Square Enix Says Embracer Sale Will Help Fund Its Blockchain Investment

Square Enix is going deep into blockchain, AI, and cloud investments after selling its Western studios to Embracer Group.

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Square Enix has shed more light on its decision to sell its Western game development studios and IPs to Embracer Group, as the Japanese company says the deal will further help it invest in the blockchain and other technologies.

The deal--which is valued at $300 million--will see Crystal Dynamics, Eidos-Montreal, and Square Enix Montreal join Embracer Group's portfolio of studios, as well. IPs in the sale include Tomb Raider, Deux Ex, and Legacy of Kain, among others.

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"The transaction will assist the company in adapting to the changes underway in the global business environment by establishing a more efficient allocation of resources, which will enhance corporate value by accelerating growth in the company’s core businesses in the digital entertainment domain," Square Enix said in an official statement via Business Wire.

Aside from investing in the blockchain, Square Enix also plans to explore the fields of AI and the cloud, a move it says is meant to optimize its business structure as part of a medium-term business strategy that was unveiled last year.

Square Enix president Yosuke Matsuda expressed an interest last month in the company creating more blockchain games with play-to-earn elements, as he explained that the traditional video game business model would not be enough to secure the future of the company. In a letter, Matsuda wrote of his belief that blockchain games "hold the potential to enable self-sustaining game growth" by pushing the play-to-earn concept further.

"I realize that some people who 'play to have fun' and who currently form the majority of players have voiced their reservations toward these new trends, and understandably so," Matsuda explained. "However, I believe that there will be a certain number of people whose motivation is to 'play to contribute,' by which I mean to help make the game more exciting."

It's worth noting that Square Enix has seen massive growth in its Japanese studios that created MMO and mobile games, areas where blockchain, cloud, and AI technology has proven to be especially useful. While its Western studios did generate profits for the companies, Square Enix generally considered these returns to be disappointing when compared to the costs of running those groups and financing games.

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