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Embracer Group Update (12/13): "at least half" of 3D Realms/Slipgate Ironworks personnel laid off

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The 'transformative' partnership was supposed to be announced today, but was unexpectedly halted last night.




It was a bad day for low-key gaming colossus Embracer Group, which announced in its full-year financial report that a "groundbreaking strategic partnership" worth more than $2 billion had fallen through at the last minute.


Embracer didn't name the other company involved in the planned partnership, but said that a verbal commitment to the deal, which "would have set a new benchmark for the gaming industry," was secured in October 2022. 


"The transaction had many of the highest rated global advisories onboard with several hundred people engaged on both sides," Embracer said. "All documentation was finalized and ready to go as of yesterday [May 23].




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  • Commissar SFLUFAN changed the title to Embracer CEO reveals that a "$2 billion strategic partnership" fell apart less than 24 hours before releasing its annual report
2 minutes ago, Brian said:

Lolololol verbal agreements are not secured. Get a LOI/LOA in place before you start spending costs and adding it to your forecast. Heads should roll for this tbh. Stock down 40%


I listened to a bit of the investor video with Lars and when the interviewer asked him about the effect on cash flows of this debacle, his response was...uhhhh..."concerning" to say the least.

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18 hours ago, Brian said:

It’s never good to have CF issues. It’s especially bad in this type of industry.  I expect the cost cutting to come fast and hard. 
Frustrated World Cup GIF


This is a problem:



Only 2 out of 14 notable new releases in the fiscal year 2022/23 performed above average. Only 4 broke even.



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  • 3 weeks later...




Everyone, This morning we announced a restructuring program across the Embracer Group that will make us a leaner, stronger and a more focused, self-sufficient company. I want to share some background and context to this decision – and what it means for us going forward. During the past years, Embracer invested significantly both in acquisitions […]


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  • Commissar SFLUFAN changed the title to Update: Embracer Group announces "massive restructuring" to reduce costs including layoffs/studio closures and divestments/project cancellations
33 minutes ago, AbsolutSurgen said:

Embracer owns Asmodee, I’m mostly concerned about impact on their mini games. 


It'a quite the kick-in-the-pants coming hot on the heels of Shatterpoint's release.


Apart from the videogame and tabletop properties, Embracer also owns Dark Horse Comics and the Lord of the Rings IP. 

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This paragraph from the RPS article about this story is quite something:



The many, many things Embracer currently own include Gearbox (Borderlands), Crystal Dynamics (modern Tomb Raider), Eidos Montreal (modern Deus Ex), Volition (Saints Row), Dambuster Studios (Dead Island 2), 3D Realms (Bombshell), Ghost Ship Games (Deep Rock Galactic), Coffee Stain (Goat Simulator and Satisfactory), Piranha Bytes (Gothic, Risen, Elex), Tripwire Interactive (Killing Floor), Warhorse Studios (Kingdom Come: Deliverance), 4A Games (Metro), Snapshot Games (Phoenix Point), Zen Studios (Zen Pinball), Bugbear Entertainment (Wreckfest), New World Interactive (Insurgency), Flying Wild Hog (Shadow Warrior reboot), Beamdog (remasters of Planescape and Baldur's Gate), Perfect World, Saber Interactive, Tuxedo Labs (Teardown), and Middle-earth Enterprises (like, actual Middle-earth). They've also bought individually bought rights to series including Alone In The Dark, Carmageddon, and TimeSplitters. And they have moved beyond games with comic book publisher Dark Horse, board game publisher Asmodee, and various companies for anime, CGI, and more.


As for the future...



"I have a high degree of confidence that this entire process is going to easily translate into better product selection that's more profitable, and that gives us a greater opportunity for growth in the future, and that helps to leverage the IP that we own within our organisation. I mean, we own Lord Of The Rings," said interim chief operation officer Matthew Karch during a press conference. "We know we need to be exploiting Lord Of The Rings in a very significant fashion, and turn that into one of the biggest gaming franchises in the world. And that's obviously something that we're going to be doing. That's a much better use of resources than some of the other projects that some of our teams have been working on."


Oh yeah - we're totally getting a Tom Bombadil dating sim!

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7 minutes ago, Keyser_Soze said:


Will be fun seeing Microsoft twist the FTC's arm to get the Activision thing going but be okay with Embracer dumping tons of IP on Amazon.

Ehhhhh - two really quite different situations because one involves a significant structural change to a market while the other doesn't.

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8 minutes ago, Brian said:

That letter has no executive responsibility for this predicament. If I was an employee, I would be pretty pissed reading that nonsense. 




Karch agreed, saying during the presentation: “When you acquire [games] studios as rapidly as we have one of the downsides of that rapid acquisition is that you really can’t integrate in a meaningful fashion and so what you end up with are a lot of studios that have their own organizations and their own departments which do things which are also being done in parallel by other units. And when you have as many companies as we do, the duplication can be significant.”






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  • 2 months later...

The Saudis were the "mystery partner" in the collapsed $2 billion deal.


Scoop: Saudi-funded Savvy Games was the mystery partner in collapsed $2b Embracer deal (Axios)



The previously unknown partner in a $2 billion video game mega-deal that mysteriously and dramatically collapsed last spring was the Saudi government-funded Savvy Games Group, Axios has learned.


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  • Commissar SFLUFAN changed the title to Update: Saudi-funded Savvy Games was the "mystery partner" in Embracer's collapsed $2 billion deal
On 8/14/2023 at 3:10 PM, Brian said:

With this leaking, I wonder if Embracer will provide any further comment this Thursday. 



"It was more that they would like to do something in the future, but not now, which became a 'no' for us."




When asked about that report, Wingefors refused to confirm the identity of the business partner, citing legal reasons and suggesting that, in business, you "don't comment on partnerships unless both partners would like to do that."


He did, however, provide some explanation as to why the deal unraveled, and indicated it was more about timing that anything else.


"As stated, when announcing the news last quarter, the background given to us [as to] why the partnership didn't happen was not because of the terms or the pipeline of games," said Wingefors. "It was more that they would like to do something in the future, but not now, which became a 'no' for us."


When asked for his thoughts on the collapse now he's had more time to digest the situation, Wingefors reiterated his belief that the proposal itself was sound, but admitted the entire ordeal has been "painful."


"I think the idea to partner up with someone to finance and to share business risks, and that both partners are in the same boat, is still valid," he said. "Obviously we do that with industry partners today, but this was on a greater scale. Embracer, again, being the only company with such a broad pipeline, including a significant variety of well-known IPs and licensed IPs, I think is a very interesting proposal for players.


"Now that's history. Now we're taking control in our own hands. We're adapting and adjusting, and we've left this behind us. Personally I've done a lot of learnings, and it's been painful, but as an entrepreneur you learn as you go."



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