Sony Corporation has decided it no longer wants a minority stake in Final Fantasy publisher Square Enix, so the company is selling 9.52 million shares to investment company SMBC Nikko Securities. The shares in question are directly owned by its gaming subsidiary Sony Computer Entertainment (SCE) and account for 8.25 percent of Square Enix' total shares. That makes SCE the third principal shareholder in Square Enix. The number one shareholder is Enix founder Yasuhiro Fukushima, who retains 23.6 million shares, accounting for 20.47 percent of company shares.
Sony expects to make 4.8 billion yen ($47 million) in profit from the sales and will record that as "other income" in its financial report. The company says it will disclose the final sale price tomorrow, when it releases its forecast for the 2014 fiscal year ending on March 31, 2015. Sony Corporation will be releasing its full-year earning report for the fiscal year that ended on March 31, 2014 on May 14, 2014.
So what does this mean for Sony and Square Enix? For Sony, it's a continuation of its current corporate strategy to slim down. The company has already sold its VAIO PC division to investment fund Japan Industrial Partners, with the deal to be completed in July of this year. At the same time as the announcement of the VAIO sales, Sony also revealed that it was splitting off its TV business into a separate subsidiary. That change is also expected to be complete by July 2014.
So for Sony, getting rid of these Square Enix shares is smart. While, Square Enix stock recently hit an five-year high (3,050 yen/$29.83) on January 28, 2014, that number is still down from the all-time high in 2000 and in the same range as the stock's average from 2004 to 2008.
While Square Enix has seen a return to profitability in its last two quarterly financial reports, I doubt the publisher is as much of a feather in the cap for Sony as it was in 2001. That was the year when Sony purchased a 18.6 percent stake in Squaresoft, becoming the number two shareholder in the company. That was two years before the Squaresoft and Enix merger and followed Squaresoft's successful releases of Final Fantasy VII, VIII, and IX for Sony PlayStation. That same year, Final Fantasy: The Spirits Within launched at the box office and flopped. Sony helped produce the film.
Sony lacked controlling interest in Square Enix, so it could not force the publisher to develop games only for Sony platforms. When it became unprofitable for the publisher to release its biggest titles on a single platform, Square Enix probably started to look less enticing to Sony.
For Square Enix, the company may take a stock hit or boost on the announcement of Sony's sell off; it just depends on if investors see the move as freeing or a lack of confidence by Sony. The stock sale just puts more of Square Enix in the hands of investment firms and banks. SMBC Nikko Securities joins other faceless entities like Fukushima Planning, State Street Bank, and Japan Trustee Services Bank. For gamers and Square Enix proper, very little should change. That means you shouldn't expect to see Square Enix throwing off the shackles and announcing a Wii U exclusive or for Final Fantasy XV to become a completely different game.