Square Enix

Square Enix Reportedly Wants To Sell Stakes In Its Game Studios

Earlier this morning, Square Enix releases its financial results for the first quarter of the fiscal year. The report itself features a lot of information and reveals a bit about how the Japanese publisher seemingly sees its Western studios — Crystal Dynamics and Eidos Montréal in particular.

The financial results as reported by analyst David Gibson, give us an insight into the sale of Crystal Dynamics, Eidos Montréal, and Square Enix Montréal were only the first steps or ‘phase 1’ of a bundle of changes coming to Square Enix. The sale to Embracer Group was driven by the concern that titles developed by these Western studios would ‘cannibalize’ sales of the rest of Square Enix and this was done to improve capital efficiency.

With Phase 2 being put in motion to diversify studio capital structure. This means the developer will look at its current portfolio of studios and then assess whether or not to keep them as wholly-owned subsidiaries or part them out as piecemeal to outside purchases. Essentially, if you want to invest in the studio that is working on the next Kingdom Hearts, for a price Square Enix will let you buy stakes in the business. Gibson goes on to say this would benefit Square Enix to reallocate resources to studios far more easily.

Gibson goes on to say that this situation is “extraordinary” and that Square Enix will have roughly $1.4 billion in cash with zero debt post sale of Crystal Dynamics, Eidos Montréal and Square Enix Montréal.