Embracer buys Square Enix Montréal, Crystal Dynamics, Edios-Montréal; Tomb Raider, Deus Ex & More

[Ashley]

As the title says Embracer has been on a buying spree and brought all of Square Enix's western studios and IPs. It now means they have 124 studios. 

 

 

[Dufniall]

Had to look up what Embracer does but THQ, Koch and Gearbox are part of it.

With acquisitions going into the billions lately, 300 million seems like quite a good deal for Tomb Raider alone. Plus all the extra IPs. A new Thief would be a pleasant surprise!

Reading that Twitter thread, someone is suggesting this may give Sony the opportunity to buy the Japanese part of Square Enix. I wonder if we see the Japanese part get sold as well.

[Hero-of-Time]

1 minute ago, Dufniall said:

Reading that Twitter thread, someone is suggesting this may give Sony the opportunity to buy the Japanese part of Square Enix. I wonder if we see the Japanese part get sold as well.

That's exactly what I thought after reading about the deal. I wouldn't be surprised if either Sony or MS now tries to acquire S-E.

300 million for those studios and IP is an absolute steal. I'm very surprised MS didn't snap them up but they probably have their hands full with sorting out that Activision deal.

I suppose the only good thing about this deal is that a platform holder wasn't the one buying up the studios, meaning the IPs acquired should still be released on multiple consoles.

Scary how fast the industry seems to be shrinking. It's crazy when you think about it. Gaming is bigger and more lucrative than it's ever been and yet it in some ways it appears to be also shrinking at an alarming pace.

[drahkon]

1 hour ago, Dufniall said:

I wonder if we see the Japanese part get sold as well.

I hope not.
I hope no gaming studio will ever be bought.

But I also live in a dream world where I look like Goerge Clooney, I'm the best snooker player ever to exist and world piece has been achieved.

[Ashley]

57 minutes ago, drahkon said:

and world piece has been achieved.

You monster!

[drahkon]

35 minutes ago, Ashley said:

You monster!

Damn. The woes of English spelling.  

[Mandalore]

Never heard of Embracer Group before. I guess this means another Deux Ex game is more likely at least.

[Julius]

Hearing Embracer pick up companies big and small, left and right across the industry in a warm embrace in podcasts the last few years has been very disturbing, but I don't think this is too much of a surprise (heck I think they even warned everyone that they were buying more studios just a few months ago). Square Enix have always had stupidly high standards when it comes to sales expectations, and time and time again they were grossly overestimating the sales potential of series under their western flag, like Tomb Raider, Avengers, and Guardians of the Galaxy, which were frequently pointed to as disappointments in their earnings reports. 

Worth mentioning that IP like Just Cause, Life is Strange and Outriders remain under Square Enix. 

Also, the follow-up tweet by Wario64 is also cause for concern about where this money is going to end up being invested by Square Enix:

Also, if we want to talk about game development being unsustainable: Embracer had 6400+ employees and 216 games in development (149 of those being unannounced titles!) back in February of this year. Their CEO has talked before about how making do many games reduces the risk, so yeah, make of that what you will. 

3 hours ago, Dufniall said:

Reading that Twitter thread, someone is suggesting this may give Sony the opportunity to buy the Japanese part of Square Enix. I wonder if we see the Japanese part get sold as well. 

With how much money is being thrown around in these acquisitions these days, I'd never say never, but it would still take a fair bit to pick them up -- it's not like Embracer have bought even half of Square Enix with the acquisitions they've made. 

Personally, I hope PlayStation don't pick them up. Square Enix already has great deals going on where they're selling exclusivity/timed exclusivity on AAA projects to PlayStation which would perform far better on PlayStation than Xbox anyways, and once those deals are up, they then cheekily put deals together with Xbox to have these games on Game Pass for a time. 

