Industry Embracer Group continues to implode, looking to sell Gearbox Entertainment

[Raine]

Article:

LONDON, Sept 11 (Reuters) - Embracer (EMBRACb.ST) is considering options for its U.S. game developer Gearbox Entertainment including a sale as Europe’s largest gaming company looks to shore up its finances, three people familiar with the matter told Reuters.

The maker of a new Tomb Raider video game, whose shares are traded in Stockholm, is working with Goldman Sachs and Aream & Co to explore a sale, the people said. Embracer last year bought several development studios and the intellectual property rights to a number of games including a new Tomb Raider game.

Embracer is weighing selling the unit, which is known for first-person shooter game Borderlands, after receiving interest from third parties, two of the people said.

In June Embracer’s announced a restructuring to reduce its net debt to less than SEK 10 billion ($903 million) by the end of its financial year from SEK 16.7 billion at the end of June. The plans, which include studio closures, cancelled projects and layoffs, follows what CEO Lars Wingefors described as a "challenging year" for the company.

Embracer, majority owned by founder Wingefors, purchased Gearbox in February 2021 in a deal that valued the business at up to $1.4 billion at the time.

Gearbox marketing materials are already available for potential buyers, which consist mainly of international gaming groups, said two of the people.

The sources, who requested anonymity as the matter is confidential, cautioned a deal may not happen.

Gearbox, which sits under Embracer’s PC console games segment, published its latest title Remnant 2 last month, which topped U.S. charts for July.

Embracer, which has a catalog of over 900 owned franchises, announced a review of its business to navigate challenging economic conditions last November, which could result in spin-offs of units.

In May, Embracer said it had reached a verbal commitment with an undisclosed party the previous October that would have resulted in more than $2 billion "in contracted development revenue" over six years. However, at the final hour it said it "received a negative outcome from the counterparty", causing its shares to drop by more than 40%.

Source: https://www.reuters.com/markets/deals/swedens-embracer-weighs-options-borderlands-maker-gearbox-entertainment-sources-2023-09-11/

This continues to be the greatest idea of all time!

...Why didn't they sell Volition instead of shutting them down, again?

 

[Mark]

...Why didn't they sell Volition instead of shutting them down, again?

Because this is how the gaming industry boardrooms operate:

 

[Raine]

I dunno, that kid seems pretty smart to me.

Fucking blows my mind that they were allowed to pick up so many publishers, development studios and IP. 900+ different IP? And for what, to gather dust and/or be lost to time when this trash heap fully goes up in flame?

 

[Raine]

Doesn't need a third thread... until a studio fails to get bought up and shut down like Volition, anyway. Which is coming.

Emphasis mine.

Article:

Embracer open to divesting studios, confirms more closures on the horizon
"On the divestment side there is a strong vibrant market with many, many active players."

Embracer CEO Lars Wingefors has said the Swedish conglomerate will need to "continue making tough decisions" to become a leaner, more cost-efficient company and signified that more studio closures and layoffs are on the horizon.

Speaking during a Q&A at the company's annual general meeting, Wingefors described the decision to close studios like Campfire Cabal and Volition and downsize others including Crystal Dynamics, Rainbow Studios, and Beamdog as "tough from many standpoints," but said the company is "determined" to see the process through.

"Ultimately we are making decisions to either restructure or downsize some teams, and there will be a few cases of closures. It's difficult and it takes time, but we announced this in June and now we're at the end of September and we're confident to deliver on the targets we set out for the end of the fiscal year," he added.

Notably, Wingefors claimed that when it comes to cost cutting, some outcomes are more desirable than others. Ideally, he suggested Embracer would like to find "new opportunities for [affected employees], even if it's outside Embracer Group through sometimes a divestment."

Source: https://www.gamedeveloper.com/business/embracer-open-to-divesting-studios-confirms-more-closures-on-the-horizon?s=09

Wingefors is a known asshole and dipshit, if that makes reading his verbal diarrhea any more tolerable. Case in point:

Article:

Embracer says its ‘crazy’ outlay on platform fees exceeds its spend on game development
It also says a new Epic Games Store exclusivity scheme will help keep Steam on its toes

Embracer Group CEO Lars Wingefors has said the company spends more on platform fees than it does on game development.

In a Q&A session during Embracer’s AGM on Thursday, the executive was asked for his thoughts on the recently announced Epic First Run program.

The new exclusivity scheme will allow developers of any size to claim 100% of revenue if they agree to make eligible titles exclusive to the Epic Games Store for six months.

After the six months are up, the game will revert to the standard Epic Games Store revenue split of 88% for the developer and 12% for Epic Games.

In comparison, Valve has traditionally taken a 30% share of game sales on Steam, although in 2018 it introduced a revenue share tier system which offers more to developers if their games meet certain sales thresholds (75%/25% on earnings beyond $10m and 80%/20% on earnings beyond $50m).

“At the end of the day, I think it’s good having competition to Steam, because it puts them on their toes to deliver their best experience,” Wingefors said of Epic First Run.

“Obviously, we would like to pay less fees to platforms. In reality we are paying more fees to platforms than we spend on game development every year, and if you just think about that number, it’s crazy.

“So, there are margins with the platforms that I would preferably have within building more games and some more margins, but I think it’s great that Epic is there trying to build a competitive platform.

Source: https://www.videogameschronicle.com/news/embracer-says-its-crazy-spend-on-platform-fees-exceeds-its-spend-on-game-development/

He legitimately thinks that saying his development studios being paid less than 30% of a game's revenue (on average) is a positive.