Report: Square Enix 'Looking to Sell Stakes in Its Studios' - NewsWilliam D'Angelo , posted on 05 August 2022 / 3,424 Views
Square Enix in a conference call with investors discussed its financial results and future plans. Senior Analyst at MST Financial David Gibson via Twitter has summarized the plans.
The Crystal Dynamics and Eidos sales was "driven by concerns that the titles cannibalized sales of the rest of the group and so it could improve capital efficiency," according to Gibson. This was phase 1 and phase s is the "diversification of studio capital structure."
"Rising development costs of making games means with 100% owned studios, they need to be selective and concentrate resources, which limits expansion," wrote Gibson.
Square Enix will be doing a portfolio review and some studios will remain 100 percent, while others will change. The biggest impact will be on Europe and US studios around large titles and the change means Square Enix "will be able to allocate resources mainly to Japan titles."
in order to improve capital efficiency, Square Enix is " looking to sell stakes in its studios to others." Gibson expects Sony, Tencent, Nexon, and more to be interested.
"[Square Enix] capitalized game dev costs are currently running at US$840m," wrote Gibson. "But post the [ Crystal Dynamics / Eidos] sale the company will have US$1.4bn in cash and zero debt, which is plenty to fund expanded game investment and not sell down stakes in its studios."
Square Enix stock prices have gone up today following the conference call.
1) Crystal Dynamics/Eidos (CD/E) sale was driven by concerns that the titles cannibalized sales of the rest of the group and so it could improve capital efficiency— David Gibson (@gibbogame) August 5, 2022
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 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can contact the author on Twitter @TrunksWD.