Definitely more likely that they go to PlayStation than Xbox, though. Not that a move to Xbox is impossible, but it's just so rare that Japanese companies are picked up in international acquisitions anyways, and there are additional hurdles to jump through. We'll see, but yeah, I don't like the direction this is all taking, but I guess at least this acquisition wasn't by s platform holder 

2 hours ago, drahkon said:

I hope not.
I hope no gaming studio will ever be bought.

[Dcubed]

Holy shit! $300 million is nothing! I know that S-E have been struggling with their more recent western projects, but man! Embracer are getting Eidos for an absolute steal! S-E must've been utterly desperate to offload them!

I'm shocked that MS and Sony allowed Embracer to snipe them, especially considering that MS are actually already making use of Crystal Dynamics for the upcoming Perfect Dark reboot... though I suppose MS probably don't want to rock the boat and risk losing their chance to buy Activision Blizzard...

Edited May 2 by Dcubed

[Dcubed]

4 hours ago, Hero-of-Time said:

That's exactly what I thought after reading about the deal. I wouldn't be surprised if either Sony or MS now tries to acquire S-E.

300 million for those studios and IP is an absolute steal. I'm very surprised MS didn't snap them up but they probably have their hands full with sorting out that Activision deal.

I suppose the only good thing about this deal is that a platform holder wasn't the one buying up the studios, meaning the IPs acquired should still be released on multiple consoles.

Scary how fast the industry seems to be shrinking. It's crazy when you think about it. Gaming is bigger and more lucrative than it's ever been and yet it in some ways it appears to be also shrinking at an alarming pace.

That's because the market itself is actually shrinking.  It's making more money than ever before, but that's off the back of fewer and fewer people as they squeeze more and more money out of fewer and fewer people.

The sad truth is that the traditional "AAA" industry has failed to bring in new audiences, as its current userbase continues to die off and grow out of the 10-25 male demographic.  Console sales (outside of Nintendo) have continued to trend downwards ever since they hit their peak with the PS3/360, you just don't notice it because total software sales as a whole are consolidated into fewer and fewer (highly successful) tentpole releases, and revenues climb ever higher off the back of abusive microtransactions that are being lifted "artificially" by whales.  The truth is that the traditional AAA industry is dying a slow death; which is why the future of this side of the industry now lies in the subscription and services model, rather than traditional retail sales.

Edited May 2 by Dcubed

[Sméagol]

Yeah, that's one of the reasons why I can see myself quitting gaming altogether in several years.. I think it's a question of when rather than if.

[Julius]

12 minutes ago, Dcubed said:

The sad truth is that the traditional "AAA" industry has failed to bring in new audiences, as its current userbase continues to die off and grow out of the 10-25 male demographic.

I'm not sure how much truth there is in that, because I don't think anyone's got the overall numbers to back a statement like this up. I actually think gaming is continuing to become more mainstream in areas where it wasn't before (i.e. we're getting more older and more female gamers), but that's anecdotal, and I have nothing too concrete to back it up. 

Also isn't it a contradiction to say that they've failed to bring in new audiences, but then talk about how the demographic outside of males aged 10-25 is growing? Couldn't it also just be a case of said demographic sliding into the next demographic range (i.e. 25 -39 males)? 

17 minutes ago, Dcubed said:

Console sales (outside of Nintendo) have continued to trend downwards ever since they hit their peak with the PS3/360

PlayStation did better with the PS4 than they did with the PS3 and Vita combined, though, and have also broken consoles sales records despite the components shortage with the PS5?

And I also feel like just looking at the numbers of console sales doesn't cut it here, context is informative as to what's going on with console sales, because we've seen a lot of stupid decisions made over the last few generations. 

PS3 picked up ground towards the end of the generation, but it flopped early on and didn't find it's footing due to poor messaging on their side, launching at too high a price, Japanese companies having difficulties adjusting to HD productions, etc. The 360 lost ground towards the end of the generation and the PS3 even hopped over it in sales. The Wii dropped off a cliff because there were no big first party games as the end of its life drew closer.

