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Embracer Group output strategy | Discussion

Abzeronow

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Embracer Group is now of the largest European video games publishers, and their just announced acquisition of Eidos, Crystal Dynamics and Square Enix Montréal along with various IP like Tomb Raider which is expected to conclude this summer adds to the global reach of this publisher. The corporation as it exists was founded in 2011 as a holding company for Swedish studio Nordic Games (which published We Sing for the Nintendo Wii in 2009, was made so the Wii would have its own version of the PlayStation exclusive SingStar series). Nordic Games would acquire JoWooD in 2011 and THQ in 2013, later acquiring the THQ trademark in 2014 and would change their name to THQ Nordic AB in August 2016 (Nordic Games GmbH became THQ Nordic GmbH). Nov. 2016, THQ Nordic had its IPO and became a public company listed on NASDAQ First North stock exchange. In February 2018, THQ Nordic acquired Koch Media Holding which owned Koch Media and Deep Silver. In November 2018, they acquired Coffee Stain Studios, giving THQ Nordic a "third leg" (THQ Nordic and Koch Media being the first two). September 2019 is when THQ Nordic AB assumed their current name Embracer Group. Their fourth direct subsidiary was acquired when they bought Goodbye Kansas Game Invest and rebranded them as Amplifier Game Invest in January 2020. February 2020 had Embracer acquire Saber Interactive, their fifth direct subsidiary. In August 2020 among other acquisitions, Embracer bought DECA Games, their sixth direct subsidiary. February 2021 had Embracer acquire The Gearbox Entertainment Company, which became their seventh major holding label and Easybrain, their eighth. December 2021 saw the acquisition of Asmodee, their ninth major label and of Dark Horse Media, which became its tenth major division.

Embracer takes a multiplatform approach under their many divisions, releasing games for Playstation, Xbox and Nintendo Switch as well as PC. Their THQ Nordic division acquired the Nickelodeon license in 2018, after Activision's license had expired. Under Saber Interactive, Aspyr (which was acquired February 2021) has been re-releasing LucasArts games for modern consoles (including the questionable decision to release the Wii version of Star Wars The Force Unleashed on the Nintendo Switch rather than the Xbox 360 version or the PS3 version). The Dark Horse acquisition also gives potential for new licensed video games based on Dark Horse IP. I imagine their next gen offerings will be on PS5, Xbox Series and whatever Drake is called (Switch 2? )

One of the bigger controversies is that in February 2019, THQ Nordic's PR director hosted an Ask Me Anything on 8chan, a notorious site associated with child pornography and hate speech. After widespread criticism, Lars Wingefors, the CEO of Embracer had apologized for the event in March 2019. Some people on other forums have indicated that they still won't buy games from THQ Nordic. I, myself, have yet to buy a THQ Nordic game. I intend to take a neutral stance on the company, as I feel that would best facilitate discussion, but in the interest of disclosure, this feels like something that damaged their reputation with me. Last year, Koch Media had a livestream as part of Summer Games Fest. It was definitely panned by those on Twitter and from some in gaming media, but I still commend the effort they made in attempting to show the devs behind some of the games they publish. Their heart was in the right place, they just needed some editing to not make it feel so long and uninteresting. I guess we'll see if Koch Media decides to do another direct-style livestream this year in the absence of E3.

Embracer clearly is not done with acquisitions. How will this effect the European gaming industry and the global one? Does this global consolidation of video game companies harm consumers or game developers? What will be the next IP that sees a revival under the huge Embracer umbrella? Does Playstation eventually get the better version of Star Wars: The Force Unleashed ? I guess only time will tell.
 
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at this rate they might as well have their own subscription service or do the other thing of putting it on someone's else XGP or PS+
Honestly longer term I see Embracer being a prime acquisition target due to the volume of their legacy software library. It's something that's going to be more and more in demand as the Service Wars heat up.
 
at this rate they might as well have their own subscription service or do the other thing of putting it on someone's else XGP or PS+
That would be a rights nightmare, while they own a lot of studios a lot of them dont self-publish some of their games and rely on other publishers to do so (Gearbox Boderlands and Take Two for example) getting all the publishers involved on Embracer games is almost impossible a lot of them would be missing.
 
After the collapse of the Ubisoft, Europe needed a big gaming publisher.

