Support NeoGAF

[Spyxos]

The deal being negotiated included more than $2 billion in contracted development revenue over six years, it said.

"The deal would have enabled a catch-up payment at closing for already capitalized costs for a range of large-budget games, but also notably improved medium-to-long-term profit and cash flow predictability for the duration of the game development projects."

Shares in Embracer were down 40% at 0753 GMT, hitting an all time low, with analysts saying the drop was due to the news of the deal as well as the lowered outlook.

Hit by game delays, weaker demand, and "lacklustre" reception for some new games, Embracer on Wednesday reported a fiscal full-year adjusted operating profit of 915 million crowns ($90.1 million), roughly matching a profit warning issued last week.

It said that on top of the partnership deal falling through, it had had to postpone planned releases of a number of games under development, cutting as a result its adjusted profit forecast for the current year to 7-9 billion crowns, from 10-14 billion seen previously.

Tomb Raider games firm Embracer tumbles after partnership talks collapse

Swedish games group Embracer on Wednesday said a large planned strategic partnership had fallen through unexpectedly and that it had lowered its profit guidance, sending shares into a tailspin.

www.reuters.com

 

[Ronin_7]

Ooooooffff

Something went wrong.

 

[Gambit2483]

Their stocks also took a HUGE hit. Shares went down something like 39%. Ouch

 

[Cert.in.Death]

What, they wouldn’t take Taiwan’s flag out of their games?

 

[lh032]

probably cancelled by Jimbo.

 

[Dr_Ifto]

Fire sale on studios incoming!

 

[splattered]

All going according to plan... While the Activision purchase is still waiting to be decided MS is going to swoop in here and pick up embracer with all those sweet IPs they grabbed over the years muhahaha

 

[Stafford]

All going according to plan... While the Activision purchase is still waiting to be decided MS is going to swoop in here and pick up embracer with all those sweet IPs they grabbed over the years muhahaha

Does it work like that? Won't this ABK shit actually mean they can't do this? Also, do we really believe Embracer will be selling studios?

 

[DeepEnigma]

All going according to plan... While the Activision purchase is still waiting to be decided MS is going to swoop in here and pick up embracer with all those sweet IPs they grabbed over the years muhahaha

 

[Fake]

Embracer failed to embrace.


What a time to live.

 

[Thief1987]

We are on the verge of the second THQ collapse it seems.

 

[kvltus lvlzvs]

Has Embracer actually made anything or is it just a bunch of acquisitions of old cherished IPs?

 

[drganon]

All going according to plan... While the Activision purchase is still waiting to be decided MS is going to swoop in here and pick up embracer with all those sweet IPs they grabbed over the years muhahaha

 

[MirageMew2]

As an Avengers game fan I know some of us on the Reddit were holding out on a resurrection of the expansion plans in a Destiny-like recovery. Just spitballing but 2B in 7 months sounds like Disney territory. Then the game wound up being shutdown. *tips tinfoil hat*

 

[SlimeGooGoo]

I won't be acquired that easily

 

[Wildebeest]

I still don't understand how Embracer has a business.

 

[ChuckeRearmed]

Damn, market cap dropped hard.

Still it is strange that CEO bet so much on these 2B for their future cash flow. I wonder what happened there.

We are on the verge of the second THQ collapse it seems.

Doesn't Embracer own THQ?

I do find it funny how reuters called Embracer "Tomb Raider games firm"

 

[reksveks]

Does it work like that? Won't this ABK shit actually mean they can't do this?

Would be funny to see the CMA try and potentially block MS from buying Embracer. It's a 5bn usd company, very different to ABK.

The real answer is the ABK is a seperate case and therefore the CMA will still have to go through the same whole process. They could use the same excuse at the end though. Their reasoning isn't based on the quantifiable strength of ABK on the cloud gaming but MS's.

 

[Jinzo Prime]

Embracer has almost as many employees as Ubisoft, a collapse would put thousands out of work.

 

[ungalo]

If it was a deal with Amazon it would've been harmless for us i think, and they could have secured their biggest games for the next years so it's a shame.

I sure hope they don't collapse or anything. If Xbox was smart they could try something (i don't mean an acquisition but more partnerships).

They just released Dead Island 2 through Deep Silver which was a success i believe. I also have a good feeling about Remnant 2.

 

[Neilg]

I don't think they'll collapse. Projected revenue dropped but so did the cost of investment.
The stock price had already priced in the acquisition long term. It means the shareholders took a hit to their net worth but doesn't really change anything about what they currently have on.

