Embracer Group Acquires Crystal Dynamics, Eidos Montreal, and Over 50 IPs for $300 Million - News
by William D'Angelo , posted on 02 May 2022 / 2,971 Views
Embracer Group announced it has entered an agreement to acquire Crystal Dynamics, Eidos Montreal, and Square Enix Montreal from Square Enix. The deal includes over 50 IPs like Tomb Raider, Deus Ex, Thief, Legacy of Kain, and many more.
The deal is worth $300 million and Embracer Group will pay it on a cash and debt-free basis that will be paid once the transaction closes later this year between July and September.
"We are thrilled to welcome these studios into the Embracer Group," Embracer Group co-founder and CEO Lars Wingefors said. "We recognize the fantastic intellectual property, world class creative talent, and track record of excellence that have been demonstrated time and again over the past decades. It has been a great pleasure meeting the leadership teams and discussing future plans for how they can realize their ambitions and become a great part of Embracer."
Square Enix America and Europe CEO Phil Rogers added, "Embracer is the best kept secret in gaming: a massive, decentralized collection of entrepreneurs whom we are thrilled to become a part of today. It is the perfect fit for our ambitions: make high-quality games, with great people, sustainably, and grow our existing franchises to their best versions ever. Embracer allows us to forge new partnerships across all media to maximize our franchises’ potential and live our dreams of making extraordinary entertainment."
Square Enix in its own press release said the "transaction enables the launch of new businesses by
moving forward with investments in fields including blockchain, AI, and the cloud."
Going forward, Square Enix development will include studios in Japan, Square Enix External Studios, and Square Enix Collective. Overseas studios will publish franchises like Just Cause, Outriders, and Life is Strange.
Embracer Group has provided reasoning as to why they decided to acquire the studios and the IPs, which can be read below:
The collection of studios represents a world-class creative team of approximately 1,100 employees across three studios and eight global locations, including two of the most reputable AAA studios across the industry in Crystal Dynamics and Eidos Montreal. The studios possess a unique ability to deliver blockbuster hits decade after decade. The acquisition brings a compelling pipeline of new installments from beloved franchises and original intellectual property, including a new Tomb Raider game. The acquisition builds on Embracer’s mission of creating a leading independent global gaming and entertainment ecosystem. Embracer has been particularly impressed by the studios’ rich portfolio of original intellectual property, housing brands with proven global potential such as Tomb Raider and Deus Ex, as well as demonstrating the ability to create AAA games with large and growing fan bases. There are compelling opportunities to organically grow the studios to maximize their commercial opportunities.
The portfolio of intellectual property consists of iconic franchises appreciated by critics and players alike. For example, two original intellectual property, Tomb Raider and Deus Ex, have sold AAA units of approximately 88 million and approximately 12 million, respectively. Embracer sees an opportunity to invest in these franchises, as well as the additional acquired intellectual property such as Legacy of Kain, Thief, and other original franchises. The acquisition also includes the continued sales and operations of the studios’ more than 50 back-catalogue games.
Founded in 1992, Crystal Dynamics consists of almost 300 employees across San Mateo, California; Bellevue, Washington; and Austin, Texas. The studio is committed to creating narrative-focused AAA action–adventure games and is led by 30-plus year veteran Scot Amos. Prior AAA releases from the studio include Rise of the Tomb Raider and Legacy of Kain Defiance. Crystal Dynamics is actively working on several AAA projects, including the next mainline Tomb Raider game that will deliver next-generation storytelling and gameplay experiences.
Founded in 2007, Eidos Montreal consists of almost 500[1] employees across Montreal, Canada; Sherbrooke, Canada; and Shanghai, China. The studio focuses on creating memorable AAA experiences focused on unique stories and strong characters within the action-adventure and RPG genres. The studio is led by David Anfossi, who has 26 years of industry experience. Prior AAA releases include Thief 4, Deus Ex Human Revolution, and Shadow of the Tomb Raider. The studio is working on a host of AAA projects including both new releases from beloved franchises and original intellectual property.
Founded in 2011, Square Enix Montreal consists of almost 150 employees across Montreal, Canada and London, UK. The studio focuses on building mobile games that players will want to return to for years to come. The studio is led by Patrick Naud, who has 24 years of industry experience. The studio is uniquely talented in creating mobile experiences based on traditionally PC and Console intellectual property such as Hitman, Tomb Raider, and Deus Ex. The studio will continue to develop and operate memorable mobile games based on AAA intellectual property.
After closing this transaction, the US will be Embracer’s #1 country by number of game developers and Canada will be #2. In total, post pending closings, Embracer will have more than 14,000 employees, 10,000 engaged game developers, and 124 internal studios. Embracer’s upcoming content pipeline includes more than 230 games with more than 30 AAA games. This acquisition will bring additional scale to Embracer’s current AAA segment, and Embracer will have one of the largest pipelines of PC and Console games content across the industry, across all genres. As Embracer’s pipeline matures, this will be a key driver for organic growth in net sales, operational EBIT, and free cash flow.
Currently, Embracer’s development resources are fully utilized either by ongoing internal development projects or by projects financed by external publishers. Embracer’s teams dedicated to work-for-hire services to external studios and publishers are also fully utilized across all territories. The lack of available resources in the industry and demand for these services exceeds our available capacity. Through this acquisition, Embracer will augment its development capabilities specifically within the AAA segment, which will provide opportunities to accelerate organic growth.
