The gaming industry is booming and shrinking at the same time, as the biggest companies open their checkbooks and gobble up their rivals in their entirety. Microsoft, Nintendo, and Electronic Arts have all recently spent big to buy even household names in the development and publishing world. Even a mega-publisher like ZeniMax is not immune to the amounts of money currently circulating in the industry. This is what makes Embracer’s story all the more interesting, as it buys a lot of game developers in an attempt to create something too big for another company to swallow.
Embracer was founded in 2008 by Swedish entrepreneur Lars Wingefors, who previously founded Nordic Games, a physical games retailer. Nordic Games Publishing, as it was called then, released its first games, making small but neat sums in the process. In 2011, he bought the assets of Austrian publisher JoWooD Entertainment after its bankruptcy. In 2013, it did the same with THQ when it filed for Chapter 11, purchasing some of its assets and, a year later, renaming itself THQ Nordic. He then went public, raising successive rounds of funds from investors to help him buy more companies to place under his umbrella.
In 2018, THQ Nordic bought Koch Media, an entertainment company that owns Deep Silver and other media interests. Later that year, she bought Coffee Stain Studios and made a commitment to operate both Deep Silver and Coffee Stain as independent businesses. But it wasn’t until 2019, when THQ Nordic (the parent company) rebranded itself as Embracer, that the company’s mad rush began in earnest. Since mid-2019, Embracer has bought or invested in almost 30 different developers and publishers.
The majority of those deals have been, relative to the kind of numbers Microsoft is throwing out, pretty small. Tarsier Studios was purchased in December 2019 for $ 10.5 million, while DECA Games was priced at € 25 million ($ 30.4 million). He did make larger purchases, however, including Saber Interactive for $ 525 million and, most notably, Gearbox Software for $ 1.3 billion. In fact, in February 2021, the company spent a small fortune on Gearbox, Easybrain, and Aspyr.
On its corporate website, Embracer boasts of having eight “operational groups” including THQ Nordic (the publisher), Koch Media and Coffee Stain. Amplifier (which invests in game startups), Saber Interactive (ports and remaster) DECA (mobile games), Easybrain (puzzle games) and Gearbox join this list. He adds that, across the company, it has 69 development studios in 40 countries and employs more than 7,000 people.
But even more important than the companies Embracer owns is the intellectual property and franchises that it now controls. The list reads like a who’s who of beloved older titles that have either been taken down by the failure of their parent companies or that have a small but dedicated audience. Embracer now boasts of controlling (deep breathing) Saints Row, Goat Simulator, Dead Island, Metro, TimeSplitters, Borderlands, Darksiders, MX vs ATV, Kingdoms of Amalur, Satisfactory, Wreckfest, Insurgency and World War Z. And, for a franchise Like TimeSplitters, Embracer seeks to breathe new life into the series with a new title from the original creators of the game. Additionally, Coffee Stain is releasing Valheim, a currently very buzz game from Iron Gate Studio.
And at E3 this year, Embracer affiliate Koch Media announced the launch of a new “Premium Gaming” label called Prime Matter. As part of the Summer Game Fest announcements, Prime Matter revealed they are working on the following titles: Payday 3, Crossfire: Legion (a new RTS from Homeworld 3 and Hard space: Shipbreaking makers BlackBird Interactive), a new Painkiller game and King’s Bounty 2. He also announced a series of new titles, including Scars above, Final form of code name, Dolmen, The last Oricru and Echoes of the End, among others.
Embracer’s strategy appears to be focused on sucking up as many mid-level franchises as possible and gaining volume. And founder Lars Wingefors said he’d rather things be smaller and messier than starting a business with just one AAA franchise. In a 2018 interview with GamesIndustry, he said his strategy was to focus on a “diverse pipeline” with a view to “slowly building something substantial that will be sustainable for a very long time.”
In that same interview, Wingefors also explained that this more is more approach also impacts the way the business is run. He explained that Embracer didn’t want to create a single, monolithic company that, in his own words, “would destroy a lot of value.” Instead, he wants every business to operate as’ siblings, but […] fully manage their own businesses.
You can expect that after spending so much last year, Embracer is now looking to slow down and digest his meal. The company doesn’t seem to agree and, in its latest financial statements, said it had raised an additional $ 890 million to fuel other purchases. In fact, he said he had about $ 2 billion in “cash and credit facilities available” to allow his spending frenzy. And the developers are interested in joining the group, with the company saying it has “signed up with more than 150 companies to join the group,” with 20 companies currently in “late stage talks.”
One of the things Embracer has pointed out in several of his public statements is that it takes time for these investments to pay off. In 2019, he said that “the development cycle of new games spans several years, and therefore the contribution of these investments is in a few years.” And, in his most recent report, he said he expects fiscal 2022 to be the first where the first of those purchases will reach the public. Only then will we see if Embracer’s strategy of owning the best of the rest wins.
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