Square Enix has been a mainstay in the industry for years, but it looks like the Japanese publisher and developer is struggling, having reported declining financial results for Q1 2023 (besides the huge success of its MMORPG, Final Fantasy XIV). And, following the publication 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 Financial analyst David Gibson breaking down the discussion on Twitter.
Square Enix recently sold a number of its Western studios to Embracer Group, but that was only phase one 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.
Resources will be focused on Japanese-developed games, with European and American studios impacted the most.
One way Square Enix thinks it will improve its capital efficiency and offset rising costs is by selling stakes in some of its studios. Gibson suspects that the likes of Sony, Tencent, and Nexon would be among the interested parties. What this means is that Square Enix won’t entirely sell studios, but rather a percentage of them,
Interestingly, once the sale with Embracer Group goes through, Square Enix will gain $1.4 billion and potentially remove any debt they have, Gibson states.
Following the call, Square Enix’s shares have risen. At the time of writing this, Square Enix Holdings Co Ltd has seen an 11% increase today.
The company has a huge slate of releases coming out at the end of this year, including on the Switch. The DioField Chronicle launches on the 22nd September, 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 is also due out in the winter.
It’s also already 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’ll have to wait and see what happens with the company for the rest of the year.
What do you think of this announcement? Do you think Square Enix will sell stakes in any of its studios? Let us know.