Square Enix to sell 'Tomb Raider' to Sweden's Embracer (updated)

SQUARE ENIX HOLDINGS

02/05/2022 11:24

* 'Tomb Raider' franchise has sold 88 mln units 
    * Deal price seen as curtailed by lack of live service
expertise
    * Embracer has gained reputation for acquisitions 

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    By Sam Nussey
    TOKYO, May 2 (Reuters) - Japanese gaming company Square Enix
 9684.T  will reduce its developer presence in the West with the
sale of the studios behind franchises "Tomb Raider", "Deux Ex"
and "Thief" to Sweden's Embracer Group  EMBRACb.ST  for $300
million. 
    The latest of a series of deals in the video games industry,
the sale announced on Monday includes studios Crystal Dynamics,
Eidos-Montreal and Square Enix Montreal, affects 1,100 employees
and is expected to close in the July-September quarter. 
    Square Enix, whose major franchises include "Final Fantasy"
and "Dragon Quest", said the proceeds will be used to invest in
areas such as blockchain, artificial intelligence and the cloud.
    The Tokyo-based company last year said it was reviewing its
portfolio to adapt to industry trends such as the focus on the
metaverse, or the idea consumers will spend more time in 
virtual worlds.  
    Embracer, which has a reputation for acquisitions and a war
chest of 10 billion Swedish krona ($1.02 billion), said the deal
will give it a pipeline of more than 230 games including 30 big
budget AAA titles. 
    "Embracer is the best kept secret in gaming: a massive,
decentralised collection of entrepreneurs whom we are thrilled
to become a part of today," Square Enix America and Europe CEO
Phil Rogers said in a statement. 
    The valuation of the assets, including the long-running
"Tomb Raider" series that has sold 88 million units and
generated a Hollywood franchise with its depiction of
archeologist Lara Croft, surprised some industry observers.
    The price reflects "limited competition for acquisition of
the assets, perhaps suggesting some post-pandemic softness in
valuations for particular segments," Piers Harding-Rolls, head
of games research at Ampere Analysis, said.
    "Interest will be curtailed by the lack of live service
expertise," Harding-Rolls added, referring to games that offer
continuous, updated play. 
    Titles such as "Tomb Raider" are primarily single player and
top games in recent years can require investment comparable to
big budget movie productions. 
    "In different timing and circumstances that could have been
a different number but now we are where we are and I'm standing
here, so I'm super pleased with that," Embracer co-founder and
CEO Lars Wingefors told a briefing. 
    Sony Group Corp  6758.T , already a leader in first-player
gaming, said in February it will buy "Destiny" developer Bungie
and plans to launch at least 10 live service titles. 
    "Embracer believes there will be an increasingly strong
demand for high-quality content, including AAA single-player
games, over the decade," the company said in a statement. 
    ($1 = 9.8474 Swedish crowns)

 (Reporting by Sam Nussey; Editing by Emelia Sithole-Matarise
and Barbara Lewis)
 ((sam.nussey@tr.com;))