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[Windows Central]Embracer Group is showcasing the dangers of irresponsible consolidation, which stands in stark contrast to Xbox.

gokurho

gokurho

Member
Summary by chatgpt
This article delves into Embracer Group's expansion strategy, highlighting the risks of irresponsible consolidation and its potential negative impact on industry engagement. Embracer Group's approach, marked by the acquisition of numerous game studios, is presented as showcasing the dangers of such consolidation, contrasting starkly with Xbox's more cautious and considered strategy.
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www.windowscentral.com

A huge gaming company, Embracer Group, is showcasing the dangers of irresponsible consolidation

Rumors of Embracer Group shutting down another beloved studio highlight the need for more careful acquisitions in the future.
www.windowscentral.com www.windowscentral.com
It seems like there isn't a month that goes by that we don't hear about another round of layoffs or studio closures from Embracer Group. One of the biggest ones was the closure of the Saints Row developer Volition. Last week we covered Embracer Group doing personnel cuts at Tiny Tina's Wonderlands support studio Lost Boys Interactive. There have also been reports of Embracer trying to sell off Gearbox. There have been dozens of other reports of layoffs that we haven't covered. Reports from people being let go from Eidos Montreal and Crystal Dynamics have also hit the news waves over the past 6 months. Timesplitters developer Free Radical Design was also closed down right before the holidays in 2023.
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This starkly contrasts with Xbox, which is continually trying to hire new talent and grow its longstanding and newly acquired studios. That being said, it would be naive to think that Xbox will always be this invested in its gaming arm, and if nothing else Embracer Group should be seen as a cautionary tale of the dangers of overzealous consolidation.
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The issue at hand here is that a company taking on the livelihood of hundreds to thousands of employees better have a hurricane preparedness plan ready. I'm hopeful that Xbox does have such a plan, but it seems that the Embracer Group not only wasn't ready for the fallout of a disaster but should have had the foresight to see this $2 billion deal falling through as a possibility.
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I think acquisitions are likely to start to slow down in the video game sector due to lowering sales and the economy as a whole slowing down. The only issue with that is independent studios will still shut down as they aren't able to stay afloat. The truth of consolidation is that there will always be risks and downsides, but if we see another rising star like Embracer Group come around purchasing dozens of studios without as much as a road map for the company's future, hopefully, we will raise concerns before it is too late.
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Weed Marijuana GIF by High End Graphics
Hot Dog Meat GIF by Applegate
 
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E

Elios83

Member
Microsoft still hasn't got any meaningful return from everything they have bought from 2019 until now.
Those are indeed the risks of consolidation in general, billions over billions and then you find out that some teams are super slow, others make games that aren't having the success you were hoping for or that to make things work you have to completely change your strategy compared to the past or the whole thing will collapse financially.
Microsoft has been obviously exposed to all of this and there has been nothing cautious about their approach given all they went through with Activision and all the billions spent.
 
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adamsapple

adamsapple

Or is it just one of Phil's balls in my throat?
He's out of line but he's right .jpg

Look at the closures at Embracer in the last 5, 6 months (and the one's expected in the coming ones).

Embracer bit too much, too fast, and a big part of their future growth/existence was reliant on a Saudi deal worth a few billions that didn't work out.
 
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Gambit2483

Gambit2483

Member
Elios83 said:
Microsoft still hasn't got any meaningful return from everything they have bought from 2019 until now.
Those are indeed the risks of consolidation in general, billions over billions and then you find out that some teams are super slow, others make games that aren't having the success you were hoping for or that to make things work you have to completely change your strategy compared to the past or the whole thing will collapse financially.
Microsoft has been obviously exposed to all of this and there has been nothing cautious about their approach given all they went through with Activision and all the billions spent.
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I wonder what would happen to Ninja Theory if their 6 years and increased development budget ultimately led to "less than stellar" sales of Hellblade 2...

Would they be "safe"?
 
kungfuian

kungfuian

Member
Or it could be a sign of what's to come? Give it a few years when those game pass numbers don't add up and they cull the herd, or better just the same they switch their focus to mobile and all those AA-AAA teams they spent so much money on end up making Avatar shoes and a loot boxes with virtual bubblegum inside.

The Xbox branding isn't working that great for them these days, maybe they could pick up the Tasmanian devil as a mascot, it'd be perfect, eat and spin, that's what they do best.
 
