Note: Square Enix has denied the earlier Bloomberg report, but I think the points made below still stand true for the inevitable rumours recirculating further down the line.
Square Enix is reportedly being monitored ahead of a potential buyout, and while the Bloomberg Japan report doesn't give any indication as to who, a lot of people are speculating that 'moneybags Microsoft' could swoop - but I don't think it's all that simple.
It's acquisition season at the moment, with Microsoft hoovering up studios before investing $7.5 billion (with a 'B') dollars to buy Zenimax and bring Bethesda's portfolio of studios under its roof. We've also seen EA acquire Codemasters, and we've heard plenty more rumours besides. We're living in an age of mega-consolidation, folks, and on the surface at least, Microsoft throwing money at Square Enix, Bethesda-style, makes sense.
This is a beloved Japanese publisher, with the kind of IP that transcends gaming. Square Enix holds the IP for Tomb Raider, Dragon Quest, Deus Ex, Just Cause, and, of course, Final Fantasy. Those are the kinds of cross-media brands that companies dream of, and the company's current market cap of under $7 billion dollars almost looks like a bargain when you consider the various merchandising opportunities.
Of course, it's well documented that Microsoft has struggled to break ground in Japan compared to the likes of Sony and Nintendo – ostensibly with a 'home team' advantage and the better understanding of Japanese culture that comes with that. Swooping in and securing huge franchises, and potentially tying them to Game Pass, could be a huge move.
And yet, it's not quite so cut and dry. Square Enix has a long and storied history with PlayStation, for one – a relationship that continues to this day. Microsoft spent $7.5 billion dollars on Bethesda, and that company's next couple of games (Deathloop and Ghostwire Tokyo) won't touch an Xbox console for some time.
With Square Enix already having the likes of Final Fantasy 7: Intergrade, Final Fantasy 16, and Forspoken tied in as PlayStation exclusives, does it behove Microsoft to drop that much money knowing their investment may not be repaid for a while? I'm no expert, but in my mind, if you've dropped $7.5 billion on one company that hasn't released a game since the acquisition, are you likely to almost double that investment in the hopes that Bethesda and Square Enix both churn out great games AFTER they've finished their contractually-obligated Sony projects?
Bethesda may actually be more key to any further acquisitions than at first anticipated. Microsoft has explained that Bethesda will, in many ways, operate under its own banner as a publishing arm of Microsoft as a whole. This would ensure that Microsoft would have top-level updates on what goes on, but that Bethesda's studios will work with relative autonomy.
With that in mind, could we see a situation where a Square Enix (or similar) is purchased to sit alongside Bethesda and Xbox Game Studios as a third "pillar"? Even then, I don't see it.
Microsoft currently has 23 first-party studios, ranging from Bethesda studios like Arkane to Mojang developer Minecraft and the likes of Double Fine. That's a huge roster of talent. For comparison, Sony's current first-party lineup is comprised of thirteen studios, although Japan Studio has been cut down and there are a trio of non-development teams, too. That's a big difference, and while adding Square Enix to its portfolio would undoubtedly strengthen the Xbox ecosystem, there comes a point where hoovering up publishers just becomes a bad look, regardless of what side you're on.
So, will Microsoft buy Square Enix? I can't see it happening, but then if you'd told me Microsoft was going to buy Bethesda, I'd have said the same thing.