Of Tomb Raiders and NFTs: The Embracer-Square Enix Deal

A few months back, Dark Horse revealed it had been purchased by a company called Embracer Group. Embracer Group is a rather large conglomerate, as even on the day Embracer announced its acquisition of Dark Horse, it was just one of five new companies being added to Embracer’s catalog.

Now, Embracer continues to buy up entertainment companies, and the latest is causing quite a stir.

Embracer’s New Acquisition

What do you think of when you hear the name “Square Enix”? For a lot of people, particularly animanga fans, they may think of titles like Dragon Quest, Final Fantasy, and Kingdom Hearts. Those are certainly some big IPs, with entries spanning several consoles over the past 20+ years. But while those series are based out of Square Enix’s homeland of Japan, the gaming company has several international divisions. Like most major gaming companies, Square Enix has several developers. Squaresoft and Enix had various teams before they merged and became Square Enix in 2003, and even when they began acquiring other companies such as Taito (Space Invaders) in 2005 and Eidos (Tomb Raider) in 2009, still more divisions were opened, like Square Enix Montréal (Hitman Go) in 2012.

On May 2nd, Embracer Group announced it had purchased several of Square Enix’s Western assets for $300 million in cash.

The deal consists of studios Crystal Dynamics, Eidos-Montréal, and Square Enix Montréal; IPs like Deus Ex, Legacy of Kain, Thiefand Tomb Raider; and a game catalog of over 50 titles.

Square Enix has clarified it will still publish Just Cause, Outridersand Life is Strangeas those are only published by Square Enix Europe and not created by a subsidiary.

The Reason for the Deal

So on one end, we have a company that was already big and is now getting even bigger. You have Tomb Raider and more joining publishers behind video games IPs like Borderlands, Saint’s Rowand Zen Pinball; board games like Pandemic and Catan (The Settlers of Catan); and Berserk, Hellboy, and The Mask under one banner. If Embracer’s goal is to make marketable multimedia franchises from its IPs, as is expected, well, there’s a lot they can do with their new series. Maybe a Thief board game where you must balance abilities to steal from other players with a stealth gauge that leaves you exposed. Maybe some Legacy of Kain merchandise sold only at Things From Another World, which is also owned by Embracer Group. A Zen Pinball table featuring Deus Ex perhaps. And Tomb Raider comics are already currently published by Dark Horse, but I’m sure more games will follow suit.

Considering Embracer is paying Square Enix fully in cash with the deal expected to close by the end of June, it seems like the company is ready to continue sweeping up as many properties as they can.

So why was Square Enix willing to sell? Well, profits for Crystal Dynamics and Eidos-Montréal were much lower than Square Enix as a whole.

The company has called several of its Western developed titles, including the reboot of Tomb Raider and Marvel’s Avengers, disappointing. But perhaps it’s a matter of Square Enix having unrealistic expectations.

Square Enix has already started earmarking the funds. You can read about the May 2021 briefing that Square Enix mentions in the Embracer news press release here, but the money is tied more into this January 2022 letter from Square Enix’s president. Which, if you’ve never read it, you can settle for this edit of the key quote from his statement.

Yes, Matsuda really wants “play to earn content”. And according to the Embracer sale press release:

“The Transaction will assist the Company in adapting to the changes underway in the global business environment by establishing a more efficient allocation of resources, which will enhance corporate value by accelerating growth in the Company’s core businesses in the digital entertainment domain. In addition, the Transaction enables the launch of new businesses by moving forward with investments in fields including blockchain, AI, and the cloud. The move is based on the policy of business structure optimization that the Company set forth under the medium-term business strategy unveiled on May 13, 2021.”

Sure sounds like a solid investment, right? Give up Tomb Raider and more to invest in the wonderful world of NFTs! After all, their initial test back in October 2021 had their first NFTs sell out, so it’s surely the way of the future!

Yes, perhaps you can own one of only 1,000 crossdressing Cloud NFTs (that are definitely totally different from the 1,000,000 identical-looking crossdressing Cloud images available on the NFT marketplace or saved on people’s computers) or that the special Keyblade you bought in conjunction with Kingdom Hearts IV will definitely still be supported in Kingdom Hearts VI and its spin-offs!

I mean, it’s not like sales have fallen 92% from its high in September 2021 or anything. Or that other video game companies’ efforts have flopped. Nope, blockchain technology FTW!

The Good, The Bad, and the Ugly

But there are questions whether Embracer Group scored a good, perhaps amazing deal, and also whether Square Enix is ​​aiming for someone to buy them.

I’m guessing a combination of an all-cash offer, the lackluster reception of Marvel’s Avengers in particular, and a desire to rush into the ASAP blockchain all led to Square Enix to take an offer lower than they might have gotten if they had otherwise waited.

Personally, I never saw a lot of Square Enix’s acquisitions as fitting their overall company image, but they held on to companies like Eidos longer than I would have predicted.

I still think back to the canceled Final Fantasy XII A spin-off that was meant to be intended by a Swedish developer, and while communication technology has improved since 2009 (and was accelerated by the pandemic), I tend to believe there’s a disjunction between how Square Enix can — or wants to — gauge predictions with its developers in Japan versus overseas.

To sell Crystal Dynamics, Eidos-Montréal, Square Enix Montréal, and associated IPs for blockchain…ugh. One Tweet in this USA Today article compared to the deal to trading your home for magic beans, but it’s more like swapping for a receipt for magic beans that are going to be kept in somewhere else and then is going to use up a lot of gas to transfer that jar of beans from place to place while also insisting that somehow these beans are different from everyone else’s even though anyone could go to the source and take some for their own private use.

Yep, Square Enix can’t be bothered to release many of their titles physically sad in all regions (it’s pretty when most of games from them the past couple of years had to be imported or bought from third-party sellers); and a recent, long-awaited remaster has been criticized by multiple outlets as being “lazy”; but no, it’s too many people just having fun that’s the problem.

Games like Tomb Raider or Legacy of Kain may not have the luster they once had, but heck, I’d argue that Square Enix’s flagships, including Final Fantasy, is the same way. No doubt Square Enix’s soon-to-be former developers like Crystal Dynamics invited a lot of their ire by not realizing complaints in the beta about repetitiveness and such were bound to be even more loud when the full release came out.

But perhaps Crystal Dynamics and the other developers will flourish under a company like Embracer Group, one who seems more interested in marketing potential and having a lot of names under their umbrella rather than micromanaging its assets. And while I’ve never been terribly interested in a lot of the properties Square Enix sold, I might check out future multimedia projects. But Square Enix…is basically just going to set the $300 million on fire. There are a heck of a lot of ways they could use that money. Get Jackt to sign off on a Crisis Core port. Turn Final Fantasy Trading Card Game into an online version. Remake Threads of Fate. Special limited run for an official English Switch physical copy of I am Setsuna. Remove the gacha-like grinding from Chocobo GP. A new Itadaki (Fortune) Street.

Okay, those are all my personal preferences. But I know I’m not alone on some of these, and Square Enix would know that if they listened to fans instead of deciding that chasing after the latest buzzwords is more important than blockchain and NFTs’ feasibility, piracy, security, longevity, and environmental issues.

Of course, what do I know; I play games for fun.

What do you think of Embracer Group buying these IPs and studios from Square Enix? What would you like to see happen with them? Do you want to see Square Enix invest in blockchain and NFTs?

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