Tomb Raider, Deus Ex, Marvel… Square Enix’s complicated relationship with its western studios

Gaming News Tomb Raider, Deus Ex, Marvel… Square Enix’s complicated relationship with its western studios

This beginning of the year 2022 is definitely marked by redemption. After Take Two regaining Zynga, Microsoft getting its hands on Activision-Blizzard-King, and finally Sony becoming owner of Bungie, there have already been enough acquisitions to irk the video game sector. As the month of May is just beginning, new information has once again changed the video game landscape. That’s Monday, May 2nd Square Enix 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 close this summer.

The desire to open up to a new market

If the announcement had the effect of a small earthquake in the world of video games, it is also for the height of this sale. $300 million for three studios with 1,100 employees and more than fifty licenses doesn’t seem like much., especially for prestigious franchises such as Tomb Raider, Deus Ex, Legacy of Kain, Thief, Sleeping Dogs… Even more so if we compare these figures with other acquisitions such as that of Insomniac (Marvel’s Spider-Man, Ratchet & Clank: Rift Apart…) from Sony in 2019 for 229 million, or the $1.3 billion Embracer Group spent to get their hands on Gearbox (Borderlands 3, Tiny Tina’s Wonderlands…). On the one hand, we have to remember that Eidos and Crystal Dynamics have been through some pretty complicated times over the past decade.

If we go back in time In 2009, Square Enix invested in Western development studios with the acquisition of Eidos, which also included Crystal Dynamics and IO Interactive. Following this acquisition, the first title to emerge from this collaboration is none other than Deus Ex: Human Revolution in 2011, the return of a big name in Eidos Montreal’s immersive simulation. With 2.18 million copies sold worldwide in November 2011, the publisher described the sales figures as “favorable results”. Unfortunately things go wrong from the next game. In 2012, it was IO Interactive’s turn to launch Hitman Absolution, which was a disappointment for Square Enix as the title sold just 3.6 million copies as of March 26, 2013, below initial expectations. The same is true the following year for Tomb Raider (2013), which sold 3.4 million copies worldwide, the franchise’s highest sales record, but fell short of the targets set by the company.

A tumultuous decade for Square Enix

The years to come will improve as Thief 2014 will have “favorable” sales despite its poor critical reception, while Rise of the Tomb Raider, released in 2015, will do very well as the game’s commercial success is deemed satisfactory by Square Enix is seen. Alongside the release of Lara Croft’s new adventure, Microsoft also spent $100 million to make the title exclusive to Xbox for a year.. A total that puts things into perspective given Embracer Group’s acquisition of these studios. Unfortunately, the following projects will have a harder time establishing themselves in the video game landscape. Whether it’s Hitman and its episodic formula or Deus Ex: Mankind Divided, 2016 will be a disappointing year for the Japanese publisher on the Western productions side. If Shadow of the Tomb Raider manages to raise the bar with its more than four million copies sold by the end of 2018, the 2020s and the realization of the collaboration with Marvel will not have the desired effect.

With the launch of Marvel’s Avengers in September 2020, Square Enix is ​​trying its hand at a Western-style gaming service with a huge license to support its initiative. Unfortunately, the studio behind the project, Crystal Dynamics, doesn’t specialize in these types of productions. As a result, the title appears in a complicated state and lacks content at launch despite an effective main campaign and gameplay.. If the game is still operational a year and a half later, it continues to suffer from a lack of activity that prevents it from attracting a new audience. In November, Square Enix confirmed that Crystal Dynamics “did not have the necessary skills to work

“on these kinds of productions, which explains that”disappointing result“and the fact that the sale of the game”were lower than we expected and did not fully offset the amortization of game development costs“. Despite its radically different formula and positive response from press and players, Guardians of the Galaxy will also have sales figures that Square Enix considers disappointing.. Thankfully, the title has recently been the subject of a strong resurgence of public interest thanks to its release on Xbox Game Pass.

Too high expectations of the Japanese publisher?

After this little story you will have understood that Square Enix never seems to be satisfied with the sales of its western games. One of the reasons that could explain this reaction is, first of all, the high hopes that the Japanese publisher has in its western productions. As evidence, Yosuke Matsuda, President of Square Enix since June 2013, himself admitted that the company’s expectations for Tomb Raider (2013) “extremely high“. By reading that sales of Western games are disappointing, gamers have become accustomed to the fact that the Japanese publisher is never satisfied with these titles. In this sense, Embracer Group’s acquisition of Eidos, Crystal Dynamics and Square Enix Montreal is not so surprising since this also happened with IO Interactive in 2017. After the disappointing results of Hitman (2016), Square Enix decides to part with the Danish studio, which is then bought by its leaders to become independent, that too retain licensing rights and production of Hitman 2.

To understand why Square Enix has such high expectations for its western games, you have to look at the Japanese productions. When we see that NieR Automata surpassed 5 million sales in December 2020 while benefiting from only an AA budget, that’s the jackpot for the company.

And while we don’t know the exact cost of the development, director Yoko Taro had hinted that the developers didn’t have enough money to work on a significant DLC. So if it is indeed a double A production then we can estimate the budget at less than $50 million. This is bound to be a much more profitable project than a western AAA game struggling to sell millions of copies quickly. In addition, recently Square Enix seems to be turning to this type of production with more reasonable budgets, often developed externally, such as Babylon’s Fall, Stranger of Paradise Final Fantasy Origin, Valkyrie Elysium, etc. So, in the event of commercial failure, the losses are less important to the publisher than an AAA, on which he would have bet a lot.

Same regarding the company’s mobile games, which are now one of its main sources of income. Content that is all the more profitable because it requires little maintenance and is dependent on a strong franchise like Final Fantasy, Dragon Quest, Kingdom Hearts SaGa or even NieR. A new mobile free-to-play game, Echoes of Mana, was recently released under the Mana/Senken Densetsu license. And if Square Enix wanted to try to create new service games, it should also try to repeat the success of Final Fantasy XIV, which since its 2013 redesign has continued to attract new players and is an important source of income for the company thanks to its monthly subscriptions.

Since acquiring Eidos and its studios in 2009, Square Enix has attempted to release a Western AAA game every year. Despite several productions with significant sales such as Rise of the Tomb Raider, the Japanese publisher was never really satisfied with the commercial reception of these titles, perhaps because of too high expectations. After a disappointing attempt at the world of service games with Marvel’s Avengers, the company finally decided to halt the cost of selling its studios to Embracer to invest in artificial intelligence, the cloud, and blockchain. A wish that aligns with the words of the President of Square Enix that he uttered 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 a number of years.

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