The Vita flopped hard; the Wii U flopped hard; this wasn't due to them following a trend, they were just extremely poorly communicated to their audiences and arguably didn't have compelling libraries at launch, and so the Vita found itself depending on the Japanese portable audience whereas Nintendo shrunk back into their shell as they lost most of their third party partnerships that they'd secured on the Wii. The 3DS was a moderate success in a period where it basically had no right to be, but there just wasn't space for the dedicated portable. 

The Xbox One had messaging and PR so bad that they had to drop the bundled Kinect within a year of launch and straight up stopped reporting hardware unit sales halfway through the generation, because they were being outperformed almost 2:1 by PlayStation and were being utterly embarrassed. To this day they themselves still don't report on hardware unit sales, though these days it can be argued that console sales aren't their focus anyways, what with their attention turning to Game Pass. I'd argue what your noticing is one third of the platform holders in Xbox not reporting anything and falling off a cliff last generation. That's not really a trend as such, they just did really poorly with the Xbox One, and are still recovering.

PS4 killed it last generation. The PS5 and Xbox Series X|S are killing it now. PSVR was a moderate success for what it was trying to accomplish, and I'm sure we'll see growth with the PSVR2. The Switch is absolutely killing it. 

22 minutes ago, Dcubed said:

you just don't notice it because total software sales as a whole are consolidated into fewer and fewer (highly successful) tentpole releases

I feel like most here - and basically anyone who follows gaming news and follows game releases - have been noticing this.

AA is pretty much dead at the highest level of publishing in a way where it was not last generation. We've seen studios shutter across the board who weren't contributing to AAA development and were seen as being surplus to success (Japan Studio in particular comes to mind on the PlayStation side of things, and Nintendo let AlphaDream die a cold and miserable death). Everyone and their mother has been rambling on about the lack of true next-gen exclusives. 

And again, Xbox doesn't really help here,  because now they report the number of players for a game (i.e. 20 million people have played Halo Infinite! - awesome, but how what's the split?) rather than actual sales. 

I feel like we're only really looking closely at first parties here, though, which seems a bit dishonest on the whole. I'd argue the industry just experienced it's busiest quarter in terms of releases to date, ranging from indie all the way up to AAA, and a lot of smaller titles continue to cross that 1 million units sold threshold, which would have been crazy not too long ago. 

The big companies are veering - and arguably have always veered - towards AAA and pumping all their money there, but the entire industry they are not. 

44 minutes ago, Dcubed said:

The truth is that the traditional AAA industry is dying a slow death; which is why the future of this side of the industry now lies in the subscription and services model, rather than traditional retail sales.

Again, for the moment, I feel like this mainly only describes Xbox. Halo, Gears of War, and Forza are their only true AAA tentpoles, so I think scooping up IP in acquisitions for Game Pass production and pumping millions into those and reboots of their existing legacy catalogue makes sense. Will it work out for them? It has been, but not off the back of any of their acquisitions just yet, as we still need to see how curation is handled. 

PlayStation are positioning themselves there as any company would do after seeing Xbox lay the groundwork - and have huge success - with Game Pass. PlayStation have had PlayStation Now, but they never pushed it like Xbox have Game Pass, and now Game Pass has done them kind of a huge favour in making game streaming and having a "Netflix of games" become mainstream. 

And Nintendo, as always, are being Nintendo about this. 

I have many concerns about subscription models for games and game libraries, but they don't revolve around the death of AAA in that it's going away, despite there likely needing to be changes, and so you're right in that I think the traditional AAA game - high budget games some 15-30 hours in length - could quickly go away as and when PlayStation decide to flip the switch. 

I think we're probably going to see more games with AAA budgets (makes sense, you need a lot of tentpoles in a service to keep people subscribed), but the experiences are just going to be much shorter than we'd typically expect. To make a service/subscription model work in the long run you need two things in terms of your exclusives compared to other competing services: high quality output at a high volume. 

We'll have to wait and see, but I'm hesitant to say I'm excited to see how this all shakes out 

[Dcubed]

Kekekekekeke 

[Cube]

I love board games, but it still seems crazy that the company that owns Ticket to Ride was bought for 10 times more than the company that owns Tomb Raider.

