Square Enix Says It Sold Its Western Studios Out of Sales Cannibalization Fear

Square Enix surprised everyone when it decided to sell its Western studios (Crystal Dynamics, Eidos Montréal, and Square Enix Montréal) to the Embracer Group for the relatively low sum of $300 million.

Shortly after that announcement, the Japanese company shared a press release laying down the primary motives behind the sale: a more efficient allocation of resources and the launch of new businesses by moving forward with investments in fields including blockchain, AI, and the cloud.

However, as part of the quarterly report published today, Square Enix executives discussed the matter once again during the conference call. As reported by analysts David Gibson and Serkan Toto, this time they said the sale happened because Square Enix feared titles from Crystal Dynamics and Eidos Montréal would cannibalize sales for the rest of the company.

It is a rather weird reason, to be sure. If anything, the games made by those studios in franchises like Deus Ex, Thief, Tomb Raider, et cetera provided a nice diversification of the overall Square Enix portfolio. They also bolstered the publisher’s release output when the Japanese divisions were repeatedly forced to delay games (Final Fantasy XV and Final Fantasy VII Remake especially come to mind).

Of course, the current Square Enix pipeline is brimming with games. Live A Live just launched, soon to be followed by Valkyrie Elysium, Star Ocean: The Divine Force, Dragon Quest Treasures, Crisis Core: Final Fantasy VII – Reunion, Forspoken, Final Fantasy XVI, and Final Fantasy VII Rebirth. That said, such a bountiful roadmap will inevitably dry up in the next couple of years, which is when the publisher could have used some output from its former Western studios.

It seems more likely that Square Enix is indeed preparing to get bought by a corporation like Sony, as surmised by many in the industry.