Shut0wen

Shut0wen

Member
Im sorry but this article is dumb as fuck, embracer group gambled big time from huge investors (saudi government) to aquire £2 billion pounds in funds, thats why they went on a spending spree to on tomb raider and devs to up its value to show confidence in investors, and behold they failed, now they are pretty much stuck and everything they have brought and now everything they have is pretty much worthless, ms pretty much brought acti for a massive cash flow (mostly from mobile games and cod) the 2 comparisons cant be any further from what the article implys
 
RickMasters

RickMasters

Member
AltogetherAndrews said:
Can’t wait for that new Fable from Lionhead.
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To be fair I think old Pete didn’t help lionheads cause either. Milo…..fable legends…. Remember those?



I think they could have handled the studio better and maybe something like gamepass would have been a good place for them as far as risk aversion on their projects and Pete moleneux lofty ideas.


I think a black and white sequel or a magic carpet or even a new populus game would have been great to revisit with new hardware and well thought out sequels…. Instead he wanted people to talk to Kinect.


It’s sad that they closed down but we can’t lay the blame entirely at MS feet on that one. That studio was having some internal leadership issues. Just my humble opinion though.
 
Shin-Ra

Shin-Ra

Junior Member
RickMasters said:
To be fair I think old Pete didn’t help lionheads cause either. Milo…..fable legends…. Remember those?



I think they could have handled the studio better and maybe something like gamepass would have been a good place for them as far as risk aversion on their projects and Pete moleneux lofty ideas.


I think a black and white sequel or a magic carpet or even a new populus game would have been great to revisit with new hardware and well thought out sequels…. Instead he wanted people to talk to Kinect.


It’s sad that they closed down but we can’t lay the blame entirely at MS feet on that one. That studio was having some internal leadership issues. Just my humble opinion though.
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Magic Carpet was Bullfrog/EA and B&W Liohead/EA.

I actually did work experience at Lionhead while B&W2, The Movies and Fable The Lost Chapter were in development.
 
Shadowstar39

Shadowstar39

Member
Who is pushing this bs about Microsoft. Sure embracer strategy was shit, but saying Ms is the picture of proper expansion is ridiculous and sole agenda gaslighting.

Sorry but they are monopolistic to the gaming space and aren't being cautious. The whole gamepass thing is not good strategy for good games. Free to play and gamepass will sequel a race to the bottom. Look at mobile phones and it's free to play model with micros as where it all goes. It's a race to the bottom.

Also what return has MS gotten from the investments?
 
thicc_girls_are_teh_best

thicc_girls_are_teh_best

Gold Member
Windows Central is basically an infomercial ad-hell website to promote Microsoft-related ventures, and this article is no different. At least they admit that MS will not be as invested in their gaming division going forward, WRT big M&As, because that is most likely going to be the case.

MS have a lot on their plate now, and have to make these purchases produce some substantial results. That takes time, a lot of time, and effort. Any single big mistake and both Zenimax & ABK could become the biggest M&A disasters of the 21st century (or at least tied with Nokia, also purchased by MS).

MS have to be extremely careful going forward not to fumble those bags and adding yet another big gaming publisher on top of that anywhere during the next 5 years minimum, will just push the dam to a breaking point.

Mister Wolf said:
Embracer was balling on a budget. Microsoft's money is strong.
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Being frivolous with your money just because you've got a lot to blow is even more irresponsible than making a bad play on a limited budget, IMO. It shows a complete lack of responsibility and taking what you have for granted. Having that much "free money" to waste can enable destructive actions that can hurt the industry in the long run.

Also FWIW Microsoft may have a lot of cash but most of that isn't Microsoft Gaming's money. These divisions get budgets to work with and after ABK, I don't think MS Gaming can justify or plead a case to get even a 10th of that ABK money for buying another publisher anytime soon, or for a good while. They have to produce some real results first, and you can't buy time to speed that up.
 
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StreetsofBeige

StreetsofBeige

Gold Member
The key difference is MS can afford it. Embracer cant. No other big gaming corporation is dumping studios and employees floodgates open like Embracer.

Gamers might think MS buying Activision and Bethesda were overpriced. Same goes for Sony buying Bungie at $3.6 billion.

If those are overpriced acquisition, on what scale do you explain Embracer buying Gearbox for $1.3 billion? And them buying Asmodee (a company that made board games and some PC games) for about $3 billion when that company was originally acquired by a different company for only $150M 7 years earlier?

I remember a gaffer in a different thread talking about Embracer and his thought was the company isn't even interested in running a gaming company long term. But instead just want to buy studios cheap when interest rates were low and sell them off later for higher prices. Probably true.

Embracer Group - Wikipedia

en.wikipedia.org en.wikipedia.org

As of September 2023, Embracer Group has 129 internal game development studios and is engaging more than 15,000 employees and contracted employees in more than 40 countries.[82][83]

THQ Nordic
 
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Shadowstar39

Shadowstar39

Member
Shin-Ra said:
Magic Carpet was Bullfrog/EA and B&W Liohead/EA.

