Embracer paid too little for Tomb Raider and Deus Ex and that’s a good thing

Square Enix best IPs

It’s easy to scoff at the purchase of Tomb Raider and Deus Ex by Embracer for what amounts to pocket change. With so many billion dollar purchases flying left and right as part of the acquisition wars, Square Enix might as well have sold its best IPs and some high profile studios for a six-pack of beer and a lottery scratch card.

Maybe we’ve become desensitized by big companies paying ungodly amounts of money for everything they set their sights on, so it can seem like Embracer is under valuing those properties. But the reality is that it’s actually a shrewd purchase on the Austrian video game conglomerate’s part.

The likes of Microsoft, Amazon or Netflix are in the business of spending money to corner market share and then figure out how to succeed and profit later. Embracer doesn’t have the pockets deep enough to spend more money than what a thing is presently worth. So instead they’re doing what normal companies would do, pay as little as possible in the hopes of getting the most out of what they get.

Embracer Tomb Raider
Lost Ark. One of the releases from Amazon Games, which has largely adopted a strategy of “spend as much money as possible” to “win” at gaming.

If anything, 300 million dollars is a sensible valuation for a bunch of studios and properties whose futures aren’t as assured as people might believe. Even though Lara Croft is one of the most recognizable video game characters of all time – thanks to a decade of unforgettably sexploitative marketing in the late 90s and three entire feature-length motion pictures – she’s not what the sales draw that she used to be.

Third person action adventure games at the level of polish that is associated with the Tomb Raider franchise are very expensive to produce. In 2018, Eidos Montreal boss David Anfossi told GamesIndustry.Biz that Shadow of the Tomb Raider cost north of a 100 mil to develop and another 35 mil to market. And yet, the complete ‘Croft Edition’ of the game was 34 percent off in just about a month later.

Adding context to this is the livestream that Embracer held to address the purchase, framing it mostly as the opportunity to add the likes of Tomb Raider, Deus Ex and more to its back catalog of B-tier cult classics and mid-budget fan favorites. During the stream, Anfossi revealed that the total lifetime sales of Deus Ex Human Revolution and Deus Ex Mankind Divided was 12 million. Big numbers are big, but those are rookie numbers compared to the Borderlands franchise which has sold over 40 million units.

So while I, like many, was initially in shock over how little was being paid out to Shinra, I mean Square Enix, it’s dawned upon me that maybe Embracer is paying exactly what Crystal Dynamics, Tomb Raider, Eidos Montreal, Deus Ex and everything else are worth. The only reason to do that is if you want to give these studios and properties enough runway to take off.

That being said, I don’t really expect much from The Embracer Group’s leadership. Between its other subsidiaries like Coffee Stain Group and Koch Media, and respected developers like 4A Games (Metro) and Volition (Saints Row), it seems content for as long as they continue to generate several dozen streams of revenue for them rather than demand they all deliver blockbuster sales within a launch week.

2018’s Shadow of the Tomb Raider. One of many ‘disappointments’ for Square Enix, now the former owners of Crystal Dynamics.

For Eidos Montreal and Crystal Dynamics, that means they can expect to be left well enough alone for as long as they generate operational profits. That can be from anything like the continued sales of their back catalogs, making bank off of partnerships like the one that Crystal Dynamics has with The Initiative and Perfect Dark and succeed in future releases like the next Tomb Raider.

Embracer isn’t in the business of disassembling and liquidating things they’ve bought, they’re in the business of growing the biggest river of profit in gaming they can, and if that means having as many tributaries as possible so be it. What that means is that the future of Crystal Dynamics, Eidos Montreal and Square Enix Montreal (to be renamed, I suppose) is secure.

Sources: GamesIndustry.Biz, PC Invasion