What will Embracer sell next? | This Week In Business

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This Week in Business is our weekly recap column, a collection of stats and quotes from recent stories presented with a dash of opinion (sometimes more than a dash) and intended to shed light on various trends. Check every Friday for a new entry.

After six years of purchasing a variety of developers and publishers, Embracer Group this week confirmed its first sale. The company divested Saber Interactive, plus a number of the studios within that part of the group, to Beacon Interactive, a company formed by Saber co-founder Matthew Karch.

STAT | $247 million - The sale price for Saber Interactive

The deal will have come as no surprise – and not just because word of the sale began spreading earlier in the week. Embracer's struggles have been well documented by this point. The group's ongoing restructuring efforts aim to reduce a net debt of more than $1.5 billion, which it has accomplished so far by laying off more than 1,400 people in the space of nine months, and closing three studios: Saints Row developer Volition Games, reformed TimeSplitters team Free Radical Design, and Campfire Cabal, which had yet to release its first game.

All of the above only reduced Embracer's debt to $1.4 billion by the end of 2023, and the Saber sale just knocks another $205 million off that. But this is just the first of such deals that are expected in the coming months.

"As part of the restructuring program, Embracer still has a few larger structured divestment processes ongoing that could strengthen our balance sheet and further reduce capex." - Embracer CEO Lars Wingefors in the report released alongside the company's most recent financial results

So with Embracer already eyeing up ways to get the weight of its bloated group under control, let's take a look at the potential sales candidates that remain. While it can be hard to keep track of what has been acquired over the years – so hard that there's a Wikipedia page dedicated to it – I've broken things down according to the 11 operational groups that Embracer owns.

Very Important Disclaimer: I'm not a business analyst, and the following should in no way be construed as advice or a forecast. This will be an overview of Embracer's business and why it may or may not sell certain parts of it. If you do, for some reason, want advice from me, it would be: don't buy more things than you can afford to operate.

THQ Nordic

Internal studios: Alkimia Interactive, Appeal Studios, Ashborne Games, Black Forest Games, Bugbear, Experiment 101, Gate 21, Grimlore Games, Gunfire Games, Handy Games, Kaiko, Massive Miniteam, Metricminds, Mirage Game Studios, Nine Rock Games, Pieces Interactive, Piranha Bytes, Pow Wow Entertainment, Purple Lamp
Internal headcount: 1,017
Brands: Darksiders, Biomutant, Wreckfest, MX vs ATV, Destroy All Humans, Titan Quest, Kingdom of Amalur, Elex

While one of the largest segments of the Embracer Group, I think it's highly unlikely this would be sold – if only for its historical value. THQ Nordic is the very company that Embracer originally spun out of after Nordic Games (as it was originally known) purchased a boatload of THQ IP and eventually the brand after that publisher collapsed.

This is the heart of the Embracer Group, and it's the division handling some of the company's biggest upcoming releases – the revived Alone in the Dark, South Park: Snow Day, and so on. It's also seen some significant successes over the years, with Purple Lamp's SpongeBob SquarePants games selling millions of copies.

Most likely this group will be consolidated, with some of its studios merged together – something Wingefors said Embracer is looking into across the group. Sadly, this is likely to result in more layoffs but we can only hope fewer people are affected than have been so far.

Plaion

Internal studios: Dambuster Studios, Digix Art, Fishlabs, Flying Wild Hog, Milestone, Vertigo Games, Voxler, Warhorse
Internal headcount: 2,184
Brands: Dead Island, Saints Row, Metro, MotoGP, TimeSplitters

The second largest operating group within Embracer. Plaion has provided Embracer with some of its biggest AAA hits over the years, such as Metro Exodus and the revived Saints Row (granted, the latter struggled to meet expectations). If Embracer wants to operate in the AAA console and PC space, Plaion would be a valuable group to maintain.

And Plaion has already taken strides to streamline its own operations. Before the Embracer restructuring program even began, the company merged three publishing labels – Deep Silver, Prime Matter and Ravenscourt – under the parent brand, and has already suffered a studio closure in the form of Volition.

That said, divesting Plaion could go a long way to reducing operating costs, and the company has already shown it can operate for decades as an independent business back when it was Koch Media. Koch was one of Embracer Group's first major purchases, acquired for $149 million way back in 2018, but of all the segments of the company that could split away and continue to operate, Plaion perhaps has the strongest chance.

Gearbox

Internal studios: Gearbox Software, Gearbox Studio Quebec, Gearbox Studio Montreal, Cryptic, Lost Boys, Captured Dimensions
Internal headcount: 1,543
Brands: Duke Nukem, Homeworld

Purchased in a deal worth up to $1.3 billion, Gearbox is perhaps one of the biggest names within Embracer Group and another vital pillar in its AAA business.