However, Embracer isn't really that. They are essentially a less diversified Tencent, a holdings company that has investments or ownership of various gaming studios, with no centralised platform, dev environment, ethos or future.

Iirc they often fund themselves by selling their debt through bonds, to then acquire studios. Their profit margins are extremely thin, like Ubisoft, so what happens in a rough period where debt payments become greater than revenue or unsustainable?

At least its better than the same 3 pubs buying up everyone: EA, T2 and Epic.
 
My big confusion with Embracer is their absolute inefficiency, because they’re not a publisher in the strictest sense, they’re a holding corporation. They now own… what, 4 or 5 separate publishing brands that operate independently with their own separate management structures? There are some real efficiencies to be had with their business without losing the flexibility they currently enjoy.

EDIT: That said, I genuinely appreciate that they seem committed to smaller-scale game production, rather than trying to roll all their current IPs into the big-budget AAA space.
 
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That's a certainty, MS and Sony will be bidding for the timed exclusivity of the next Tomb Raider.

If it ends up with Sony timed exclusive , I expect Eidos will try to squeeze an EGS PC timed exclusive too , the Sony/EGS combo is popular , but I don't recall I saw much MS/EGS Combo outside of The Outer World which was a special case due to Obsidian likely doing a deal with Epic before they were acquired by MS and it was released on MS Store alongside it , otherwise Most MS time exclusives also releases on MS Store , which makes Epic exclusivity less effective
 
If it ends up with Sony timed exclusive , I expect Eidos will try to squeeze an EGS PC timed exclusive too , the Sony/EGS combo is popular , but I don't recall I saw much MS/EGS Combo outside of The Outer World which was a special case due to Obsidian likely doing a deal with Epic before they were acquired by MS and it was released on MS Store alongside it , otherwise Most MS time exclusives also releases on MS Store , which makes Epic exclusivity less effective
MS/later GP addition would be an option also and wouldnt lose PC sales at launch,seems the best idea imo if they have to take a deal imo
 
MS/later GP addition would be an option also and wouldnt lose PC sales at launch,seems the best idea imo if they have to take a deal imo

Another possibility that doesnt leave behind any market at launch and gets good revenue at launch is the Gamepass at launch approach , I think it is the most harmless approach that makes the developer gets the most secure money without locking a market behind at launch , I dont think A game like Tomb Raider will be a Day 1 Gamepass game , but who knows how things will be when Tomb Raider releases after a few years
 
My big confusion with Embracer is their absolute inefficiency, because they’re not a publisher in the strictest sense, they’re a holding corporation. They now own… what, 4 or 5 separate publishing brands that operate independently with their own separate management structures? There are some real efficiencies to be had with their business without losing the flexibility they currently enjoy.

EDIT: That said, I genuinely appreciate that they seem committed to smaller-scale game production, rather than trying to roll all their current IPs into the big-budget AAA space.
Embracer is essentially an investment firm yeah, with a ton of independent but co-operating subsidiaries underneath. What I really like about Embracer is that it's getting on all facets of gaming and entertainment. They have super-small indie productions, AA, AAA, live service, PC, console, mobile, etc, etc. They're everywhere. And now they've expanded into board gaming and comics as well. It's only a matter of time before other media will be added to the mix. It's all about IP and interactive entertainment.
 
Another possibility that doesnt leave behind any market at launch and gets good revenue at launch is the Gamepass at launch approach , I think it is the most harmless approach that makes the developer gets the most secure money without locking a market behind at launch , I dont think A game like Tomb Raider will be a Day 1 Gamepass game , but who knows how things will be when Tomb Raider releases after a few years
I would assume that Microsoft would put less & less emphasis on 3rd party GamePass offerings (especially Day 1 deals) as their own internal studio count increases over the upcoming years. At some point, GamePass will offer stable amount of new content from the internal studios alone - or at least this seems where Microsoft is heading.
 
Deus Ex HRDC on Switch (and I guess current PS/Xbox) is the only thing I'm really trying to will into existence.
 
