More info on Square Enix's plans regarding mergers and acquisitions

Annual Report

Page 8
However, as the investment required for development efforts has grown, this strategy has begun to produce side effects of a scale that we cannot ignore. It is now more important than ever that we manage financial volatility and the impact that it has on our accounting because, while development investments fuel our Group's future growth, we must also recognize those investments in the form of our content production account. How to exercise appropriate control over volatility and strike a balance between risk and return when making growth investments are the key questions that we must ask ourselves as we manage our games business going forward, and I believe that the answer lies in a more diversified capital structure of our studios.

By "a more diversified capital structure of our studios," I refer to not fixating on full ownership and instead making various patterns of the studios' capital structure that enables sharing development risk with partners. Such a strategy would allow us to grow our studio portfolio as a whole while exposing ourselves to less risk. Specifically, we would diversify the capital structure of our studios by not only owning some studios outright, but also by welcoming third parties to take stakes in some of our studios or by our taking stakes in studios outside the Group. In this way, we would create a studio portfolio that spans a continuum from studios that we own outright to those that are equity-method affiliates or less. Under such a strategy, we would also engage in M&A activities, for example, and work to achieve a balance between growth and financial stability.

Was stated earlier this year, but this report contains a bit more info. Lessens the chances of them being bought outright imo.
 

Elios83

Member
This idea has been floating for a while and it's basically the ideal outcome for companies like Sony who don't want to spend billions in extra baggage and approval nightmares but would still like to continue to have a privileged relationship with certain IPs and studios.
 
This idea has been floating for a while and it's basically the ideal outcome for companies like Sony who don't want to spend billions in extra baggage and approval nightmares but would still like to continue to have a privileged relationship with certain IPs and studios.

Yep. Makes sense and is probably the better scenario than a full purchase.

Old news. This was mentioned in the last conference call 3 months ago.

True. This just adds a bit more info.
 
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This idea has been floating for a while and it's basically the ideal outcome for companies like Sony who don't want to spend billions in extra baggage and approval nightmares but would still like to continue to have a privileged relationship with certain IPs and studios.
Nintendo as well. SQEX pretty much already does this. Has tons of timed exclusives off-loading development cost and marketing cost. Nintendo even published several of their handheld titles, and even localized in the past. SQEX has kinda done this for a long time.
 
I think at some point the game industry is going to structure like the movie industry where the "special effects" companies are separate from the production companies and basically work for hire on all sorts of projects. And for publishers that own the art devs they are going to be more and more located in markets like Vietnam where the labor is cheap.
 

IbizaPocholo

NeoGAFs Kent Brockman

In the "medium to long term", Square Enix "will accelerate our efforts to strengthen our internal development capabilities by further expanding our internal talent pool, while also more quickly concentrating our resources on the development of titles that are competitive globally." In other words, it wants to commit to its own projects while expanding its portfolio.

When you consider how many new games Square Enix released in 2022, this all makes sense. Indeed, the company also wants to refocus its publishing efforts, as Matsuda notes the importance of "end-to-end global publishing". Previously, the company's Japanese and Western publishing arms operated somewhat independently. Matsuda goes on to clarify that the goal is to become "One Square Enix".

But of course, evident consolidation can only mean one thing in this current gaming climate: Square Enix is preparing itself for a big sale. Or at least, that's what people on forums and social media would have you believe. Rumours of Sony snapping up Square Enix have been doing the rounds for ages now, and they've been fairly relentless. The whispers have started up again following this letter from Matsuda, as consolidation has long been equated to new management, and transforming a business into something that's more attractive to potential buyers.
 
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