I do wonder what the $2bn acquisition was set to be though. Square? Capcom?

 

[Luigi Mario]

Has Embracer actually made anything or is it just a bunch of acquisitions of old cherished IPs?

Acquire as many studios and IPs as possible and then sell everything to Tencent, NetEase or the Saudi Investment Fund.

 

[Kokoloko85]

All going according to plan... While the Activision purchase is still waiting to be decided MS is going to swoop in here and pick up embracer with all those sweet IPs they grabbed over the years muhahaha

I have a feeling they will go after Tomb Raider and co. Embracer got em for MS because they were in the middle of buying Activision lol

 

[splattered]

I have a feeling they will go after Tomb Raider and co. Embracer got em for MS because they were in the middle of buying Activision lol

Ya never know

 

[Labadal]

Star Wars KOTOR is 100% cancelled, then.

 

[Thirty7ven]

Colin Moriarty said Embracer was going to be in trouble soon, it seems like he was right.

 

[reksveks]

Star Wars KOTOR is 100% cancelled, then.

"No comment"

 

[StealthGoblin]

Colin Moriarty said Embracer was going to be in trouble soon, it seems like he was right.

Which is bloody awful given how they’ve grown so quickly and hoovered up so many teams.

That sort of growth is not sustainable. They aren’t even putting out many ‘big’ games with all that IP.

I imagine we’ll get another THQ style fire sale. Microsoft will want the former SE teams no doubt. Can’t imagine there’s much of quality Sony will want

Just went down their list of studios. Not much worth buying really if you are a platform holder or an already large publisher.

 

[SEGAvangelist]

Which is bloody awful given how they’ve grown so quickly and hoovered up so many teams.

That sort of growth is not sustainable. They aren’t even putting out many ‘big’ games with all that IP.

I imagine we’ll get another THQ style fire sale. Microsoft will want the former SE teams no doubt. Can’t imagine there’s much of quality Sony will want.

Gearbox would be the most sought-after developer in Embracer, I'd assume.

 

[Kacho]

Has Embracer actually made anything or is it just a bunch of acquisitions of old cherished IPs?

Off the top of my head

Darksiders 3
Destroy All Humans remakes
2-3 Titan Quest expansions
Way of the Hunter
Kingdoms of Amalur remaster

There’s definitely more but their focus seems to be on niche games which is probably not sustainable.

 

[StealthGoblin]

Gearbox would be the most sought-after developer in Embracer, I'd assume.

Probably, but they aren’t even that significant. Borderlands is okay. Duke Nukem isn’t worth much.

Can’t imagine Sony or Microsoft wanting them really. Microsoft already have so many shooter teams and will have a ton more with ABK, and their quality bar and talent isn’t anywhere near Sony’s usual threshold.

 

[Cert.in.Death]

Gearbox would be the most sought-after developer in Embracer, I'd assume.

Crystal Dynamics. They're already making Perfect Dark and you'd likely get Tomb Raider as part of the acquisition.

Otherwise, if I'm looking to buy, I'd be after the Canadian Eidos teams.

 

[SEGAvangelist]

Probably, but they aren’t even that significant. Borderlands is okay. Duke Nukem isn’t worth much.

Can’t imagine Sony or Microsoft wanting them really. Microsoft already have so many shooter teams and will have a ton more with ABK, and their quality bar and talent isn’t anywhere near Sony’s usual threshold.

Sony has been looking for GaaS money. Borderlands could easily be a gateway into that realm.

 

[ungalo]

Off the top of my head

Darksiders 3
Destroy All Humans remakes
2-3 Titan Quest expansions
Way of the Hunter
Kingdoms of Amalur remaster

There’s definitely more but their focus seems to be on niche games which is probably not sustainable.

They're not really focusing on anything specific i believe. They buy studios and those will do their things.

What's interesting is they have internal studios that will work on games that are not published by Embracer. Like Flying Wild Hogs make games with other publishers like Focus. Same thing for Saber that's making Space Marine 2 with Focus, along with KOTOR remake.

Besides that they released Biomutant, Wasteland 3, Saints Row, Dead Island 2, Chorus, Remnant From The Ashes...it's not particularly impressive but i think their future output has potential. Remnant 2 for example looks polished. They announced the return of Timesplitters, Outcast 2, Gothic remake, Payday 3, Tomb Raider, probably Deus Ex, Alone in the Dark, the next Metro, probably the next Kingdom Come, a South Park game, they have a deal with Amazon for a LoTR MMO, etc.

