Square Enix has been a mainstay in the industry for years, but it seems the Japanese publisher and developer is struggling, as it reported declining financial results for the first quarter of 2023 (on top of the huge success of its MMORPG, Final Fantasy XIV). And, following the release of those results, Eurogamer reports that the company is looking to “improve capital efficiency” by selling stakes in its studios.
This comes from an internal conference call held after the results were shared, with MST’s financial analyst. dave gibson breaking up the discussion on Twitter.
Square Enix recently sold several of its western studios to the Embracer Group, but that was only the first phase of the company’s plans. The next stage is for Square Enix to diversify the studio’s capital structure and be more selective with resources due to rising costs.
The resources will focus on games developed in Japan, with European and US studios being the hardest hit.
One way Square Enix believes it will improve its capital efficiency and offset rising costs is by selling stakes in some of its studios. Gibson suspects that companies like Sony, Tencent and Nexon would be among the interested parties. What this means is that Square Enix will not be selling studios in their entirety, but rather a percentage of them,
Interestingly, once the sale to Embracer Group goes through, Square Enix will make $1.4 billion and potentially wipe out any debt they have, Gibson claims.
After the call, Square Enix shares have risen. As of this writing, Square Enix Holdings Co Ltd has seen an 11% increase today.
The company has a huge slate of releases later this year, including on Switch. DioField Chronicle launches on September 22, followed by the Switch port of NieR: Automata in October, farming sim Harvestella and Tactics Ogre: Reborn in November, and Dragon Quest Treasures in December. Crisis Core: Final Fantasy VII Reunion will also be out in the winter.
It also released two fantastic games earlier in the year and a long-awaited port: Triangle Strategy, Live A Live, and Chrono Cross. So it’s been a busy year for Square Enix. We will have to wait and see what happens with the company for the rest of the year.
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