In its most recent quarterly earnings call, Square Enix explained its reasoning behind selling off its Western studios.
Back in May, Square Enix announced it was selling off Crystal Dynamics and Eidos Montreal, the studios behind Tomb Raider and Deus Ex respectively. Now, as reported by Polygon, Square Enix has explained in its financial results that this is due to the fact that games from its Western studios might have been cannibalising the sales of its other games, according to analyst David Gibson.
Gibson noted that the sale of the studios and their IPs would have the potential to “improve capital efficiency,” i.e. making more money compared to what it’s spending, in order to continue to make more money. And according to Gibson, the move to sell these studios to Embracer Group is part of its first phase, with the second phase being “diversification of studio capital structure.”
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