I would assume that Microsoft would put less & less emphasis on 3rd party GamePass offerings (especially Day 1 deals) as their own internal studio count increases over the upcoming years. At some point, GamePass will offer stable amount of new content from the internal studios alone - or at least this seems where Microsoft is heading.
One thing that Embracer might do is further partner with platform holders on exclusive games to lessen the risk for their studios especially the less profitable ones . I believe KOTOR remake for the PS5 is being developed by an internal Embracer studio while being backed by Sony and one of their future internal teams will be working on Perfect Dark for Microsoft (Embracer seems to want this to continue). For this reason I could envision Microsoft funding the next Tomb Raider rather than simply signing a day 1 game pass deal if they were interested.
 
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It's difficult to tell what their long term strategy is because it's so decentralized (that level of freedom is part of the pitch when they acquire). The Company has something like 6 publishers but still chooses to partner with other external publishers for some of it's projects - sometimes because of contractual reasons, and sometimes (presumably) to mitigate against financial risk. Thus far, it has focussed on growing at all costs, and that doesn't seem to be slowing, although it might because their stock price lost it's momentum in 2021:

embrac06j2n.jpg


Previously, issuing new shares to raise money wasn't disruptive since everything was on the incline. They secured debt financing for part of the Eidos acquisition, although I don't know if that's just a single data point or the start of a new trend.


Coffee Stain is one of their best divisions, it seems to have chosen it's projects well - Satisfactory is internal, Deep Rock Galactic and Valheim were external (although they acquired the DRG developer). I expect they will also acquire the Valheim developers if they are interested in selling. For the rest of the company, it's pretty inconsistent, and sometimes it feels like their strategy (for as much as you can say they have one) is panning for gold. They are making a large number of small bets and hoping some pay off big time.


In the long term, I don't know what will happen if they hit hard times. For now I expect them to basically act as content brokers for the various forms of videogame welfare - platform exclusivity deals (Consoles, Epic) and content library deals (GP, PS+ etc) mostly. I don't know if or when they'll feel confident enough to stop seeking external publishers for some projects. That's probably going to require at least one major hit, and maybe several. I expect Eidos post-acquisition to either be externally published or take some kind of major deal to help fund those games.
 
Koch Media subsidiary Prime Matter will be having a stream on the 17th. The ending of the stream leaked apparently. Payday will be discussed in some form as well as a few other games.
 
Koch Media subsidiary Prime Matter will be having a stream on the 17th. The ending of the stream leaked apparently. Payday will be discussed in some form as well as a few other games.
It seems like it's all only updates on games that are already revealed (but in some cases not shown yet). Payday 3 won't be part of the show.


So far, I'm not enthusiastic about Prime Matter at all. The games they've published so far haven't been great. I hope some of the upcoming games are better.
 
Extremely long interview with CEO Lars Wingefors at GamesIndustry.biz today.
https://www.gamesindustry.biz/artic...r-and-transmedia-what-next-for-embracer-group

Covers a lot of topics, including:
- what they try to achieve with their M&A strategy
- the Eidos acquisition (Square Enix' western studios and IP)
- how Embracer sets its expectations for specific titles and IP
- Embracer's multimedia strategy that also currently covers TV, film, board games and comics
- and more
 


THQ Nordic is distributing the AEW video game which has a placeholder date of December 31, 2022. Will be on PS4/PS5, Xbox One/Series, Switch and PC.
 
There are remakes of Dead Space & Resident Evil 4 in January & March respectively to build up the action horror fanbase before it's arrival later in the year. Decent showing but one thing really stood out to me. Namely, when you ask for more arcade racers & three arrive from the same publisher. Even the names are similar. 'Candyman, Candyman, Candyman, Candyman...'
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'You were not content with the stories, so I was obliged to come.' Smashin' Extended Universe! Dat Crashing Crossover! Arcade Armageddon! 'What's the matter, THQ Nordic? Scared of something?' Playtest on steam for the Alpha version for Stuntfest. Wreckfest still getting post-launch support alongside a recent Switch port that impressed Digital Foundry. By far the main draw is Wreckreation, far more ambitious than prior releases since leaving Criterion Games. Last blog entry in 2020 had its open world racer tagged Dangerous Driving 2 (Alex Ward likes his movie references so I'm sure he'd approve). Be real interested to read interviews, know if this is what became of it & if so, how it has evolved over the years. 'It was always you THQ'. (edit: typo)
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Embracer just aquired the rights to Lord of the Rings like an average Tuesday, along with a bunch of other stuff.
 