I actually did work experience at Lionhead while B&W2, The Movies and Fable The Lost Chapter were in development.
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So during their best time. Was this before being bought by Microsoft? What did you do there?

I'd love a new black and white game. It was so ahead of its time. And populous too.
 
Kadve

Kadve

Member
StreetsofBeige said:
The key difference is MS can afford it. Embracer cant. No other big gaming corporation is dumping studios and employees floodgates open like Embracer.

Gamers might think MS buying Activision and Bethesda were overpriced. Same goes for Sony buying Bungie at $3.6 billion.

If those are overpriced acquisition, on what scale do you explain Embracer buying Gearbox for $1.3 billion? And them buying Asmodee (a company that made board games and some PC games) for about $3 billion when that company was originally acquired by a different company for only $150M 7 years earlier?

I remember a gaffer in a different thread talking about Embracer and his thought was the company isn't even interested in running a gaming company long term. But instead just want to buy studios cheap when interest rates were low and sell them off later for higher prices. Probably true.

Embracer Group - Wikipedia

en.wikipedia.org en.wikipedia.org

As of September 2023, Embracer Group has 129 internal game development studios and is engaging more than 15,000 employees and contracted employees in more than 40 countries.[82][83]

THQ Nordic
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Scratch Piranha Bytes from that list:

Neue Informationen zu Piranha Bytes: Das Studio hinter Gothic und Elex steht offenbar kurz vor der Schließung

Eine offizielle Bestätigung steht nach wie vor aus, aber unsere Quellen legen nahe, dass es Piranha Bytes in Zukunft nicht mehr geben wird. Zumindest...
www.gamestar.de www.gamestar.de
 
baphomet

baphomet

Member
There's no difference in their current strategy.

Buy as much as possible.

Only one has unlimited money and Embracer's money has run out.

They're both destroying the industry though.
 
Negotiator101

Negotiator101

Member
Bitmap Frogs said:
brah, how can you write something like that.

The only differene is that microsoft has billions in the bank, while embracer has millions in debt.
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Thats a pretty big difference don't you think? One can sustain these studio's the other can't, isn't this the point of the article? Embracer didn't have the financial chops and the Studio's it acquired paid dearly. Microsoft obviously do as you pointed out.
 
Negotiator101

Negotiator101

Member
baphomet said:
There's no difference in their current strategy.

Buy as much as possible.

Only one has unlimited money and Embracer's money has run out.

They're both destroying the industry though.
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Destroying the industry? How's that? In Microsoft case they are giving these Studios financial stability and letting them create without the burden of paying the bills.

Also from Phil Spencer, We have a service that is financially viable, meaning it makes money, in Game Pass. We’ve put a lot of money into the market, over a billion dollars a year supporting third-party games coming into Game Pass

Over 1 Billion to funding third-party games is not how you destroy an industry 🤣 Quite the opposite 🙄
 
Shin-Ra

Shin-Ra

Junior Member
Shadowstar39 said:
So during their best time. Was this before being bought by Microsoft? What did you do there?

I'd love a new black and white game. It was so ahead of its time. And populous too.
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2005 testing in the main building (but we were escorted briefly to visit one of the satellite offices just down the road)

Most of my feedback was related to how I expected view scrolling to work in The Movies (ramping up the speed the closer the mouse cursor gets to the edge of screen) and I was supposed to test Black & White 2 but my test PC wasn’t up to the task.
 
Bitmap Frogs

Bitmap Frogs

Mr. Community
Negotiator101 said:
Thats a pretty big difference don't you think? One can sustain these studio's the other can't, isn't this the point of the article? Embracer didn't have the financial chops and the Studio's it acquired paid dearly. Microsoft obviously do as you pointed out.
Click to expand...

There is no strategy or smarts involved as the article argues when you can buy a company multiple times over.
 
thicc_girls_are_teh_best

thicc_girls_are_teh_best

Gold Member
StreetsofBeige said:
The key difference is MS can afford it. Embracer cant. No other big gaming corporation is dumping studios and employees floodgates open like Embracer.

Gamers might think MS buying Activision and Bethesda were overpriced. Same goes for Sony buying Bungie at $3.6 billion.

If those are overpriced acquisition, on what scale do you explain Embracer buying Gearbox for $1.3 billion? And them buying Asmodee (a company that made board games and some PC games) for about $3 billion when that company was originally acquired by a different company for only $150M 7 years earlier?