So not that niche, probably more midbudget.

 

[ChuckeRearmed]

Gearbox would be the most sought-after developer in Embracer, I'd assume.

The problem with Gearbox is Randy though

 

[Three]

Colin Moriarty said Embracer was going to be in trouble soon, it seems like he was right.

That trouble will be to lower the price for that shareholder vote.

 

[Kadve]

Btw here is the entire article from Wingfors if anyone wants to read it.

https://storage.mfn.se/3d21b973-d248-4f41-939e-b1f6b292e45c/embracer-interim-report-q4-2022-23.pdf

(part regarding the lost partenrship)

In Q2 2022/23 we outlined our ambition to close a number of partnership and licensing deals that would be jointly transformative for Embracer. We have already entered into multiple partnerships and licensing agreements with industry partners on both AAA games and movies based on some of our iconic IPs. Except for the already announced deals that have more limited short-term financial value, we have been working on one groundbreaking strategic partnership agreement that would have set a new benchmark for the gaming industry.

Negotiations have been taking far longer than originally anticipated considering we had a verbal commitment already in October 2022. The specific deal included more than USD 2 billion in contracted development revenue over a period of six years. The deal would have enabled a catch-up payment at closing for already capitalized costs for a range of large-budget games, but also notably improved medium-to-long-term profit and cash flow predictability for the duration of the game development projects

The transaction had many of the highest rated global advisories onboard with several hundred people engaged on both sides. All documentation was finalized and ready to go as of yesterday. We asked for the execution of the agreement before our Q4 announcement. However late last night we received a negative outcome from the counterparty. This decision was unexpected to the management and the Board of Directors of Embracer.

TLDR for rest:

* Profit for Board/tabletop/card games are much higher than expected

* Profit for Mobile Games are falling hard

* Space Marine 2, Remnant 2 and Payday 3 are expected this fiscal year alongside several unannounced titles

* Several games slated for the next fiscal year have the potential ""to generate more than SEK 1 billion in net sales"

* Dead Island 2 shattered all expectations and sold 1 million copies during its first weekend

* they have "more than 850 owned and controlled IPs, over 130 internal development studios and over 200 games in the pipeline"

* They will scale back on acquisitions and focus on already owned IP's looking forward as well as on decreasing their net debt.

 

[Mr Hyde]

Saints Row fucked up their leverage at the negotiation table.

 

[Shifty1897]

Fuck me Embracer, you have 200 studios. Stop buying new ones and start making games with the ones you've got.

 

[Pelta88]

Saints Row fucked up their leverage at the negotiation table.

This.

 

[StealthGoblin]

I wonder who that partnership was with.

Given the timing and the cold feet, I can only imagine it was a partnership with Microsoft for GamePass content etc. I’m not sure who else would have that sort of money and have the timings match to get cold feet.

 

[Cyberpunkd]

Acquire as many studios and IPs as possible and then sell everything to Tencent, NetEase or the Saudi Investment Fund.

My bet is the Saudis pulling out.

 

[Lokaum D+]

its ok guys

 

[El Muerto]

I'm definitely buying their stock while it's low. They make money and they're not going anywhere.

 

[Ozriel]

Fuck me Embracer, you have 200 studios. Stop buying new ones and start making games with the ones you've got.

That’s what they’ve said they’re doing now.

 

[Darkmakaimura]

Doesn't Embracer on the rights for most of the Lord of the Rings games now? I wonder what that means for the future of all those games? Supposedly there's going to be four new Lord of the Rings games between now and 2024 but maybe that's not the case now?

 

[Astray]

Very pessimistic on the future of this company, feels like a lot of their games come and go without making any real splash, and yet they keep buying and buying.

Microsoft can afford to do stuff like this because Azure is a money machine, but they can't keep it up indefinitely.

 

[Kadve]

Doesn't Embracer on the rights for most of the Lord of the Rings games now? I wonder what that means for the future of all those games? Supposedly there's going to be four new Lord of the Rings games between now and 2024 but maybe that's not the case now?

They leased the movie rights to amazon recently. Rumored to have done the same with the gaming one.

 

[Barlow]

 

[DeepEnigma]

Alright, which MS exec left to have a role in Embracer Group years ago ala Nokia and Ybarra?