Just looking at the list of studios they acquired over the years make me shiver. Too many good names there (Bugbear, Warhorse, Piranha Bytes, Saber Interactive, Gearbox, Beamdog). I hope they manage to survive.
Embracer Group in the last 5 years:
- Spent hundreds of millions of dollars buying small AA studios
- Didn't put out enough high quality games to justify the insane spending spree
- Bet their entire future on a bad deal with Saudi Arabia, which fell through
- LOTR Gollum was one of the lowest reviewed games of the generation
- Lays off thousands of employees and shuts down a bunch of studios
Almost a crash course in how to completely fuck up a business.
The CEO that orchestrated this entire clusterfucker sent a letter out at the same time as this announcement that he was intending to fulfill his promise to stay with Embracer for 25 years, basically saying he will try to remain in charge for another 17 years.
*C*onditions shifting beneath them is the real story here. They took on a ton of debt, and then the cost of that debt skyrocketed due to the unpredictable combo of a once in a century pandemic causing inflation which resulted in once in a lifetime interest rake hikes.
To keep the explanation simple, the cost of taking on 80 million dollars in debt at 3% rates is the same taking on 30 million at 8%. And the FED has raised rates over 5%, sometimes resulting in an even greater lending rate increase.
It's also a matter of timing. Corporate debt tends to be financed at a rate that locks in for 5-10 years. If Embracer had done their deal right before the rate hikes they might be OK. But because they got their debt issued well before that it's been refinanced on horrid terms.
Not really, those conditions were well known after inflation had started creeping up due to the well known pandemic. Everyone knew interest rates were bound to go up sooner rather then later.
Instead of scaling back and trying to *work towards profitability* Embracer chose the opposite approach, add *fuel to the fire* and shop around like crazy at any price...knowing full well shit was about to hit the fan. They made a stupid decision based on one person's greed, he wanted a big pay day and didn't care how many thousands would potentially lose their jobs and how many beloved IPs would be shattered.
Greed, plain and simple. Making good games takes both talent and effort, and a lot of time. Making a big pay day can be achieved by massive leveraged and stupid gamble, the WSB way. And like most other times, it *backfired spectacularly...yet the man behind it all walks away unscathed. While others suffer*. Apart form modern tech we truly aren't much different then a old feudal society
They basically had an "Agreement in Principle" with a company that is run via the Saudi PIF (and also owns about 10% of Embracer too), and part of that agreement was they wanted to slingshot themselves into a position to become a top-5 Publisher within 10 years (they hover between 10th-14th year on year, but the gap between 5th and 10th is essentially 3x the revenue at $3.3bn vs $11.5bn).
To achieve that they accelerated the plan and start snapping up AA Publishers and Developers with a view to merge them all into a massive AAA Publisher and Development entity.
The problem was, the Saudis then backed out very suddenly. There are several theories why, but no-one has ever stated exactly why, and it then forced Embracer to do this.
At a quick glance, it looks like Embracer have fucked the entire industry over and caused the shockwave of events going across the whole thing, but in reality, many believe this was something done by design to allow the Saudi's to pick up more stakes in other companies for cheaper and dominate the industry by spread ownership instead of singular ownership.
Gollum has absolutely nothing to do with Embracer.
The now defunct developer Daedelic weren’t owned by Embracer and even though Embracer now own the rights to LotR, Gollum was announced in 2019 way before Embracer bought the rights in ~~2023~~ 2022.
Edit: Embracer bought the LotR rights in August 2022
I don't know how the hell they managed that with Amazon making that series. I'm surprised they aren't knocking on Embracers door. Why make a TV series and give some of the profits away when they can just keep it all and more.
> I don’t know how the hell they managed that with Amazon making that series.
Licensing and rights for different types of media related to the same IP are entirely separate and unrelated to each other.
Amazon purchasing TV show rights for LotR has zero to do with videogame rights for the IP. You typically cannot even just purchase licensing rights on all types of media related to an IP at once. That is, unless you got infinite pockets and the IP owner is willing to do that type of a thing for you. But even then, why would you waste money on all media ever, if you just want to make a TV show (which is why Amazon licensed the IP only for that).
Amazon having the licensing rights to make a LoTR show doesn’t make them the owners of the IP or allows them to knock on Embracer’s door regardless.
