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What Square Enix’s sale of Tomb Raider tells you about the future of gaming

Has Tomb Raider become a historical artefact itself (pic: Square Enix)



Paying $300 million for Tomb Raider and two well-respected developers seems like a steal but there’s a clear reason it didn’t go for more.



In the last few months we’ve seen Microsoft pay £5.9 billion for Skyrim maker Bethesda and a record-breaking £50 billion for Call Of Duty owner Activision Blizzard , while Sony has snapped up Destiny 2 developer Bungie for £2.7 billion . For most people, once you get past a few million it’s hard to comprehend such immense sums but paying just £239 million for Tomb Raider , the studio that makes it, and all of Square Enix’s Western developers and their associated franchises seems like a steal to everyone… except other games companies.



£239 million ($300 million) is less than the production budget of Avengers : Endgame, with the 2018 Tomb Raider film reboot itself having a budget of around $100 million. To suggest that the entire franchise, plus developers Crystal Dynamics, Eidos-Montreal, and additional franchises such as Deux Ex and Thief are only worth an extra $200 million seems madness but this is not a case of Square Enix being foolish. They wanted more money, but nobody was willing to pay it.



Although there’s no indication yet of who the other interested parties might have been it seems impossible to imagine that Microsoft wasn’t amongst them, given their current acquisition spree and the fact that they already made one of the modern Tomb Raiders a timed exclusive. Apparently they weren’t tempted though, despite using Crystal Dynamics to help with the reboot of Perfect Dark , and that says a lot about the sort of games big companies are willing to invest in nowadays.



All of the recent big acquisitions have one thing in common: live service games. Destiny 2, Call Of Duty, Overwatch, World Of Warcraft, Fallout 76, The Elder Scrolls Online… the most prominent current games at Bungie, Activision Blizzard, and Bethesda are all games as a service titles. That is, games that continue to evolve and expand for years after their initial launch, with an emphasis on multiplayer and paying for microtransactions or subscriptions.



Live service games have been fashionable for years already but after a number of high-profile failures (Crystal Dynamic’s Avengers game being a prominent example) it did seem as if the industry had realised that there was a limit to how many live service games the average player has time for. That illusion of restraint looks ready to break though, with Sony already saying it has 10 live service titles currently in development and Microsoft always having been an advocate.




The great irony of everyone’s reactions to the price of the deal is that it failed to meet their expectations https://t.co/fvMW7fHBxd — Daniel Ahmad (@ZhugeEX) May 2, 2022




Ever since EA revealed that FIFA makes more money from microtransactions than from actual game sales other publishers have been desperate to repeat the formula that rewards the maximum amount of profit for the least amount of effort. Now though, the new buzzwords are not microtransactions and loot boxes but the blockchain and NFTs – as evidenced by Square Enix’s peculiar rationalisation for selling their Western companies.



Enabling ‘the launch of new businesses by moving forward with investments in fields including blockchain, AI, and the cloud’ sounds like the sort of thing you’d say to investors, safe in the knowledge that it’s so vague and nebulous that there’s no way you can be judged on whether you’ve successfully done it or not (in that sense it’s only a surprise they didn’t mention the Metaverse).



There’s no reason to think that isn’t exactly why they did it though, with Square Enix realising that one shot single-player games like Guardians Of The Galaxy can never make as much money as a successful live service game. The only qualification is the ongoing problems Square Enix has had managing its Western studios over the years, ever since it bought British publisher Eidos in 2009 for £84 million.









The attempts to turn Deus Ex into a mega franchise failed, as did the reboot of Thief, and while the recent reboot trilogy of Tomb Raider was successful it by no means returned the series to its former position as one of gaming’s biggest franchises. The failure of Avengers was no doubt the final straw, and indeed rumours suggest that Square Enix has been trying to offload Eidos for years.



The move towards big publishers focusing solely on live service games is beginning to seem worryingly inevitable, especially given Bethesda has just seen single-player only titles Deathloop and Ghostwire: Tokyo released to indifferent sales, despite the former reviewing well. This year’s Starfield may avoid any attempts to repurpose it as a live service game but the more distant The Elder Scrolls 6 may not be so lucky.



Companies do not pay £50 billion in order to encourage critical darlings with indie style sensibilities. The primary goal of Microsoft, Sony, and all the big publishers is to make money, and history has shown that they do not care how this is achieved. So if live service games seem the next most reliable means to increase their value to shareholders then that’s what they’ll make more of.



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There is a bright side to this though, hopefully, which is that the mysterious Embracer Group, that Square Enix sold everything to, has picked up an absolute bargain. Not just Tomb Raider and all the other franchises, but two extremely large and highly talented developers.



Believe it or not, but experienced and talented staff are becoming increasingly difficult for the games industry to retain, due to the pressures of unfair work hours, relatively low pay, and the never-ending reports of toxic workplace conditions. The reason the deal seems so odd, from a certain point of view, is that here are two top notch studios that have had no reports of similar problems and have consistently put out high quality games. The problem is they’re not the right sort of games, not for publishers looking to maximise profit.



Presumably Embracer Group is quite keen on making money too, so it’s going to be extremely interesting to see what their new purchases end up doing in the future. Especially as there’s currently no clue as to what Eidos-Montréal might work on next. If it’s not a live service game then it’ll probably be welcomed by gamers, but it’ll be going against the tide of change that is currently sweeping the industry.




The short of it: – SE Western Studios have underperformed over numerous titles – Its biggest growth areas in the past year have been from JP studios (Smartphones / MMO) – SE was looking to offload Western studios for a while – Embracer is paying the full amount upon completion https://t.co/7Qww4phzxd — Daniel Ahmad (@ZhugeEX) May 2, 2022




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MORE : Square Enix sells Tomb Raider and Crystal Dynamics to invest in blockchain games







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MORE : Square Enix announce old school looking DioField Chronicle and Valkyrie Elysium





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