(Both bought by the same company, too).

[Dcubed]

2 hours ago, Julius said:

I'm not sure how much truth there is in that, because I don't think anyone's got the overall numbers to back a statement like this up. I actually think gaming is continuing to become more mainstream in areas where it wasn't before (i.e. we're getting more older and more female gamers), but that's anecdotal, and I have nothing too concrete to back it up.

Total PS4 + Xbone WW hardware sales are around 165-170 million; that's 15-20 million less than PS3 + 360.  Total WW software unit sales are significantly lower than PS3 + 360 too.

Quote

Also isn't it a contradiction to say that they've failed to bring in new audiences, but then talk about how the demographic outside of males aged 10-25 is growing? Couldn't it also just be a case of said demographic sliding into the next demographic range (i.e. 25 -39 males)?

The point is that it's the same people buying these current games who used to be in that 10-25 male demographic back when the PS360 were kicking about.  Kids these days grow up with mobile F2P games, Minecraft, Roblox and Youtube/Twitch streamers; not consoles anymore.

Quote

PlayStation did better with the PS4 than they did with the PS3 and Vita combined, though, and have also broken consoles sales records despite the components shortage with the PS5?

That all came at the expense of Xbox's sales, not by bringing in new audiences.  Sony basically stole the 360 audience from Microsoft and added it to the people that previously bought PS3s; but the total number of people buying console hardware has actually shrunk from generation to generation.  PS5 is also now significantly behind PS4 in terms of hardware sales launched alligned; as its sales have fallen off significantly after its explosive launch (another sign that the business is becoming more and more reliant on the hardcore early adopters).

Quote

Again, for the moment, I feel like this mainly only describes Xbox. Halo, Gears of War, and Forza are their only true AAA tentpoles, so I think scooping up IP in acquisitions for Game Pass production and pumping millions into those and reboots of their existing legacy catalogue makes sense. Will it work out for them? It has been, but not off the back of any of their acquisitions just yet, as we still need to see how curation is handled. 

PlayStation are positioning themselves there as any company would do after seeing Xbox lay the groundwork - and have huge success - with Game Pass. PlayStation have had PlayStation Now, but they never pushed it like Xbox have Game Pass, and now Game Pass has done them kind of a huge favour in making game streaming and having a "Netflix of games" become mainstream. 

Not anymore... Sony are now starting to follow in Microsoft's footsteps with a push towards more service ("GAAS") orientated games, and a push towards being more hardware agnostic.  The reason why Sony are now starting to release their titles on PC is because they have reached a plateau with their traditional console business; they need to start reaching out to "new" audiences by releasing their titles on PC in order to grow their Playstation business now.

Edited May 2 by Dcubed

[Sméagol]

So I hear they want to invest in NFT's..

[Hero-of-Time]

Let's all just agree that the industry is heading down the toilet and has been for a while.

Time to dust off the old GameCube and remind myself of better and simpler times. 

[drahkon]

1 minute ago, Hero-of-Time said:

 and remind myself of better and simpler times. 

I'm charging up my trusty PSVita to do that  

[Julius]

4 minutes ago, Dcubed said:

Total PS4 + Xbone WW hardware sales are around 165-170 million; that's 15-20 million less than PS3 + 360. 

Where exactly are you sourcing these numbers from?

We don't have hard numbers on the Xbox One, only estimates, and I'm not denying that the PS3 + 360 sold more than PS4 + One, what I'm saying is that the One flopped, meaning what you see is not a trend, but a result which was bound to happen given that Xbox and Microsoft did the console no favours; again, down to poor messaging, a lacking library of games (especially on the first party side of things, and especially at launch), etc. A flop like that is not necessarily the sign of a trend, and would be accounted for when trying to determine if there is a trend. 

Last time Sony reported PS3 sales was March 31st 2017 at 87.4 million units sold. Shipments to Japanese retails ceased by May of that same year, and that was the last market where the PS3 was being shipped. 