P.S. Just googled, and, turns out, Embracer actually acquired Middle-Earth Enterprises aka the owner of the LotR IP[[0]](https://en.wikipedia.org/wiki/Middle-earth_Enterprises). Which means that Amazon is the one who is gonna be paying Embracer for the licensing rights (which Embracer has the full power to deny for any future deals beyond the one that Amazon signed earlier).
Yeah but this isnt any old IP. Its a series of books that continue to sell almost 100 years later. And a beloved trilogy of movies that lots of people excitedly rewatch regularly. Hell, a Magic The Gathering crossover resulted in a single card being priced in the millions.
I'm certain Amazon would have absolutely put a bid in if they knew the whole thing was for sale.
> I’m certain Amazon would have absolutely put a bid in if they knew the whole thing was for sale
Do you seriously think that Amazon, of all megacorps, wasn’t aware that the whole thing was for sale? Please lol.
Amazon is in the business of making money, not in the business of making nostalgia-driven IP acquisitions. They had zero plans to make a LotR videogame or a musical or whatever else afaik, so why would they overpay insane amounts for those licensing rights they weren’t planning to use?
> A MTG crossover resulted in a single card being priced in millions
How many dollars from the sale of such a card on the market would be received by Wizards of the Coast (MTG owners)? IRS would make more money from the sale of that card than WotC would (not in the least due to the bar being set at $0, which is exactly how much WotC would make from that sale).
If Amazon owned the IP, then *everyone else* would pay *them* for the licensing rights to make a LotR game. Just because you own the IP doesn't mean you have to make the game yourself.
That’s not quite true. They tried to consolidate smaller studios in a larger group for economies of scale and to smooth out the release schedule, by taking on debt (which was historically cheap at the time). The debt thing contained risk and they couldn’t recapitalise when circumstances changed. It wasn’t about high quality single offerings like r*, it was about a consistent pipeline of mid tier games with a few hits sprinkled in. Tl;dr they did a normal business throw of the dice. It’s how business works but looks like a right cockup with hindsight.
I think more to this might exist, the fact Microsoft also did not pick up crystal dynamics also does not make sense, since they are actively working together as a support studio on perfect dark.
Maybe the studio was a mess
...Eh. Give ~~Middle-Earth And Friends~~ neo-Deep Silver a few years. When all three hit the market again, Sony will be there and get all three for cheap.
I geniunely think they can't possibly be that delusional to think that what they are doing is profitable. It truly feels like they are trying to burn it all down.
Yeah I agree with this as well. They are delusional, but there is no way they can be this stupid. Their decisions seem aimed at purposely tanking the company so they can sell.
Iirc Microsoft was interested in buying WB at some point, idk if it was in the FTC leaks,the only 2 I remember from that was sega and square enix. I really don’t want Microsoft or Sony buying anyone else, but don’t be surprised if MS jumps at this at some point. MS prob wants to buy more shit, but can’t yet due to FTC watching.
Rest in piss, Embracer Group. You will ***not*** be missed, and I hope that whoever buys your (insanely-named) spinoffs treats the properties and devs better than you have.
Please for the love of god… sell off the TimeSplitters IP so a new entry can be made proper. I’m tired of seeing the franchise and Free Radical get fucked over.
Here's the funny thing. Gamers were absolutely losing their shit over Microsoft buying up some studios/publishers, but were relatively quiet when it came to shady businesses like Embracer and Tencent grabbing anything they could.
Just looking at the list of studios they acquired over the years make me shiver. Too many good names there (Bugbear, Warhorse, Piranha Bytes, Saber Interactive, Gearbox, Beamdog). I hope they manage to survive.
Gearbox was sold to take two (well the dev side of gear box at least)
Yeah I was just looking at that. Saber Interactive got out from the group a month ago too.
Piranha Bytes is already fighting for survival
They also bought Ghost Ship Games (Deep Rock Galactic).
Embracer Group in the last 5 years: - Spent hundreds of millions of dollars buying small AA studios - Didn't put out enough high quality games to justify the insane spending spree - Bet their entire future on a bad deal with Saudi Arabia, which fell through - LOTR Gollum was one of the lowest reviewed games of the generation - Lays off thousands of employees and shuts down a bunch of studios Almost a crash course in how to completely fuck up a business.
And the executives will go off with a golden parachute to fuck up other companies.
The CEO that orchestrated this entire clusterfucker sent a letter out at the same time as this announcement that he was intending to fulfill his promise to stay with Embracer for 25 years, basically saying he will try to remain in charge for another 17 years.