Embracer believes there will be an increasingly strong demand for high-quality content, including AAA single-player games, over the decade. We aim to continue working with leading platforms and license holders and to form deeper strategic relationships with a handful of leading companies in the industry. Furthermore, synergies across Embracer’s ecosystem benefit our people and companies. Our approach is that quality comes first in games development, which is why we believe our decentralized operating model of empowering management teams while facilitating synergies positions Embracer for sustainable long-term success.
A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel dedicated to gaming Let's Plays and tutorials. You can contact the author at wdangelo@vgchartz.com or on Twitter @TrunksWD.
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To think that Aspyr Media, a company that before Knights of the Old Republic Remake was announced, only worked on ports of decades old games for the entirety of the studios history was bought for $450 million.......what a steal for Embracer Group! Who also owns Aspyr lol
Not just for the studios, but the IP as well. Now that these studios don't have to deal with the awful mismanagement they went through with Square, hopefully this means that IPs like Tomb Raider, Sleeping Dogs, Thief, and Deus Ex can thrive again.
Seems like a steal for embracer. No idea why Sony didn't try to buy it.
I think Sony would vastly prefer the Japanese side of Square
Sure, but 300M is a steal.
This definitely will bring down the asking price! I won't be surprised if Sony does purchase Square soon.
I'm thinking that Sony already have a deal to buy SE eastern side and this sale is like a spin-off done in preparation for that.
If that's the case, it makes more sense why Square would sell their western division for so cheap. Just get it out of the way as quickly as possible to focus on the big sell.
I dunno how cheap my company sold part of its business, but it needed to spin-off some of its parts because of anti-thrust so it can be a similar situation that Sony wanted just a portion and already have a deal, and SE needed to sell the rest before the closing of Sony agreement.
Mind blowing wierd! Thats a "your dumped" price! Surprised EA or take 2 did try and snap this up let alone sony or microsoft!
There is speculation on other parts of the internet that Square might be trying to slim down for a sale to someone else.
In any case, this is a steal by Embracer. These are all talented studios and I think Square’s Japanese management just didn’t “get” western games.
In the end, this might end up being good for both square and Embracer. Square gets to focus on what they are best at, and Crystal/Eidos get to go back to doing what they want
Unfortunately, Square said in a statement that they'll use the transaction to invest in other ventures which one them includes........blockchain gaming. So while getting to focus on what they're best at is good for their upcoming games, it also makes me worried at what will be included in the games they're best at making.
Blockchain gaming... Well, that's going to be dissapointing if true. I hope they can learn from Ubi's attempts to insert NFTs into games and stay far away from that trap, but considering how they like to overlymonetise their games...
Yup, I saw this coming. Especially after that last comment from Square Enix's CEO. But man, that price is loooooow. EG is up to 14K employees now, 10K of them being developers. The revenue of a new Tomb Raider could easily surpass 300M. And for 300M, that's like the budget of 1 or 2 real AAA games. They were trying to sell them off with a quickness.
They keep mentioning legacy of kain fcken bloody make a new one already or fcken remaster 1/2/3
Dirt cheap price. I would bet MS didn’t bid because it would interfere with the Activision deal.
What an absolute steal from Embracer, glad they managed to rescue those studios from SEs toxic leadership.
Would be nice if this resulted in me seeing new entries from Legacy of Kain and Anachronox.
wow, that's really dirt cheap for the number of IP's and two studios.
Is it me, or are holdings companies getting the cheaper deals compared to MS/Sony/Ninty?.
$300 mil for 3 studios and all those IPs? Sorry but Sony and MS are getting ripped off.
Some are saying it looks like Sony may make a bid for the JP side of Square/Enix. And i can see that happening with the long history between the two. Maybe not as long as Nintendo & SE but still more financially lucrative with Sony. And the fate of the WB gaming division is still up in the air. MS is already in the long haul with AB that I dont think they can make another deal while one is still in the works. So that may mean Tencent might get hold of the WB gaming as they are as financially sound as MS. Google and Amazon may also be interested but Google with Stadia isnt doing so hot so Amazon maybe.
The thing with WB is that it's nearly all licensed IP's in their games. So the only thing any buyer of WB's gaming division would be primarily getting are their studios. Unless they really wanna pay a pretty penny for those licensed IP's.
I'm honestly expecting Ubisoft to be the next major purchase either from Embracer or Amazon. Amazon's first party studios are in an awful place and in one swoop, they get 20,000 employees/developers along with a wealth of IPs.
With the western studios gone - this leaves Asia/Japan remaining.....which is a region that MSFT has pretty much nothing in. Does this transaction free up Microsoft to make a swoop? No overlap of studios, obviously the issue is a foreign company buying a japanese firm and the gamepass issue. Would be a good fit for MSFT to complete its global reach....
tbh i would prefer if Sony (or anyone but MSFT) swoops but with TR/Deus Ex going SE doesn't really have much that i fancy.
It would kill Square Enix. Japan is a lost cause for Microsoft, and the American Xbox fanbase doesn’t really buy much in the way ofJapanese games.
My preference would be Nintendo buying Dragon Quest and Sony buying Final Fantasy.
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