Last time Xbox reported 360 sales was June 9th 2014 when they were at 84+ million units sold. Statista seems keen to say that they're at 85.8 million units sold. 

That's PS3 + 360 at 173.2 million units sold lifetime in reports from start to finish, and that's using Statista's number to potentially go over the official number on the 360. 

PS4 was at 116.9 million units sold as of December 31st 2021. The estimated sales of the Xbox One as of Q2 2020 by Ampere was 51 million units, which I'm not really comfortable using, but considering that we haven't had official sales figures of the Xbox One since October 2015, it's probably the best we have to go off. 

Combined that's roughly 167.9 million units, within range of your 165 - 170 million units that you stated - but it's just over 5 million away from the combined sales of the PS3 and Xbox 360, not 15 - 20 million. And that's with one of the consoles flopping so hard they stopped reporting sales and haven't done so since. 

31 minutes ago, Dcubed said:

Total WW software unit sales are significantly lower than PS3 + 360 too.

PS3 lifetime software sales were 999.4 million units as of March 31st 2019.

Xbox 360 software sales can only be estimated at best, because Microsoft love to be difficult. VGSales try to estimate software sales at some 630 million units...but their logic is all over the place, such as using an attach rate stated as being 8.9 by Microsoft in 2010 and then applying it to 2013's numbers to calculate software sales in the US. They then use an NPD attach rate for Europe. Again, it's a mess, I don't want to use it as evidence of anything, because concrete it is not. I'd want to suggest we just use the same number for PS3 as we do Xbox - they're so close in hardware sales, after all, and both had opposite journeys during the course of that generation - but yeah, it's not a perfect way to make a point. 

For the PS4 - I hate to use them as a source, but ResetEra used to be great for quarterly and annual financial breakdowns - it is the console with the most software sales to date, at 1.622 billion units, more than the 1.537 billion units of the PS2, and that's with some 50 million fewer consoles sold. And that was reported in April 2021, it's likely grown more since then. 

Again, it's impossible to find anything for the Xbox One as they report software revenue. VGSales tries to estimate that it's 204.36 million units, but again I doubt it, and besides, the console was a flop so they pulled the plug when it came to massive effort first party titles and you've also got to take the existence and prevalence of Game Pass towards the end of the generation - after it launched around halfway through - into account. It was never going to be a fair comparison. 

But there's nothing here which makes me say for a fact that PS3 + 360 sales are significantly greater than that of the PS4 + One sales, as you say is the case -- we just don't have that written as hard fact. Even if we're generous and say the 360 software sales were equal to the PS3's (and, to be clear, that's only really generous compared to the estimate VGSales tries to enforce), to put their combined total to around 2 billion units of software sold, the PS4 alone gets you over 80% of the way to that total. 

Honestly, all it really shows is that Microsoft don't like to share sales numbers (which is frustrating for me as someone who loves to see them), and just reinforces how much of a flop the Xbox One was, emphasised by the success of the PS4. That there isn't a substantial drop-off despite one console in that generation really dropping off, when they were virtually at parity just a generation prior, is a testament to how well the PS4 did in getting PlayStation back on the right track by their own metrics. 

Now, if you really want to talk about drop-offs, how about we talk about Wii + DS vs Wii U + 3DS? 

1 hour ago, Dcubed said:

The point is that it's the same people buying these current games who used to be in that 10-25 male demographic back when the PS360 were kicking about.  Kids these days grow up with mobile F2P games, Minecraft, Roblox and Youtube/Twitch streamers; not consoles anymore. 

I mean, while I don't think you're massively off the pace by pointing out how big some of these other corners of gaming are, making sweeping generalisations is rough when we haven't really had a chance to see how this younger demographic engage with and impact the wider gaming industry. The next 5-10 years are going to be really interesting to follow, I think. 

