Square Enix held a financial conference call on Friday, August 5, and the call was described as a doozy by one analyst.
Financial analyst David Gibson took to Twitter to go over what was discussed, including the recent sale of Crystal Dynamics and Eidos and the publisher’s plan to sell stakes in more studios. The $300 million deal in May included Crystal Dynamics, Eidos Montréal and Square Enix Montréal, intellectual property rights to franchises like Tomb Raider, Deus Ex, Thief and more than 50 back-catalogue games from Square Enix.
Gibson said the “[CD/E] sale was driven by concerns that the titles cannibalized sales of the rest of the group and so it could improve capital efficiency,” noting that it is considered a “phase 1.” The next phase is described as a “diversification of studio capital structure.” This will include a studio portfolio review of Square Enix’s studios, which will reportedly lead to some studios remaining 100% “while others will change (equity method or JV).” Square will also reportedly “look to explore to expand the studio portfolio.”
The largest impact will reportedly affect U.S. an European studios around large titles and “will be able to allocate resources mainly to Japan titles” in an effort to improve capital efficiency, Gibson said.
The analyst said that Square Enix’s capitalized game development costs are currently $840 million, but that post-C/DE sale the company will be working with $1.4 billion in cash and no debt. That cash, Gibson said, “is plenty to fund expanded game investment and not sell down stakes in its studios.”
You can read the full thread here:
Square Enix (SE) – highlights from results conf call… strap on your boots, this is a doozy 1/10 #SquareEnix
— David Gibson (@gibbogame) August 5, 2022