I wrote for Naavik about Embracer’s acquisition of Square Enix’s North American studios and IP. Read the full article here.

Why I wrote about this

It’s one of the more peculiar deals in games. Tomb Raider is a big IP, yet Square Enix has been famously vocal about how it’s unhappy with its overseas studios. The interesting question is whether Embracer is the better owner for these assets than Square Enix.

The gist of it

Embracer acquired Crystal Dynamics, Eidos-Montreal, and Square Enix Montreal (along with IP like Tomb Raider, Deus Ex, Thief, Legacy of Kain, and a catalog of 50+ titles), for $300M in cash. Compared to recent headline-grabbing deals like Sony’s $3.6B acquisition of Bungie, the price looks modest.

But the comparison also explains part of the gap. Bungie represents a mature live-service machine with years of live ops expertise. Square Enix’s Western studios, in contrast, are rooted in traditional AAA development and have only recently experimented (expensively!) with live-service models. Their recent Marvel titles struggled commercially, even if the underlying teams delivered high production value.

Strategically, the divestment makes sense for Square Enix. Its Japanese business is thriving, powered by franchises like Final Fantasy, Dragon Quest, and FFXIV. Leadership has also signaled growing interest in Web3 and other new initiatives. Exiting capital-intensive Western AAA operations reduces risk and sharpens focus. For Embracer, however, this looks like a long-term bet on premium AAA content, and possibly a bargain. We have limited visibility into the profitability of these studios. Nevertheless, in a market where experienced developers are scarce and evergreen IP is priceless, $300M feels closer to a steal than a stretch.

Key takeaways

  • $300M for three major studios and Tomb Raider-level IP is unusually low in today’s acquisition market.
  • The valuation gap vs. Bungie highlights the premium placed on proven live-service capabilities.
  • Square Enix is doubling down on its strongest segments: Japanese franchises and new strategic bets.
  • Embracer is making a long-term wager that big-budget AAA still works.
  • Great IP and great developers remain timeless assets, even as business models shift.