Square Enix Reportedly Lost $200 Million on Avengers and Guardians of the Galaxy

There’s a lot to unpack in the recent announcement that the Embracer Group is acquiring Square Enix’s North American studios and IPs, especially given the involvement of studios like Crystal Dynamics and Eidos Montreals and the IPs that are traditionally attached to them, from Tomb Raider to Deus Ex. One thing in particular that has caught the attention of many, however, is the fact that the whole deal costs $300 million, which, given the magnitude of the deal and the names attached, seems shockingly low.

But it would seem that, given the losses Square Enix has incurred due to its western output in recent years, the price starts making more sense. In fact, taking recently to Twitter, industry analyst David Gibson stated that the primary reason Square Enix accepted the price for the deal was the Marvel license.

Since 2020, Square Enix has openly talked about the commercial underperformance of both Marvel’s Avengers and Marvel’s Guardians of the Galaxy, including the heavy financial losses brought about by the former’s failure in particular, and according to Gibson, the two have collectively led to losses of $200 million in under two years for Square Enix.

Even so, as Gibson points out as well, considering the potential of the IPs attached to the two studios and the upcoming AAA games that are in the works at both Eidos Montreal and Crystal Dynamics (with the latter confirmed to be working on a new Tomb Raider game), the price seems significantly lower than expected.

One would think that the mega-successful Tomb Raider franchise in and of itself would enough to drive up that number significantly. Add to that the fact that Square Enix is using the money from this deal to invest in blockchain, of all things, and the deal becomes even more baffling.

Marvel – that’s the reason why Square sold its NA team for $300m. Because in a little under two years they lost $200m on two Marvel games. But it still looks like a low price given the optionality on probably 4 AAA titles coming through. #SquareEnix #Embracer

— David Gibson (@gibbogame) May 2, 2022