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One of the largest game manufacturers in the world is breaking down into three manageable blocks: How Embracer Group's silverware is divided.
In March 2023, the Embracer world still seemed to be in order: at its peak, the Swedish computer games company employed almost 17,000 people in 40 countries. But with every studio acquired, with every new brand and with every additional billion invested, the worries increased: Will it work?
Spoiler: It didn't. Almost a year later, the Scandinavian gaming empire is falling apart into individual pieces. Saber Interactive – gone. The Borderlands-Maker of Gearbox – gone. Studios like Volition (Saints Row) – closed. Planned game projects – stopped. The workforce – shrunk to 10,000.
Then on Monday the real kicker: Over the next 18 months, the Embracer Group will create three independent companies that will compete directly for talent, brands, market shares and customers. Many of the original synergy effects that Embracer boss Lars Wingefors had promised himself and the shareholders of the all-in-one powerhouse are no longer valid.
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The aim is to turn an increasingly maneuverable steamer into three powerful, efficient frigates – each of which still easily holds a place in the top 10 of the largest European publishers.
The three new companies will have a few things in common: roughly the same turnover of 1 to 1.2 billion euros, the company headquarters in Karlstad, Sweden and the planned listing on the Nasdaq Stockholm technology exchange.
But this is where the overlap ends, because each company should pursue its own focus. The drawing-board-like division doesn’t seem entirely rigorous:
- Under the umbrella brand of Coffee Stain & Friends – the makers of the anarchic Goat simulator – includes full-price games for PC and console as well as free2play games for smartphones, tablets and online. Business models could hardly be more contradictory. Together with the Viennese publisher THQ Nordic, some of the largest game studios in German-speaking countries are slipping under the Coffee Stain umbrella.
- Middle Earth Enterprises & Friends is a reservoir for that Lord of the rings-Universe plus Tomb Raider, Dead Island and Kingdom Come: Deliverance plus Dark Horse comics, karaoke games (Let's Sing) and racing simulations (MotoGP). Also located here: the German-Austrian publisher and distributor Plaion, which supplies retailers via its own logistics centers – also with games from other manufacturers (including Activision Blizzard, Square Enix, Kalypso Media, Paradox, SEGA).
- Only the board game and trading card giant Asmodee can continue to devote itself to the core business under its own name – albeit with a €900 million mortgage to enable the two previous sister companies to get off to a stable start.
The entire process will extend until the end of 2025, at the end of which there will be three independent companies – with a massive impact on structures, processes, personnel and mutual cooperation. And: The name 'Embracer Group' will not only disappear from the stock exchange listing, but also from all communications.
Lars Wingefors wants to incorporate his shares and investments into his own holding company in the medium term. As a major shareholder, he will continue to play an important role in key decisions.
Please also read the detailed analysis of the causes and effects of the Embracer conversion.
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