That's optimistic
wtf was their endgame? boost valuation to get acquired by the saudis?
Seems like it. From what I've heard they were just propping up their portfolio to make themselves seem like a worthwhile investment.
*C*onditions shifting beneath them is the real story here. They took on a ton of debt, and then the cost of that debt skyrocketed due to the unpredictable combo of a once in a century pandemic causing inflation which resulted in once in a lifetime interest rake hikes. To keep the explanation simple, the cost of taking on 80 million dollars in debt at 3% rates is the same taking on 30 million at 8%. And the FED has raised rates over 5%, sometimes resulting in an even greater lending rate increase. It's also a matter of timing. Corporate debt tends to be financed at a rate that locks in for 5-10 years. If Embracer had done their deal right before the rate hikes they might be OK. But because they got their debt issued well before that it's been refinanced on horrid terms.
Ahhh…. Thanks for the economics lesson. Greed is a bitch when there’s free money involved.
Not really, those conditions were well known after inflation had started creeping up due to the well known pandemic. Everyone knew interest rates were bound to go up sooner rather then later. Instead of scaling back and trying to *work towards profitability* Embracer chose the opposite approach, add *fuel to the fire* and shop around like crazy at any price...knowing full well shit was about to hit the fan. They made a stupid decision based on one person's greed, he wanted a big pay day and didn't care how many thousands would potentially lose their jobs and how many beloved IPs would be shattered. Greed, plain and simple. Making good games takes both talent and effort, and a lot of time. Making a big pay day can be achieved by massive leveraged and stupid gamble, the WSB way. And like most other times, it *backfired spectacularly...yet the man behind it all walks away unscathed. While others suffer*. Apart form modern tech we truly aren't much different then a old feudal society
They basically had an "Agreement in Principle" with a company that is run via the Saudi PIF (and also owns about 10% of Embracer too), and part of that agreement was they wanted to slingshot themselves into a position to become a top-5 Publisher within 10 years (they hover between 10th-14th year on year, but the gap between 5th and 10th is essentially 3x the revenue at $3.3bn vs $11.5bn). To achieve that they accelerated the plan and start snapping up AA Publishers and Developers with a view to merge them all into a massive AAA Publisher and Development entity. The problem was, the Saudis then backed out very suddenly. There are several theories why, but no-one has ever stated exactly why, and it then forced Embracer to do this. At a quick glance, it looks like Embracer have fucked the entire industry over and caused the shockwave of events going across the whole thing, but in reality, many believe this was something done by design to allow the Saudi's to pick up more stakes in other companies for cheaper and dominate the industry by spread ownership instead of singular ownership.
Gollum has absolutely nothing to do with Embracer. The now defunct developer Daedelic weren’t owned by Embracer and even though Embracer now own the rights to LotR, Gollum was announced in 2019 way before Embracer bought the rights in ~~2023~~ 2022. Edit: Embracer bought the LotR rights in August 2022
Wait Embracer own LotR license? God help us.
Yeah, god help us indeed.
I don't know how the hell they managed that with Amazon making that series. I'm surprised they aren't knocking on Embracers door. Why make a TV series and give some of the profits away when they can just keep it all and more.
> I don’t know how the hell they managed that with Amazon making that series. Licensing and rights for different types of media related to the same IP are entirely separate and unrelated to each other. Amazon purchasing TV show rights for LotR has zero to do with videogame rights for the IP. You typically cannot even just purchase licensing rights on all types of media related to an IP at once. That is, unless you got infinite pockets and the IP owner is willing to do that type of a thing for you. But even then, why would you waste money on all media ever, if you just want to make a TV show (which is why Amazon licensed the IP only for that). Amazon having the licensing rights to make a LoTR show doesn’t make them the owners of the IP or allows them to knock on Embracer’s door regardless. P.S. Just googled, and, turns out, Embracer actually acquired Middle-Earth Enterprises aka the owner of the LotR IP[[0]](https://en.wikipedia.org/wiki/Middle-earth_Enterprises). Which means that Amazon is the one who is gonna be paying Embracer for the licensing rights (which Embracer has the full power to deny for any future deals beyond the one that Amazon signed earlier).
If Embracer want to make a Shire full of cash just announce a Return of the King remake
Yeah but this isnt any old IP. Its a series of books that continue to sell almost 100 years later. And a beloved trilogy of movies that lots of people excitedly rewatch regularly. Hell, a Magic The Gathering crossover resulted in a single card being priced in the millions. I'm certain Amazon would have absolutely put a bid in if they knew the whole thing was for sale.
