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Square Enix finally explains why they sold Tomb Raider and Crystal Dynamics

Concerns about the cost of making modern games and cannibalising sales from their own line-up are behind Square Enix’s recent actions.

The fact that Square Enix sold Tomb Raider and almost all its Western franchises, along with the two highly talented developers that made them, for an absurdly low $300 million seems so peculiar it’s hard to imagine there’s any sensible explanation for it.

One of the main theories so far is that Square Enix sold them in order to be a more attractive acquisition target for Sony, but while that may be true in part it’s not the official reason being given.

Speaking to investors during a recent financial call Square Enix made the peculiar suggestion that they did it because they were worried that the games would cannibalise other Square Enix sales.

The idea of cannibalising sales is a real, if uncommon, phenomenon, with perhaps the most famous example being that time EA released both Battlefield 1 and Titanfall 2 within the same two week period (and just a week before Call Of Duty: Infinite Warfare).

It’s a mystery though, as to what Square Enix thinks could be conflicting within their own schedules, given the long gaps between major releases and how different games like Tomb Raider and Guardians Of The Galaxy are to each other, let alone anything made by their Japanese studios.

The other rumour as to the true reasoning behind the move is that both studios were simply too expensive and difficult to maintain, and Square Enix no longer thought they were worth the time or trouble. With the implication that Sony would come to the same conclusion and Square Enix would seem a less desirable acquisition as a result.

So while the output of Crystal Dynamics and Eidos-Montréal in terms of games was generally very good, issues with management and the sheer cost of running large studios with hundreds of employees had became too great.

This is born out by other comments made by Square Enix, during a recent investment report covered by analyst David Gibson.

Rather than cannibalisation it seems that Square Enix’s primary concern is simply money, or capital efficiency as they put it.

They’re concerned about the rising cost of making games, especially when combined with the cost of running their own internal studios as well.

This seems to mean that other studios may be shut down or sold off, while at the same time Square Enix sets up new teams by co-financing them with other companies. And while they’ve stated that they want to concentrate more on Japanese made games in the future, they’re apparently still interested in setting up new Western studios.

Although this begins to make more sense it’s still a very peculiar situation, with no explanation as to why Square Enix is acting as if it suddenly can’t pay the rent anymore.

At the end of the day though, if Crystal Dynamics and Eidos were costing more money than they were bringing in that’s all the reason any business would need for getting rid of them.

Indeed, it also explains why they were sold for so little, with the implication being that once they looked at the books, rather than just the review scores, nobody else wanted them either.

Square Enix (SE) – highlights from results conf call… strap on your boots, this is a doozy 1/10 #SquareEnix

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