However, the value of Gearbox may not quite be what it seems. While the company is best known for the multi-million selling Borderlands series, plus its spin-off Tiny Tina's Wonderlands, the publishing rights to that IP lie with 2K Games. So while the release of the upcoming Borderlands movie may boost the brand, the upside would be split between Embracer and 2K.

It's the film – and the off chance of it sparking a breakthrough for the franchise – that is perhaps the most compelling argument for Embracer to keep Gearbox. The group has long since talked about its ambitions to break beyond games and have a hand in all other forms of entertainment, and a AAA developer with its own film and TV studio certainly helps.

Of course, this all makes it appealing to potential buyers as well, so Gearbox remains a likely candidate for the next major sales – especially as rumours that Embracer is looking to unload this company first emerged last year.

Crystal Dynamics / Eidos Montreal

Internal studios: Eidos Montreal, Crystal Dynamics, Crystal Northwest, Crystal Southwest
Internal headcount: 901
Brands: Tomb Raider, Deus Ex, Legacy of Kain, Thief

One of Embracer's last major purchases, the studios formerly owned by Square Enix Europe signalled the group's ambitions for the AAA space. Crystal Dynamics is already hard at work on a new Tomb Raider – arguably the biggest IP Embracer now owns – and is working with Amazon to publish it, with Amazon also working on a movie reboot.

The purchase of Eidos Montreal also brought with it other significant IP, such as Deus Ex, Thief and Legacy of Kain, although plans to make use of these seem to be stumbling with news that a Deus Ex game was cancelled when Embracer laid off staff earlier this year.

It was just two years ago that the industry was trying to get its collective mind around how Embracer managed to acquire a collection of renowned studios and historic IP for just $300 million, so it's odd to think it would sell them this soon.

The above operating groups are the largest Embracer owns when it comes to the games industry, but it's worth taking a look at the rest of the group.

Asmodee Group

Internal studios: Access+, Atomic Mass Games, Bezzer Wizzer Studio, Catan Studio, Days of Wonder, Edge, Exploding Kittens, Fantasy Flight Games, Gamegenic, Libellud, Lookout Games, Mixlore, Office Dog, Plan B Games, Rebel Studio, Repos Production, Space Cow, Space Cowboys, Twin Sails Interactive, Unexpected Games, Z-Man Games, Zygomatic
Internal headcount: 2,523
Brands: Catan, Ticket To Ride, Exploding Kittens

Another operating group that may be relatively safe. Asmodee Group gives Embracer a presence in the tabletop gaming industry, and according to the company's most recent financial results, this sector generated the most revenue: SEK 11.7 billion ($1.12 billion) compared to SEK 11.3 billion ($1.1 billion) from console and PC games for the nine months ended December 31, 2023.

As with THQ Nordic, Asmodee encompasses a lot of internal studios, so it may be that these are merged and/or consolidated rather than sold off wholesale. As by far the largest operating group in terms of headcount, it's unfortunately likely that future layoffs may be targeted at this segment.

And if Embracer decides that, for all the revenues generated in tabletop, it wants to focus on the traditional video games market, Asmodee is a group that could be sold entirely, similar to the Saber sale.

Dark Horse Media

Internal divisions: Dark Horse Comics, Dark Horse Entertainment, Things From Another World
Internal headcount: 177
Owned brands: The Mask, Time Cop, Father's Day, Ghost
Licensed IP: Star Wars, Avatar: The Last Airbender, Stranger Things, The Witcher, Hellboy, The Umbrella Academy

If Embracer's multimedia ambitions remain in place, it's likely the group will keep Dark Horse. It gives the company a foothold in the publishing industry – not just comics, but books as well – and it's the third largest comics publisher in the US, behind only DC and Marvel.

The crossover with video games and Dark Horse's output is also well established, with the publisher producing art books for blockbuster games as well as comics spin-offs for the likes of Cyberpunk 2077, The Witcher, Skull & Bones, Assassin's Creed, Overwatch, Halo and Dragon Age.

As the smallest operating group within Embracer, at least in terms of headcount, Dark Horse Media could either be safest from cost-cutting measures – or the easiest to sell.

