This morning, Embracer Group outlined their plan to branch off into three stock-listed companies after battling layoffs and studio closures.
Publishing company Embracer Group has faced many great woes in the past few years. Today, they announced their decision to split the corporation into three distinct entities: Middle-earth Enterprises and Friends, Coffee Stain and Friends, and Asmodee Group. Each one of these companies will be listed separately on the Stockholm Stock Exchange. Ideally, they hope this will allow for more streamlined work on major projects in the near future. They posted a link to their live webcast to detail it all.
In an open letter to shareholders, Embracer Group CEO Lars Wingefors said the decision to split the group into three separate entities will help them re-strategize their business structure. “There is not one way to do business, but some business models are more similar than others,” he explained. “The same goes for businesspeople. The ambitions may be similar, but the approach differs.
So, what company will be covering which studios? Middle-earth Enterprises and Friends will oversee Embracer’s biggest video game studios and brands, including developers such as Crystal Dynamics (Tomb Raider), Eidos Montreal (Marvel’s Guardians of the Galaxy), 4A Games (Metro), Plaion and Deep Silver Dambuster Studios (Dead Island 2), Warhorse (Kingdom Come Deliverance 2), plus Tripwire, Flying Wild Hog, Vertigo Games and Freemode.
Embracer stated how this branch will be the “creative powerhouse in AAA game development and publishing for PC and console, as well as the stewards of The Lord of the Rings and Tomb Raider intellectual properties”. Last year, interim exec Matthew Karch said Embracer “need[s] to be exploiting The Lord of the Rings in a very significant fashion and turning that into one of the biggest gaming franchises in the world.”
Coffee Stain and Friends will contain more of the indie game studios and AA-games, including Coffee Stain itself (Goat Simulator, Valheim), Ghost Ship Games (Deep Rock Galactic) and Tarsier (Little Nightmares), plus free-to-play developers. Lastly, Asmodee will be the company’s tabletop games focus, which owns brands such as Ticket to Ride, Exploding Kittens, Azul and Catan. Embracer explained they entered into a new financing agreement through Asmodee, which is worth €900 million. They also noted that these proceeds will “repay existing debt and reduce leverage in the remaining Embracer Group.”
At the end of the day, this move appears to be a way to offset the head studio’s abilities to balance their books. They stated that the last year was their toughest, especially after a $2 billion dollar investment fell through. This led to approximately 1,400 layoffs and the sale and closures of many game studios, including countless cancelled games in production. Free Radical and Saints Row developer Volition and a now-cancelled Time Splitters game closed down. The company even had to sell Borderlands devs Gearbox to Take-Two for $460 million to recoup some funds. Only time will tell whether this strategy works.
Here is more words from Wingefors’ statement on the matter:
“The similarities between the businesses that will make up Asmodee, Coffee Stain & Friends and Middle-earth Enterprises & Friends are striking, but so are also the differences when it comes to go-to-market strategies and business profiles. All the companies have bright futures ahead, by perfecting what is working for each of them, and by continuing to cooperate when it makes sense.
There is significant untapped potential within the group, which I am confident the new structure will unleash. This will empower each individual and each team to grow and excel further in their careers as well as provide them with their own leadership and strategic direction.”