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Any guess of which company that was acquired that cant tell us?
The total value of the deal is roughly 600 million $, so we're talking about a very small company, one of those we probably know by name but often forget.
The fact that it's undisclosed though may suggest it's instead a studio from another publisher company, which is what I'm betting on.

A WB studio? Another SE studio? (Luminous?) There may be a lot of dry branches that gaming publishers would gladly sell off right now
 
The total value of the deal is roughly 600 million $, so we're talking about a very small company, one of those we probably know by name but often forget.
The fact that it's undisclosed though may suggest it's instead a studio from another publisher company, which is what I'm betting on.

A WB studio? Another SE studio? (Luminous?) There may be a lot of dry branches that gaming publishers would gladly sell off right now
Based on the Tolkein estate acquisition from another company, my guess is Monolith Productions, makers of the recent AAA Middle-Earth games. WBD is trying to divest and that'd be a simple way to do so, especially if the Wonder Woman game they've been making isn't panning out as hoped.
 
It felt like after the Plaion shuffle and the issues with the KOTOR remake, something was going to break badly for Embracer. The $2 billion deal just seems like it would be bashing the dam, since a lot of Embracer's sustainability currently is investments for it to expand and acquire.
The Middle-Earth stuff seems to be their main saving grace though.
 
Embracer has definitely acquired too much too quickly, but I believe they could have built themselves up to a healthier position over the next couple years if the $2 billion deal didn't fall through. I'd like to know which company that was, because it sounds like they didn't handle things properly at all.
 
It felt like after the Plaion shuffle and the issues with the KOTOR remake, something was going to break badly for Embracer. The $2 billion deal just seems like it would be bashing the dam, since a lot of Embracer's sustainability currently is investments for it to expand and acquire.
The Middle-Earth stuff seems to be their main saving grace though.

The KOTOR remake implosion/cancellation made me certain we'd hear something like this, such a massive project collapsing is never a good sign.

Embracer also expanded way too rapidly. COVID boom definitely fueled them towards this path unless they had gotten extremely lucky.
 
I don't have time to make a thread (and maintain it), so here's some Embracer news for y'all:

Embracer to Close Studios, Cancel Games, and Lay Off Staff After $2 Billion Deal Falls Through​


Would really love to know wth happened with that mega deal.

This is why industry consolidation is a double-edged sword. On the surface it seems beneficial, but holding companies like Embracer are entirely dependent on rapid growth. When that rapid growth stalls for any reason, the blowback disproportionately affects the rest of the portfolio.
 
Looks like my original post about business inefficiency has come to a head, when one of major planks of their plans looks to be redundancy elimination. Maybe by 2024, they’ll be down to only operating 2 publishing arms with the others converted into strictly game studios.
 
I never understood the rationale behind Embracer's rapid growth, it always seemed unsustainable. Were they looking to
be an acquisition target for the megacorps?
You'd think that was the case, but they've become so unwieldy that I doubt any of the megacorps would buy them. Maybe Amazon because of the LOTR license and their cloud gaming aspirations. However, I think they would need to make a lot of changes to increase their appeal to potential acquirers.
 
I never understood the rationale behind Embracer's rapid growth, it always seemed unsustainable. Were they looking to become an acquisition target for the megacorps?
The rapid growth got expedited by COVID when they were filled with cash. Purchases like Koch Media, and CDE and Perfect World seem like they were extremely cheap but, seem to have added a fair bit of organizational cost and we start to see the excessive buys in early 2021 with Gearbox, Aspyr and Easybrain. I think the idea was Embracer was going offer devs for hire with Saber Interactive and IP licensing through Asmodee, Dark Horse and Middle Earth. Deca Games and Easybrain are for attempts to break into the mobile market. Most of the rest is traditional game publishing.
 
I'd have to look at the financials but I would almost be certain their operational cashflows were shit and not improving in any meaningful way. And that would suggest even if the $2 billion deal went through they wouldn't have been far off from needing to restructure and downsize. Company can't buy shit forever on a growth only model and not have any actual tangible operational plan. Some investors made out like bandits I imagine but no way was this anything approaching a sound strategy.
 
The crazy thing to me is this all happened after Dead Island 2 was a surprise hit for Embracer (granted the sunk costs of the 2 reboots are certainly a factor) and they also had a good lineup with a couple of safe hits coming up. Their position felt safer than before when they were just buying and putting out minor games.
 
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