Coffee Stain

Internal studios: Coffee Stain, Coffee Stain North, Coffee Stain Malmo, Ghost Ship Games, Box Dragon, Easy Trigger Games, Lava Potion
Internal headcount: 192
Brands: Deep Rock Galactic, Goat Simulator, Satisfactory, Valheim

Another small division within Embracer, but one that has produced some big hits. Indie developer and publisher Coffee Stain is responsible for the bizarrely popular Goat Simulator series (much to my chagrin), with Goat Simulator 3 being Embracer's biggest seller during a crucial holiday quarter.

Coffee Stain also handled the release and support of Valheim, the 2021 Viking co-op game that sold six million copies in six weeks. With a track record like this, and a solid reputation within the indie space, Embracer may well consider holding on to Coffee Stain.

Amplifier Game Invest

Internal studio: A Creative Endeavour, Destiny Bit, Frame Break, Green Tile Digital, Infinite Mana Games, Invisible Walls, Kavalri Games, Misc Games, Palindrome Interactive, Rare Earth, Studio Hermitage, Tarsier Studios, Zapper Games
Internal headcount: 317
Brands: Dice Legacy, Lightyear Frontier, Fishing North Atlantic

Embracer's larger indie operation, Amplifier is described on the group's website as "an important vehicle for our investments in new IP development and teams." If Embracer is focused on reducing debt, it's likely to be holding back on investment for the time being but having such a team in place will help it invest as and when (if and when?) its problems have been resolved.

And Amplifier has a good eye for investment; it's bringing promising mech farming game Lightyear Frontier to market next week, has helped fund hits like Dice Legacy and The Ascent, and it owns Little Nightmares developer Tarsier Studios.

What Embracer decides to do with Amplifier Game Invest going forwards may speak volumes about its investment strategy.

Deca Games

Internal studio: Deca, CrazyLabs, A Thinking Ape, Iugo Mobile Entertainment, Firescore
Internal headcount: 718
Brands IP: Party in my Dorm, DragonVale, Realm of the Mad God, Amaze

One of two primarily mobile divisions at Embracer Group, Deca Games specialises in live operations and other mobile services – essential skills to have in today's games industry.

Deca itself does not produce games but has supported titles such as indie browser game Realm of the Mad God. Meanwhile, Crazy Labs has developed a number of hypercasual games, A Thinking Ape is the team behind titles like Party in my Dorm and Kingdoms of Heckfire, and IUGO has worked on a mix of casual games and spin-offs such as the Middle-Earth: Shadow of War mobile title.

Given how hyper-competitive the mobile space is, however, it's hard to see anything here that helps Embracer stand out and mobile generated the least revenue in its most recent financial results: SEK 4.6 billion ($443.3 million) for the nine months ended December 31, 2023. It would require investment and support to push this portfolio further, and others may be better positioned than Embracer to provide it.

Easybrain

Internal studios: 2 (both under the Easybrain brand)
Internal headcount: 340
Brands: Art Puzzle, Blockudoku, Jigsaw Puzzles, Killer Sudoku

Embracer's other mobile division is more focused than Deca Games, and perhaps more successful, with the company's website bragging of more than 1 billion downloads and 16 million daily active users for Easybrain's titles.

The company claims to have market-leading games in the form of Sudoku.com, Nonogram.com and Blockudoku – the sort of apps that appeal to millions of people that don't generally consider playing any other form of video game.

That's an important audience to tap into, but given how low Embracer's mobile revenues are compared to its other divisions, time will tell if the group wants to maintain its presence in this area. As with Deca, if Embracer decides it wants to focus on other markets - e.g. PC and console games - it may seek a better home for Easybrain, selling to a company that can invest in and grow the mobile firm in ways Embracer is unable to.

Freemode by Embracer

Internal brands: Limited Run, Middle-Earth Enterprises, Quantic Lab, Game Outlet, Grimfrost, Singtrix, Gioteck, Bitwave, Tatsujin, Clear River Games
Internal headcount: 404

Freemode is an odd one. At first glance, a bunch of tangential services and ventures that Embracer could ultimately outsource, such as Quantic Lab's localisation and quality assurance. This is also the operating group that owns accessories firm Gioteck, Swedish distributor Game Outlet, and (I kid you not) Viking clothing specialists Grimfrost.

But it also includes popular indie publisher Limited Run, and perhaps most importantly Middle-Earth Enterprises, granting it ownership of The Lord of the Rings and JRR Tolkien's other IP. This is the division that speaks most to Embracer's ambitions beyond games, and given how recent the purchase of Middle-Earth was (just 18 months ago), Embracer will likely want to attempt to capitalise on this brand before it sells it off. Perhaps there will be a few smaller divestments from this operating group.

So who's next?

