Square Enix looking to sell stakes in its studios, new report claims

This follows the release of the company's latest financial results.

Image via Square Enix

Just after the release of its latest financial results, a new report suggests Square Enix is considering sellling stakes in its studios.

As per MST financial analyst David Gibson, who was part of an internal conference call after the release of Square Enix’s latest financial results this Q1 2023, the studio is reportedly looking to sell stakes in its studios “to improve capital efficiency.” He also mentioned some of the companies that might be interested, including Sony, Tencent, and Nexon.

With this, Gibson pointed out that Square Enix could be getting $1.4 billion from the recent sale to Embrace Group. This led to him calling the company’s decision to sell stakes “extraordinary” since Square Enix should have made money to suffice all its expenses.

“Square Enix capitalised game dev costs are currently running at $840 million,” Gibson said. “But post the Crystal Dynamics / Eidos sale the company will have $1.4 billion in cash and zero debt, which is plenty to fund expanded game investment and not sell down stakes in its studios.”

The latest financial results report by Square Enix showed it made $561.7 million in overall net sales last Q1 2022. This is down by 16 percent compared to the company’s earnings last year in the same period listed at $665.4 million. A lower operating income was also recorded, which went down from $129.9 million last year to $108 million this year during the same quarter.