Square-Enix sells all of its Western game studios—and their games—to Embracer

On Monday, Japanese game publisher Square-Enix confirmed that it was selling all three of its Western video game studios, along with many significant game series and IP attached to those studios, to the European game publisher Embracer.

The sale includes game studios Crystal Dynamics, Eidos Montreal, and Square-Enix Montreal. All three had previously been wholly owned by Square-Enix, and Embracer will acquire their entire staffs, combined at roughly 1,100 people, along with popular IP such as Tomb Raider, Deus Ex, and Legacy of Kain, and a game-publishing catalog of “over 50 games,” for $300 million.

Not all of the deal’s IP has been confirmed thus far, however, and an announcement from Square-Enix indicates that its Western operations “will continue to publish franchises such as Just Cause, Outriders, and Life is Strange.” This suggests that Square-Enix will retain some of its Western-specific IP and that its future collaborations with Western game makers will come via publishing deals with outside developers.

…or one-fourth of a Gearbox

While console manufacturers Microsoft and Sony have racked up headlines thanks to their own megaton game-maker acquisitions over the past few years, Embracer has quietly built its own roster of predominately European studios over the past decade—and was better known by the name THQ Nordic beginning in 2014, after picking up the rights to that fallen publisher’s name (though not all of its games). Its biggest acquisitions in the past 12 months have included video game maker Gearbox Software and board game producer Asmodee Games.

Looking at the balance sheet, however, those two deals each exceeded $1 billion, while today’s Square-Enix deal falls well short of that number. The discrepancy feels curious in light of Square-Enix itself announcing that Tomb Raider lifetime game sales had exceeded 85 million in October, as part of the series’ 25th anniversary celebration. As a comparison, that sales number is neck-and-neck with one of Square-Enix’s most beloved game series, Dragon Quest, which had sold over 83 million games as of August of last year. Since it’s a full IP acquisition, Embracer will likely also claim the rights to Tomb Raider‘s legacy as a Hollywood film series, though the company has yet to confirm whether previously rumored Lara Croft-related productions, one live-action and one anime, are still in the works.

Square-Enix’s recent handling of Western properties has had some issues, particularly after it put a ton of its Western studios’ eggs into the uneven, game-as-a-service basket of Marvel’s Avengers—only to see its 2020 launch fall well short of critical and sales expectations. This was followed by the critical 2021 darling Marvel’s Guardians of the Galaxy, helmed by Eidos Montreal, falling short of sales expectations. Between those disappointments and the utter silence of Deus Ex as a sci-fi adventure series since 2016, perhaps Square-Enix’s estimation of its combined Western studios’ value had fallen.

Still, Embracer wasted no time beating the drum of its newly acquired IP. Its announcement of the deal confirmed that development has already begun on “the next mainline Tomb Raider game,” complete with “next-generation storytelling and gameplay experiences,” while several other “AAA” projects were teased as being in development by the combined studios.

And shortly after the announcement went live, Eidos Montreal confirmed in an Embracer conference call that its next major game would be set in the world of Deus Ex. The announcement didn’t clarify exactly how Crystal Dynamics’ recently announced work on the Microsoft-published Perfect Dark sequel will factor into this deal.