The gaming industry is growing and shrinking at the same time, as larger companies open their chessboards and beat their entire rivals. Microsoft, Nintendo and Electronic Art they have all gone little by little to buy even household names in the world of development and publishing. Even a mega-publisher like ZeniMax is not immune to the sums of money that are being thrown around the industry right now. This is what makes the history of Embracer even more interesting, since it buys a large number of game developers in an attempt to create something too big for any other company to swallow.
Embracer was founded in 2008 by Swedish entrepreneur Lars Wingefors who had previously founded Nordic Games, a retailer of brick games. Nordic Games Publishing, as it was then known, published its first games, making small but orderly sums in the process. In 2011, he bought the estate of Austrian publisher JoWooD Entertainment after its bankruptcy. In 2013, he did the same thing with THQ when he applied for Chapter 11, including some of his assets and, a year later, he was billed as THQ Nordic. He then went public, raising successive rounds of money from investors to help him buy more companies to put under his umbrella.
In 2018, THQ Nordic acquired Koch Media, an entertainment company that owns Deep Silver and other media interests. Later that year, it acquired Coffee Stain Studios, and undertook to operate both Deep Silver and Coffee Stain as independent companies. But it won’t be until 2019, when THQ Nordic (the parent company) has rebelled as Embracer, that the company’s wild deal has begun in earnest. Since mid-2019, Embracer has bought or invested in nearly 30 different developers and publishers.
The majority of these issues have been, compared to the sort of figures that Microsoft pulls around, quite small. Tarsier Studios was raised in December 2019 for $ 10.5 million, while DECA Games was priced at € 25 million ($ 30.4 million). However, he made some more significant acquisitions, including Interactive saber for $ 525 million and, most importantly, Gearbox Software for $ 1.3 billion. In fact, February 2021 saw the company spend a small fortune on it Change, Easybrain and Aspyr.
On its corporate website, Embracer boasts that it has eight “operating groups” including THQ Nordic (the publisher), Koch Media and Coffee Stain. Adding to that roster are Amplifier (which invests in game startups), Saber Interactive (port and remastering) DECA (mobile games), Easybrain (puzzle games) and Change. He adds that, across the company, it has 69 development studios in 40 countries and employs more than 7,000 people.
But, more importantly the business that Embracer owns is the intellectual property, and franchises, that it now controls. The list reads like which is which of the most beloved old titles that have been knocked down by the failure of their parent companies or that have a small but dedicated audience. Embracer boasts that he now controls (deep breath) 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 cum ‘and TimeSplitters, Embracer seeks to give new life to the series with a new title from the original creators of the game. In addition, Coffee Stain publishes Valheim, a currently very buzzy game from Iron Gate Studio.
And at E3 this year, Embracer’s subsidiary, Koch Media, announced the launch of a new “Premium Gaming” label called Raw Material. Part of the Announcements Summer Game Fest, Prime Matter has revealed that it works on the following titles: Paghjella 3, Crossfire: Legion (a new RTS from Homeworld 3 and Hardspace: Shipbreaker 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 Codename, Dolmen, The last Oricru and Echoes of the End, among others.
Embracer’s strategy seems to focus on raising as many franchisees as possible and winning them over to volume. And founder Lars Wingefors said he would prefer things to be smaller and more unpleasant than to build a company that is united into a single AAA franchise. In a 2018 interview with GamesIndustry, said his strategy was to focus on a “diversified pipeline”, with a view to “slowly building something substantial that will last for a very long time”.
In the same interview, Wingefors also explained that this more-and-longer-term approach also applies to how activity is managed. He explained that Embracer does not want to create a single monolithic activity that, in his words, “destroys a lot of value”. Instead it wants every society to operate like “brothers and sisters, but […] totally managing their own businesses. “
You can expect that, after spending so much in the last year, Embracer is now trying to slow down and digest his food. The company doesn’t seem to agree, and in its most recent financial statements he said he had raised another $ 890 million to fuel further purchases. In fact, he said he had about $ 2 billion “in number and credit facilities available,” to activate his spending plan. And developers are interested in joining the party, with the company saying it had “engaged with more than 150 companies to join the group”, with 20 companies currently in “discussions at a late stage”.
One of the things Embracer has emphasized in many of his public statements is that it takes time for these investments to pay off. In 2019, it is he said that “the development cycle for new games spans several years, and so the contribution of these investments is a few years down the road.” And, in his latest report, he said he expects to see the financial year 2022 as the first where the first of these acquisitions will reach the public. It will only be then that we will see if Embracer’s strategy of getting the best out of the rest is a victory.
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