Square Enix Would Be Open to Joint Ventures or Even Minority Stake in its Own Studio Because of Rising Development Costs

Axios pointed out that Square Enix had a somewhat surprising end to its investor briefing held at the beginning of August. Now that we’ve been able to read the transcripts, it seems that Square is indeed open to joint ventures or possibly selling a majority stake in the studios it owns.


“Traditionally, our general policy has been to own our development studios fully,” writes Square Enix President Yosuke Matsuda. “But development costs have skyrocketed in recent years, so I want to find ways to allocate capital to studios that give us more flexibility.

These may include not only full ownership, but also joint ventures, subsidiaries operating with the capital method and minority shares.

Instead of insisting on full ownership, we will hedge our risks by investing in the studios through various capital structures, while working to enrich our portfolio and achieve sustainable growth.”


In the Q/A section, Matsuda further clarified the company’s strategy around the decision.

“The costs of developing a single title are increasing. Thus, full ownership of the studios means that while we can expect a significant return, the downside risk is also significant.

This results in higher-than-expected income fluctuations.

Therefore, instead of sticking to full ownership, we also want to take other approaches, such as joint ventures and minority stakes, to hedge investment risk, thereby controlling volatility and achieving growth and an optimal balance sheet profile at the same time .”

It seems almost shocking that this is coming from Square Enix, especially given the success of franchises like Final Fantasy.

However, it’s been clear for some time now that the woeful launch of Marvel’s Avengers and Crystal Dynamics’ continued struggles with the game have hurt Square, even with the success of Marvel’s Guardians Of The Galaxy.

This also helps further explain why Square effectively sold the aforementioned Crystal Dynamics, along with Eidos Montreal and Square Enix Montreal, to the Embracer Group.

With Square Enix’s new approach, this could be the perfect time for Sony to swoop in and make Square Enix an irresistible offer for Square Enix Tokyo, as has been rumored.

Source – Axios</a >

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