Embracer Group has announced its intent to split into three separately listed companies through 2024 and 2025 in the most drastic restructuring effort since the company fell into financial hardship last year, and bringing an end to the megalithic IP and studio acquisition project of the last decade. Asmodee Group will split off this year, with “Coffee Stain & Friends” and “Middle-earth Enterprises & Friends” then splitting up in 2025.
These latter two company names will be decided in due course, with “Middle-earth Enterprises & Friends” being a part of the remaining Embracer structure, which will then be renamed.
“This move has been made with the intention to unleash the full potential of each team,” says Lars Wingefors, co-founder and Group CEO of Embracer Group. “This is the start of a new chapter, a chapter that I intend to remain part of as an active, committed, and supportive shareholder of all three new entities, with an evergreen horizon. This move towards three independent companies reinforces Embracer’s vision of backing entrepreneurs and creators with a long-term mindset, allowing them to continue to deliver unforgettable experiences for gamers and fans across the globe.”
The result will be three companies with loosely equivalent net sales and portfolios.
Acquired by Embracer in 2022, Asmodee is described as “a global leading tabletop games publisher and distributor”, and will feature 23 in-house studios and over 300 IPs including Ticket to Ride, 7 Wonders, Azul, CATAN, Dobble, Exploding Kittens, and licensed games based on The Lord of the Rings, Marvel, Game of Thrones, Netflix, Lego and Star Wars.
Coffee Stain & Friends will be engineered to lean toward indie games, A and AA premium games and free-to-play, with an emphasis on the high-margin and recurring revenues. It will included Coffee Stain (the indie publisher acquired in 2018) itself, Ghost Ship, Tarsier, Tuxedo Labs, THQ Nordic – surprisingly, since THQ Nordic was the original basis of Embracer – and Amplifier Game Invest, with F2P coming through Easybrain, Deca, CrazyLabs and Cryptic. That gives them IP including Deep Rock Galactic, Goat Simulator, Satisfactory, Wreckfest, Teardown, Valheim, and over 200 other IPs.
And finally, Embracer itself will then be Middle-earth Enterprises & Friends, which is to be “a creative powerhouse in AAA game development and publishing for PC and console.” Under this umbrella will be the Plaion publishing arm (formerly Deep Silver), Freemode, Dark Horse, and the studios at Crystal Dynamics, Dambuster Studios, Eidos-Montréal, Flying Wild Hog Studios, Tripwire, Vertigo Games, Warhorse Studios and 4A Games.
The Lord of the Rings is the biggest IP that this company will hold, but there’s also Dead Island, Killing Floor, Kingdom Come Deliverance, The Lord of the Rings, Metro and Tomb Raider.
Embracer had already spun-off Saber Interactive and sold Gearbox to Take-Two earlier this year.
All in all it feels like a damning indictment of the general plan of massive mergers and acquisitions that Embracer Group went on through the 2010s and early 2020s. The company simply got far too big in that time, gobbling up every studio and asset that it could while interest rates were low and the tech and entertainment industries could project to investors that they were in the growth stage of a business. However, while something like Netflix could shift from growth toward stronger monetisation, it never felt like Embracer really had an idea beyond buying more companies and adding them to its various publishing arms – often with caveats like Gearbox being tied to 2K Games via Borderlands, or the deal with Amazon to fund the next Tomb Raider game.
In the end, it seems that one big conglomerate was not the way to go, and several smaller (but still huge) companies doing their own thing gives better chances at survival.
Source: Embracer