The only reason I say this is because, anecdotally, I've seen and heard a massive shift from my younger brother over the last few years. He's 15 now, and he and his friends have grown up on mobile games, Fortnite, Minecraft, Roblox, Among Us - you name that mainstream thing that has all of us here going "huh, that's what the kids are playing these days?!", and they've probably played it - but in recent years have been looking for more and more things which are deeper than these ahem "more approachable" games. That's not to say that they've necessarily stopped playing those other games, but it's given them a foundational interest in games where if they do play something deeper, they kind of end up craving more. 

Again, totally anecdotal, but my younger brother borrows more and more games from me every time he pops around, talks more and more about indie and AAA games than he ever has before, and seems to be slowly moving from these more approachable games to more focused and deeper experiences in gaming, as are his friends. I'm not saying that's a huge sign of anything changing on a wide scale, but I think it's something worth considering when we talk about this new generation as if they are just going to stick with these "more approachable" games for life. 

Worth pointing out, too, that some of those friends of his are girls. Things aren't as rigid as I feel they once were, and you see it in a lot of things these days, such as the globalisation of anime. You have no idea how weird it was for me to get on a bus a few years ago and hear these high school kids dressed like they were about to harass people so casually and openly - and annoyingly loudly - talking about a slice-of-life anime. 

Also, final thing regarding what you said that's worth bearing in mind when it comes to YouTube and Twitch with this new generation: for a lot of them, YouTube is to them what TV was to me growing up, and Twitch is to them what YouTube was to me growing up. I don't think it's impacting their actual time spent playing (other than cases where a kid might not be able to afford a game?) and I actually think it's time being taken away from elsewhere (TV). 

1 hour ago, Dcubed said:

PS5 is also now significantly behind PS4 in terms of hardware sales launched alligned; as its sales have fallen off significantly after its explosive launch (another sign that the business is becoming more and more reliant on the hardcore early adopters).

Gee there's no explanation at all for...oh wait...hold up...

These next-gen consoles are still out of stock more often than they are in stock. You know just as well as I do just how massive an impact COVID and the parts shortage has had not just on gaming, but on every consumer electronics industry, so I don't see why you're even trying to compare the two. 

I'll always go back to this, as I think it's the best example: in summer 2020, Sony forecast having 15 million units sold by the end of March 2021. Then in September, this was reduced to 11 million units sold by the end of March 2021. And then again down to 6.5 million units by the end of March 2021 in early 2021. These being forecasts, they were always meant to undercut the actual sales figures, and the actual sales landed at 7.8 million units sold in that period. 

It still outsold the PS4 despite there being nearly half as many PS5 units shipped as initially intended, and remains virtually impossible for many to just casually get their hands on. 

But sure, let's act as if a worldwide pandemic and parts shortage has had no impact 

1 hour ago, Dcubed said:

Sony are now starting to follow in Microsoft's footsteps with a push towards more service ("GAAS") orientated games, and a push towards being more hardware agnostic. The reason why Sony are now starting to release their titles on PC is because they have reached a plateau with their traditional console business; they need to start reaching out to "new" audiences by releasing their titles on PC in order to grow their Playstation business now. 

To clarify, what I meant, and what I think we both agree on is: Xbox are there, Sony have positioned themselves to be there, but they aren't at the same stage as Xbox yet. It's why there's a lot of "we're not doing that...yet" when it comes to their plans for the new PS+ and talks about first party games landing Day 1. They're going to pull that trigger hard, but they need to lay the foundation first, and like you say, getting games on PC is a great way to do that. 

To be clear, though, that is a smart business decision regardless of hardware sales: there are simply far more PCs out there than there are consoles, why wouldn't you start bringing your games which have broken sales records with a smaller install base to a much larger install base? Let's not forget that, unlike Nintendo, PlayStation is part of a larger company which has depended on them increasingly over the last decade. 

[Dcubed]

I laughed.

Edited May 4 by Dcubed

[Hero-of-Time]

The Phil Spencer line and what S-E are going to do with the money got me good.  

[Hero-of-Time]

https://kotaku.com/nft-market-collapse-square-enix-ubisoft-sega-konami-sca-1848878945