The last few years have seemingly been a race in the video game industry to see how many smaller companies can be bought up by larger ones.
Microsoft’s (MSFT) – Get Microsoft Corporation Report upcoming deal to buy Activision Blizzard (ATVI) – Get Activision Blizzard, Inc. Report is one of the most high-profile, but dozens more are being bought and sold in the background.
Netflix’s (NFLX) – Get Netflix, Inc. Report purchases of previously independent development studios Night School, Boss Fight Entertainment, and Next Games is another example of a big company seeking to gain a foothold on the $198.40 billion video game industry.
All three were acquired by Netflix within a period of six months as a part of an aggressive plan to build out Netflix Games, which promises to release 50 games for mobile by the end of 2022.
Epic Games, the creators of the enormously popular video game “Fortnite,” also snapped up Harmonix in 2021, the developer behind industry-changing music games such as “Rock Band” and “Guitar Hero.” Epic has more spending power than ever before since “Fortnite’s” launch, which made more than $9 billion for the company in its first two years after release.
Now another big purchase has been announced, which will shift many beloved games into the hands of a new company, but also give its prior owner room to focus on some new arenas it believes to be important to its future growth.
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What Video Game Company Was Sold This Time?
Square-Enix (SQNNY) – Get Square Enix Holdings Co. Ltd. Report, a video game publisher with a storied history in the industry and best known for its cash cow franchise “Final Fantasy,” has decided to sell several studios from its Western development arm to Swedish company Embracer for $300 million.
The studios affected are Crystal Dynamics, Eidos Montreal, and Square Enix Montreal. These three studios are known for several successful video game franchises, including the “Tomb Raider” series that dates back to 1996, as well as “Deus Ex,” “Legacy of Kain,” and “Thief.”
Embracer already owns 119 studios and 850 video game franchises, with many purchased over the last two years.
Square-Enix’s official announcement mentions that the sale will create room for it to focus on new investments, including blockchain, AI, and the cloud.
This lines up with the interest that Square Enix has shown in this sector in the past. President Yosuke Matsuda said in an interview with Yahoo Japan from April 15 that focusing on traditional games “would not be enough” for the company going forward, and that it planned to explore these new areas.
Matsuda also addressed the topic in a New Year’s letter to staff, explaining that blockchain enables video games to take on a new form where the player helps to define the game experience.
“Be they single-player or online games, games have traditionally involved a unidirectional flow whereby creators such as ourselves provide a game to the consumers that play them,” Matsuda wrote. “By contrast, blockchain games, which have emerged from their infancy and are at this very moment entering a growth phase, are built upon the premise of a token economy and therefore hold the potential to enable self-sustaining game growth.”
Both video game industry voices and fans have taken to Twitter to make clear how much they dislike this new direction, lending more fuel to a general dislike of crypto, blockchain, and NFT’s from the community as well as a general consensus that Square Enix was making a mistake.
Source: https://www.thestreet.com/technology/square-enix-sale-embracer
