The Collapse Of The Embraer Group. How The Swedish Holding Company Came To A Sad End

The Swedish holding company Embraer Group has been one of the leading players in the gaming industry in recent years. They bought up studios in batches, trying to build an empire. But this strategy did not bring them success — the entire holding company, like the legendary Titanic, went down.

It has been known for a long time that there is discord in the ranks of the holding. Many projects moved from one studio to another, creating real confusion in the hierarchy and complicating the development process. Instead of listening to the demands of the players, the company often canceled the development of many expected games or simply gave up on them, feeding us breakfast.

During the COVID era, Embracer Group's shares grew, which allowed it to become one of the leaders of the gaming industry in terms of capitalization. But the post-crisis put everything in its place - the company's share price fell more than 10 times. 

They tried to find new investments in the face of Arab sheiks, but the deal fell through, leaving the Swedish holding company in a broken trough. All hopes were for the release of high-quality and high-profile games, but…

What Happened To The Big Franchises That Embracer Bought?

Even with the rights to many popular franchises, the studios that are part of the Embracer Group have not released anything major, and the holding itself is remembered more for its high-profile purchases than for hit big-budget releases.

The example of the cancellation of the continuation of Deus Ex was especially indicative — many players asked for it. The last game in the series, Mankind Divided, was released in 2016 and ended in mid-sentence. The players wanted to know what would happen next, but the developers were in no hurry to take on the third part. For a long time, it was believed that the problem of the lack of a sequel was the former owner of the Eidos Montreal studio, Square Enix, but even after the acquisition by the Swedish holding of the entire western division of this company, the fate of Deus Ex remained unchanged. The sequel, which was thought out by Eidos Montreal in the dungeons of the Embracer Group, was wrapped up, and the game was canceled. 

Another great example is the confusion with the remake of Star Wars Knights of the Old Republic and Saber Interactive studio. The reissue of KotOR was announced back in 2021, after which it fell into a real production hell — the development was transferred from studio to studio and was almost canceled. It is absolutely unclear what is happening with the project now: Saber Interactive, which was eventually entrusted with the development, withdrew from the holding company using a "confusing scheme" — it was sold for $ 247 million to its own founder, Matthew Karch. Initially, there was information that the rights to create a remake would go to another studio, but recently, the director of Saber Interactive announced the opposite.

You can also remember last year's The Lord of the Rings: Gollum. It's no secret that The Lord of the Rings is one of the most popular media franchises in the world. Having obtained the rights to such a tasty morsel and having come up with an interesting concept — a game about Gollum — the management of the holding did not come up with anything better than to give the studio Daedalic Entertainment, which had previously done nothing but a few quests. The result is natural — one of the most high-profile failures of the last year.

The Expeditions: A MudRunner Game project also failed to meet expectations. Among other things, players complain about the boring gameplay, inferior even to Snowrunner, the previous game in the series: meaningless mechanics, a small number of maps, the lack of a system of rewards and punishments for players, and a global goal. Now, it is completely unclear what will happen to the game and whether it will receive any support in the future.

And, of course, Warhammer 40k: Space Marine 2. This game, in theory, could greatly help the company by bringing it a large profit. However, due to the mess inside the entire holding, and Saber Interactive in particular, the development was greatly delayed, which only played a negative role for the entire company. 

Where Does Embracer Go

These examples showed that the Embracer Group initially chose the wrong tactics. They acted based on the financial performance of the franchises, wanting to maximize profits — which is normal for large corporations. However, based on the examples of companies such as Google and Amazon, this is not the best solution for the gaming industry. A more creative and in-depth approach is needed here, which, in turn, requires something more than the right investment.

In addition, the concept of payback in the gaming industry is very vague. Both a small project made for three kopecks and a large-budget AAA release can bring big profits. Therefore, building your plans based on the performance of past franchise games is not always the right decision.

Perhaps the leaders of the holding realized this and announced the restructuring — it began in June 2023. A number of studios were closed — for example, Free Radical Design, the creators of TimeSplitters, or Volution, the authors of Saints Row and Red Faction. A lot of games under development have been canceled. The final act of restructuring was the division of Embracer Group into three divisions:

• - Asmodee Group will deal with board games. The group is named after the main company — Asmodee. The portfolio includes "Explosive Kittens," "Train Ticket," "7 Wonders";
• - Coffee Stain & Friends will be responsible for small B-category or indie projects. He will also manage game services and free projects. It consists of such teams as Coffee Stain, Ghost Ship, Tarsier, and Tuxedo Labs, as well as THQ Nordic, Amplifier Game Invest, Easybrain, Deca, CrazyLabs, and Cryptic. They have such franchises as Deep Rock Galactic, Goat Simulator, Satisfaction, Wreckfest, Teardown, Valheim, and "more than 200 more projects";
• - Middle-earth Enterprises & Friends will take over the big-budget games. The group will include teams such as Crystal Dynamics, Dambuster Studios, Eidos-Montréal, Flying Wild Hog, Tripwire, Vertigo Games, Warhorse Studios, and 4A Games. Among the franchises at their disposal are: "The Lord of the Rings," Tomb Raider, Metro, Dead Island, Killing Floor, Kingdom Come Deliverance, and others.

According to the CEO of the former Embracer Group, Lars Vingefors, such a decision in the future will allow better "financing business," "creating successful games," and "reducing the cost of capital." The effect of the split was immediately apparent — the company's shares rose by 18%.

It is difficult to say for sure whether such a division will bear fruit in the long term, but it definitely makes sense. Now, all three companies will not be so closely intertwined with each other, which means that there will be much less confusion. Perhaps this will help solve creative problems by bringing teams together with each other, where each department will do what it should.

According to the CEO of the former Embracer Group, Lars Vingefors, such a decision in the future will allow better "financing business," "creating successful games," and "reducing the cost of capital." The effect of the split was immediately apparent — the company's shares rose by 18%.

It is difficult to say for sure whether such a division will bear fruit in the long term, but it definitely makes sense. Now, all three companies will not be so closely intertwined with each other, which means that there will be much less confusion. Perhaps this will help solve creative problems by bringing teams together with each other, where each department will do what it should.

Result

The disbandment of the Embracer Group is a natural outcome. The management of the holding company could not put him on his feet for a long time, making mistake after mistake, which led them to collapse.

At first glance, the new structure is more optimized and, in theory, should do its job better. It remains to be hoped that the leaders have drawn conclusions and will not repeat the previous mistakes. Otherwise, even after the separation, the situation will not improve, and the created holdings may go down.