The fact that Saber Interactive was an entire operating group of Embracer suggests that any of the above could be candidates for the next big sale. And, of course, whether Embracer plans to sell any of its business is only half the equation – it needs to find someone to buy them, too. That's going to be difficult to find at a time when so many companies are tightening their belts.

Embracer spent six years seemingly buying whatever it could afford, regardless of whether it fit with the overall business, resulting in a bloated group that somehow covers PC/console, mobile, tabletop, film/TV, comics, peripherals, home karaoke machines, and dressing people like a Viking. But there is no new Embracer snapping up all and sundry. The most likely way to sell any of these studios or groups is to find a buyer that sees itself as a better fit for those businesses than Embracer.

Wingefors' earlier comments indicate there are already multiple sales in the works, and he suggested these are likely to be completed and announced after the end of the financial year on March 31.

Until then, all we can do is watch Embracer Group's cards continue to wobble and try to guess which will be next to fall.

The rest of the week in review

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QUOTE | "The model of how games were made is failing... Combined with a post-COVID correction, recession, inflation, and layoffs, it causes a tremendous downward spiral of unintuitive pessimism" - Keoken Interactive's Koen Deetman talking to GamesIndustry.biz about the struggle to find funding following the Deliver Us Mars studio's 200 unsuccessful pitches for five games in two years.

STAT | 18 days - The length of time we'll be running our GI Sprint editorial special on how developers can make games better, faster and cheaper, running from June 17th to July 5th. Find out how you can get involved here.

QUOTE | "Web Distribution, available with a software update later this spring, will let authorized developers distribute their iOS apps to EU users directly from a website owned by the developer" - Apple's updated business terms, signalling that developers will be able to distribute apps via their own websites in addition to the App Store in the EU

QUOTE | "Commercially unusable" / "Entirely useless" – Epic Games' description of direct payment links on iOS as it argues Apple is violating the original 2021 antitrust trial court order

STAT | $1,850 - New annual cost of a seat-based subscription to Unreal Engine for companies in industries outside games development

QUOTE | "Our industry is at a crossroads between business and talent. At Empty Vessel, we take a developer-first approach to our direction and execution. We understand every innovation in this industry has been led by a developer taking a risk - every new IP, every billion-dollar franchise. Gaming's next massive hit can come from anywhere" - Garrett Young on the ambitions of new studio Empty Vessel, founded by former Naughty Dog, Id Software and Activision developers.

STAT | 64% - Amount of global games revenue accounted for by Asia-Pacific markets in 2023, according to a new report by Global Data.

QUOTE | "The company has a clear strategy centered around creating attractive games on our own and licensed IPs. The board's consolidated assessment is that the execution of strategy needs a different leadership" - Starbreeze chairman Torgny Hellström on why Tobias Sjögren has been ousted as CEO, with Juergen Goeldner named as his interim replacement

STAT | 84 - Days until Summer Game Fest returns to once again try and wedge itself into the E3-shaped hole that exists in June. It kicks off on Friday, June 7 with a two-hour showcase hosted by Geoff Keighley.

STAT | 24 months and two weeks - Time we have to wait for the next Mario movie.

QUOTE | "Technology is evolving, and the future is unwritten. We could lean back and have others write that future for us, or we could choose to define what that future is" - Haiyan Zhang, Xbox's general manager of gaming AI, speaking at DICE 2024 about the potential for AI in games. Read the full write-up here.

QUOTE | "I wish so dearly that more companies had a bit more money to throw at creative endeavors like this" - developer Ryan Mandseth is one of the many Global Game Jam participants and hosts that Alicia Haddick spoke to in their excellent piece on the creative sparks ignited by this annual event

STAT | 32 minutes and 15 seconds - Length of this week's Microcast. We promised we'll get it down to 20 one day.

QUOTE | "Demakes [also celebrate] the history that led up to that original game being made in the first place. It is humbling to recognize that the theory we have for crafting the games we make today is built on a foundation of work other people have done" - Doinksoft's Cullen Dwyer speaking to Chris Sutcliffe in his feature on why publishers can benefit from embracing fan-made demakes

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QUOTE | "Large events like GDC are social gatherings as well, and the lines between work expectations, general networking, and purely social or optional events often get blurred" - Safe In Our World's SKy Tunley-Stainton commenting as the charity teams up with Take This to release an Event Safety Standards Guide.

STAT | 3 - The number of acquisition stories we ran this week, including Grom Social Enterprises buying Arctic7, Behaviour Interactive purchasing Fly Studio, and Virtuos snapping up Beyond FX.

STAT | 4 - Number of GamesIndustry.biz team members heading to San Francisco for GDC next week. Keep an eye out for them and say hello.

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