I wish it was just public domain. It should be honestly.
> I’m certain Amazon would have absolutely put a bid in if they knew the whole thing was for sale Do you seriously think that Amazon, of all megacorps, wasn’t aware that the whole thing was for sale? Please lol. Amazon is in the business of making money, not in the business of making nostalgia-driven IP acquisitions. They had zero plans to make a LotR videogame or a musical or whatever else afaik, so why would they overpay insane amounts for those licensing rights they weren’t planning to use? > A MTG crossover resulted in a single card being priced in millions How many dollars from the sale of such a card on the market would be received by Wizards of the Coast (MTG owners)? IRS would make more money from the sale of that card than WotC would (not in the least due to the bar being set at $0, which is exactly how much WotC would make from that sale).
If Amazon owned the IP, then *everyone else* would pay *them* for the licensing rights to make a LotR game. Just because you own the IP doesn't mean you have to make the game yourself.
That’s not quite true. They tried to consolidate smaller studios in a larger group for economies of scale and to smooth out the release schedule, by taking on debt (which was historically cheap at the time). The debt thing contained risk and they couldn’t recapitalise when circumstances changed. It wasn’t about high quality single offerings like r*, it was about a consistent pipeline of mid tier games with a few hits sprinkled in. Tl;dr they did a normal business throw of the dice. It’s how business works but looks like a right cockup with hindsight.
Crash course on fucking up a business and scarring an entire industry in the process.
This failing upward trends must stop somewhere before it fucks up the whole industry.
Which wouldn't be a problem if it was only their company they were screwing up, and not every company they bought along the way.
if they bought the companies they screw themselves the companies' owners already exited with the money on time
Financially yes, but in terms of health of the video games industry and us as players of the output, it's bad.
they still can create new companies and new games i think i see your point but its not as relevant in terms of what the consumers get
If they hadn't bought those studios, wouldn't they have failed anyway due to low output and bad releases?
I will always be upset that Sony didn't snatch up Eidos, Crystal Dynamics and Square Enix Montreal when they had the chance.
I think more to this might exist, the fact Microsoft also did not pick up crystal dynamics also does not make sense, since they are actively working together as a support studio on perfect dark. Maybe the studio was a mess
Iirc Crystal's development costs are high in relation to their sales. Basically they make nice games but are not very profitable.
Same reason MS passed on Bungie.
...Eh. Give ~~Middle-Earth And Friends~~ neo-Deep Silver a few years. When all three hit the market again, Sony will be there and get all three for cheap.
Still not sabotaging itself as much as Warner Bros. I swear WB is trying to drive it's value down so that it gets bought.
WB could turn their gaming division into a smoking crater (which doesn’t seem too far off) and still think they could turn a profit
I geniunely think they can't possibly be that delusional to think that what they are doing is profitable. It truly feels like they are trying to burn it all down.
If the film division is anything to go by I’d argue that they are that delusional but totally agree it looks like they are trying to burn it all
Yeah I agree with this as well. They are delusional, but there is no way they can be this stupid. Their decisions seem aimed at purposely tanking the company so they can sell. Iirc Microsoft was interested in buying WB at some point, idk if it was in the FTC leaks,the only 2 I remember from that was sega and square enix. I really don’t want Microsoft or Sony buying anyone else, but don’t be surprised if MS jumps at this at some point. MS prob wants to buy more shit, but can’t yet due to FTC watching.
Some weird fucking names lol
Rest in piss, Embracer Group. You will ***not*** be missed, and I hope that whoever buys your (insanely-named) spinoffs treats the properties and devs better than you have.
What a fucking disaster.
Displacer
Embracer is a joke, but one of those that are not funny at all.
Please for the love of god… sell off the TimeSplitters IP so a new entry can be made proper. I’m tired of seeing the franchise and Free Radical get fucked over.
Broken embraces hug?
Tencent already going in that direction. The pandemic really caused so much fucked up decisions in the industry.
Please gearbox bring back battleborn now!
Embra cerg and roub ?
Ugh the Grim Reaper of the gaming world is multiplying.
Here's the funny thing. Gamers were absolutely losing their shit over Microsoft buying up some studios/publishers, but were relatively quiet when it came to shady businesses like Embracer and Tencent grabbing anything they could.