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The week starts with a bang: the Embracer Group becomes three separate companies. What does that mean exactly?
Since 2011, Lars Wingefors has been busy building a kind of Galeria Karstadt Kaufhof for the video game industry: with board games, with comic publishers, game apps, studios, publishers, service providers, agencies, merchandise specialists, sales structures, more than 15,000 employees, over 9,000 trademark rights and, most recently, eleven business areas. In German-speaking countries alone, there are still 1,300 employees on the payroll of the Swedish Embracer Group AB.
But times and therefore the market environment have changed, as Wingefors said after today's investor conference. The concept and structure of the general store no longer fit into today's landscape – analogous to that A bit of everything-Retail department store. What was previously piled up with the argument of synergy effects is now becoming a millstone.
As a result, Europe's second largest publisher (after Ubisoft) is splitting into three listed individual companies:
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- the board game business of Asmodee
- the PC, console and mobile games division Coffee Stain & Friendswhich focuses on indie titles and the A/AA business, i.e. projects with small and medium budgets
- and finally Middle Earth Enterprises & Friendswhere big brands with big volume and big sales are parked – Lord of the Rings, Tomb Raider, Kingdom Come: Deliverance, metro and Dead Island.
The effects on the games industry in German-speaking countries are far-reaching. Because the 'custody' for the local daughters is divided:
- The Viennese publisher THQ Nordic will be part of Coffee Stain & Friends in the future – and with it the studios Grimlore Games (Munich), Black Forest Games (Offenburg), DECA Games (Berlin), HandyGames (Giebelstadt), Purple Lamp Studios (Vienna), Metricminds and KAIKO Games ( both Frankfurt), Massive Miniteam (Cologne) and what's left of Piranha Bytes.
- The Munich publisher and distributor Plaion including Fishlabs (Hamburg) moves to the Middle Earth Division together with Crystal Dynamics, Warhorse Studios (Prague), Eidos Montreal and Dambuster Studios (Nottingham).
Also known as: The sister companies Plaion and THQ Nordic become direct competitors.
The real work is just beginning now, says Wingefors: Contracts, processes, collaborations, personnel, structures, brand and trade fair appearances (e.g. with a view to Gamescom 2024) – everything inevitably has to be rethought so that the three still very large companies function independently. The new/old management at the top will also have to decide what to invest in and which locations and brands have a future – and which do not. What does not fit is made to fit.
If you put it positively: It's never boring at Embracer. Less euphemistic: the unrest remains.
This also applies to the future role of Lars Wingefors, who will initially remain on board and in all discussions “in the room” will be, as he put it. As a major shareholder, he at least has a say in key, i.e. strategic, decisions; operational responsibility will, however, be transferred to the already named CEOs of the three new companies.
The role backwards is the immediate and drastic consequence of that ad hoc announcement from May 24, 2023: Eleven months ago, the visibly bleary-eyed Embracer boss had to admit that a multi-billion dollar deal had fallen through. According to reports, representatives of the Kingdom of Saudi Arabia were sitting at the other end of the negotiating table. Embracer then found itself in a serious crisis because costs and debts had piled up. What followed: project stops, layoffs, location closures, spin-offs.
With a view to the now easily filleted tranches, the likelihood that Saudi Arabia – currently the second largest Embracer shareholder – will secure individual pieces of fillet without having to fish for the entire fish, as was the case a year ago, is now increasing again.
This interpretation can also be read from the lines that the consumer-friendly, state-owned Saudi Savvy Games Group contributed to the celebration of the day: “We welcome today’s announcement regarding the transformation into three separate entities – and believe this proposal has significant benefits for operations and shareholders.”
Even if concrete answers to many questions will only be available in the coming weeks and months, one thing is certain: today marks the beginning of the controlled winding down of the Embracer Group as we know it.
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