I remember a gaffer in a different thread talking about Embracer and his thought was the company isn't even interested in running a gaming company long term. But instead just want to buy studios cheap when interest rates were low and sell them off later for higher prices. Probably true.

Embracer Group - Wikipedia

en.wikipedia.org en.wikipedia.org

As of September 2023, Embracer Group has 129 internal game development studios and is engaging more than 15,000 employees and contracted employees in more than 40 countries.[82][83]

THQ Nordic
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FWIW, even if you say Microsoft can afford it, they've still let many people in their gaming division go, too. Theoretically, they shouldn't have to let anyone go, but these are businesses not charities.

That all said, on the scale of Most Responsible (1) <-> Least Responsible (10) gaming companies in M&As, given that's a 10-point scale, Embracer would easily fall right into the Least Responsible slot without issue. I'd probably put Microsoft at a 5; moving so fast to ABK after barely completing the Zenimax one (and not even producing results yet with it) was questionable on some level, not to mention how studios like Rare have fallen in prestige so sharply under Microsoft's ownership.

It's just funny the Windows Central article seems to posit it as if Microsoft are the complete polar opposite, when at best they're at most a few degrees removed from an Embracer but not comfortably enough to be at the total opposite end of the scale. I would save that for companies like Sony/SIE (Naughty Dog, Insomniac), Nintendo (Retro), Bandai-Namco and maybe also Koei-Tecmo & Square-Enix. Sega-Atlus (& Sammy) could fit in there too depending on how upcoming games and the "Super Game" projects land.

But yes, all of them, Microsoft too (just lesser so), are much better with M&As compared to Embracer Group.
 
TheThreadsThatBindUs

TheThreadsThatBindUs

Member
I don't think there is a world in which MS's M&A strategy of buying up entire fucking multiplatform publishers can be considered a more cautious approach.

Microsoft is a platform holder of the distant 3rd place platform who buys entire multiplatform publishers, trying to make all their games exclusive; publishers who make most of their money on the competing platforms, on the premise that you're going to put all their games up for free to your tiny installed base on your sub service.

Unless MS magically creates 300m new GP subs on PC and in the cloud, there is no way the economics of their strategy makes any sense. Even their own internal projections pretty much admitted to it.

Their strategy is reckless big spending to try to force their competitor out of the market. That's far worse than Embracer group.

Embracer bit off more than they could chew. MS spent big on the fallacious idea they sold to MS higher ups that they could somehow create more Xbox gamers on PC and xCloud based on nothing more than a wing and a prayer; meanwhile their console business having been neglected for years is just fucking cratering.

Embracer's management made big bets that didn't pay off. Whereas Spencer and co are just delusional and clueless, but have borderline infinite money because Xbox is Satya Nadella's pet project.
 
StreetsofBeige

StreetsofBeige

Gold Member
As for Embracer, name one company in any industry that goes hog wild buying up shit like this during covid. But thats what embracer did. Hoard small publishers and studios for dirt cheap during covid when interest rates were rock bottom (probably the lowest in history). Interest rates started shooting up at the beginning of 2022, but it took some time for it to ramp up to a high level later in 2022. Thats when embracer jammed on the brakes.

Their list of acquisitions is so much pasting in the Wiki chart becomes a complete mess and isnt even doable in Gaf as it passes the 30,000 character limit! Gaf shows a message a limit was reached and it's not able to post!

So if you want to see the giant list, just check out the link and check out how much they bought and paid during covid years.

List of mergers and acquisitions by Embracer Group - Wikipedia

en.wikipedia.org en.wikipedia.org
 
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Pejo

Pejo

Member
Organic Families like Microsoft don't just happen by accident. Their angelic fingers reach slowly into their pure innocent coffers, and offer a lifeline to struggling multi million/billion dollar corporations.

The Nadella, The Spencer and the Gamepass Subscription, Amen.

Anyways, consolidation of publishers/developers has been bad for the industry and gamers alike for a very long time now, whether it's MS/Embracer/Sony/Saudi princes/any other entity. I really wish the industry would reboot themselves (instead of the hit games from ~7 years ago) to become more lean/sustainable and release games in more realistic timeframes.
 
N

NEbeast

Member
Negotiator101 said:
Destroying the industry? How's that? In Microsoft case they are giving these Studios financial stability and letting them create without the burden of paying the bills.

Also from Phil Spencer, We have a service that is financially viable, meaning it makes money, in Game Pass. We’ve put a lot of money into the market, over a billion dollars a year supporting third-party games coming into Game Pass

Over 1 Billion to funding third-party games is not how you destroy an industry 🤣 Quite the opposite 🙄
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