Scooby-Doo Enix held a conference call today to discuss its recent financial results and revealed some future plans during the call.
Japanese analyst David Gibson summarized the SE interview afterwards: the sale of Crystal Dynamics and Eidos to Embracer Group is the first phase of Square Enix’s plan, and the second phase will be “diversifying the capital structure of the studio.
Rising game development costs mean that studios with 100% ownership need to be selective and pool their resources, which limits expansion. As a result, SE will “conduct a studio portfolio review.
Some studios will maintain 100% equity structures, while others will change (equity or joint venture),” he added, adding that Square Enix will also look to expand its studio portfolio.
According to a report on the conference call, “the biggest impact will be around larger games for European/US studios,” meaning Square Enix “will be able to allocate resources primarily to Japanese games.
“Square Enix is looking to sell shares of its studios to other companies to improve capital efficiency, and companies like Sony are among its buyers, with interest expected from the likes of Sony, Tencent and Nexon.”
He also noted that Square Enix’s decision is “extraordinary” because the publisher should have enough money to meet its needs without having to sell its stake in existing studios.
Square Enix’s current game development costs are $840 million,” he said. But after the Crystal Dynamics / Eidos sale, the company will have $1.4 billion in cash and zero debt, which is more than enough for expanded game investments and without the need to sell a stake in the studio.”
