Cave to acquire Monster Strike developer for around $40 million

Written by. Nick Mosier based on the original Japanese article (original article’s publication date: 2022-06-04 14:51 JST)

Cave Interactive has revealed that they will be acquiring Deluxe Games (PDF Link). The 5-billion-yen (roughly $38 million) deal will see Cave take possession of all shares of Deluxe Games, making the Monster Strike developer a subsidiary of the long-standing shmup developer.

Cave is a Japanese video game development studio that was established in 1994 and known for their shoot ‘em up games such as the DoDonPachi series, Mushihimesama, and Deathsmiles. The company is currently developing an officially licensed Touhou Project title. Deluxe Games, the company being acquired, is the developer behind the hit game Monster Strike and a company with a proven track record operating mobile games.

According to the announcement from Cave, the acquisition will be brought up during the company’s regular August shareholders meeting. If a resolution is reached, all shares of Deluxe Games will be transferred to Cave, making them a subsidiary of the company.

Cave says the main purpose behind the acquisition is securing personnel. Due to the impact of COVID-19, Cave says they’ve had a difficult time securing developers for their projects including the officially licensed Touhou Project game and that subsidiary FIVESTAR BANK is also in a tough situation.

The company aims to leverage having Deluxe Games’ content and personnel under their umbrella to improve business performance. With Cave being a publicly listed company, they plan on offering stock options to employees and staff at Deluxe Games to avoid an outflow of staff members.

One point that is especially interesting is Yoshiki Okamoto’s deep ties to both companies. During his time at Capcom, Okamoto was involved with series such as Street Fighter and also had a hand in the development of Monster Strike. While currently a board member of Cave, he is also a member of Deluxe Games.

According to the aforementioned document, 2 of the 3 shareholders at Deluxe Games that would be transferring their shares are direct relatives of Okamoto and hold a majority stake in the company. One of the reasons they mentioned as to why Cave was chosen to receive the stocks, as within Deluxe Games’ executive leadership, Okamoto is a known figure that they believe to be trustworthy.

Then there’s the matter of Cave’s recent troubles leading to the acquisition. In the 5 fiscal years between June of 2016 and May of 2021, Cave has been in the red with worsening business performance. They’ve released multiple titles that ended their service early due to failing to attract a player base. While their earnings have centered around the shooting game Gothic wa Mahou Otome, they’ve currently been unable to produce another hit title.

As of the 3^rd quarter of the fiscal year ending May 2022, Cave holds a cash equivalent of around 1.07 billion yen (roughly $8 million), which isn’t enough for the 5 billion yen needed to acquire Deluxe Games. The company will divide the payment into 8 installments, with the first being a payment of 1 billion yen.

When considering the connection between the companies, we can see that Okamoto is likely a driving force behind the acquisition. It will be interesting to see how this impacts upcoming games from both companies.