and please the player base it has despite Square Enix being unimpressed with its sales in light of the Marvel Cinematic Universe’s success. The reception to Avengers likely contributed to Guardians of the Galaxy putting up disappointing sales despite it being a solid game by all reports. Under Embracer, they’ll be free of all this to pursue their own franchises again.

Embracer Group has been, well, embracing far too many developers over the years, acquiring a treasure trove of them under their megacorporate wing. The former Square Enix western franchises will be joining the likes of ex-THQ equivalents like Saints Row and Darksiders, the aforementioned Gearbox and Borderlands, and too many more. But executives at these companies have largely given the teams independence, a far better alternative compared to one that never truly felt as if they knew what to do with their western staffers over the last decade.

This is also good news for anyone who thought Square Enix was too concerned with appealing to western sensibilities over the years, and wants them to make and publish Japanese games for the world again. It’s not like all those efforts have been quality, as titles like Left Alive, Balan Wonderworld (making headlines again due to drama around it), and Babylon’s Fall can attest, but the company isn’t as averse to releasing good games as cynics like to believe. The Japanese side had been more consistent than the western companies in recent years, so there’s a chance this new deal could benefit everyone involved.

But that depends on how serious Square Enix is about their more divisive plans. It was at the beginning of 2022 when CEO Yosuke Matsuda laid out plans for the company to tackle initiatives that take advantage of NFTs and the blockchain, to groans and eyerolling from plenty. The company reiterated this in a document explaining why they sold the companies. “The Transaction enables the launch of new businesses by moving forward with investments in fields including blockchain, AI, and the cloud,” the statement mentioned. This is not good for anyone who prefers buying games that don’t depend additional microtransactions or cares about the planet.

Developers like Naoki Yoshida may be able to stave this off in games like Final Fantasy XIV and eventually Final Fantasy XVI, but teams working on smaller games without staffers on par with Yoshida attached to them might have no choice. Just imagine what a blockchain/NFT-focused Final Fantasy: All the Bravest would resemble.

Square Enix isn’t entirely pulling out of the western market, considering they’ll keep the rights to Just Cause, Life Is Strange, and Outriders. But they’ll no longer be in full control of any western developers, which could benefit them given the narrower focus. That is, assuming they don’t dip their feet  so far into the blockchain/NFT stuff that it will come back to bite them, or if this isn’t part of a process of buttering themselves up for a nice acquisition. It’s possible both of those scenarios could eventually happen.

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