Square Enix selling its western studios can only be good for all parties

Embracer Group has recently announced that it is acquiring Square Enix’s western division of studios, which includes Crystal Dynamics, Eidos-Montreal, and Square Enix Montreal. What this means is that Square Enix will not be developing any 1st party games outside of Japan and will only be publishing a handful of western IPs moving forward. This has honestly been a long time coming, and even with the weak monetary gain of $300 million in the deal, this acquisition is a great deal for both Square and its former studios.

I’ve been following Square Enix’s business practices intimately for years, and the company is my favorite game developer, so it’s been obvious to me that the company has struggled over the past decade. Square has never really had a great connection with its western studios and was even having difficulties keeping up its good side with its own Japanese-developed titles like Final Fantasy XIV, Final Fantasy XV, and even more recently, Kingdom Hearts III. Despite the latter, the company has regained its footing, killing it with the vast majority of its Japanese titles by remastering or remaking older games for Nintendo Switch, as well as the masterpiece that was Final Fantasy VII Remake. That said, the western side has continued to be dragged in the mud. 

Square Enix has always had unrealistically high expectations for its western titles, including recent titles like Marvel’s Avengers and Marvel’s Guardians of the Galaxy. But it’s not even just the western titles — it’s almost any game that it publishes that isn’t being developed internally. Babylon’s Fall was released earlier this year in a horrific state to the point where only a few hundred have played the game on Steam at its peak in the past month. Square Enix would release games unfinished and then be upset when those titles did not perform, which isn’t fair to those developers. 

Even without that in mind, there have been plenty of games that were released under Square’s banner that did do well (at least critically) like Tomb Raider and Deus Ex. Guardians of the Galaxy was also critically praised, receiving nominations at several award shows, but Square has always had unrealistic expectations for these studios. It was revealed after the acquisition that Tomb Raider has sold $38 million across its new trilogy that began in 2013, which is a solid number across three games. Knowing that those results did not please Square, it seems clear that nothing would. 

When you think about Square selling these proven studios for a small sum of $300 million, it immediately came as no surprise for me, as Square has been looking to sell them for a few years now. Regardless of the amount of money the company leads decided to shake hands on, it is obvious that Square just wanted the studios out of its hair. It actually made me look back at Hitman, an IP that was previously owned by Square Enix, but once IO Interactive went independent from Square, it just gave IOI the IP — no money or strings attached. Granted, Square did make a statement saying that the reason was that no other studio could do the IP justice, but in retrospect, it looks like to me that Square just didn’t want to deal with it anymore, as Hitman was also underperforming in the company’s eyes.

Once Hitman became independent, it found greater success in sales, and while Square’s deal with Embracer Group isn’t a one-for-one comparison, as these western studios are just moving from one parent company to another, there is still an opportunity for a fresh start. Square simply wasn’t a good fit for managing these studios, and that’s okay to admit. The company is in a good place with its internal studios and Japanese IP and can now focus almost completely on what it is best at. In the meantime, Crystal Dynamics, Eidos-Montreal, and Square Enix Montreal all have the potential to have management that will help their future projects flourish instead of struggle.