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Embracer, rise and fall (?) of the most amazing European software house

1 year ago babelfish

Embracer, rise and fall (?) of the most amazing European software house

Embracer employs approximately 17,000 people. Savvy Games Group, owned by the Saudi government, has also bet on the entertainment giant. But not even the Swedish label seems immune from the crisis that is sweeping the world of video games

Until now he had been described as a miracle worker. And for once it wasn't a press exaggeration. The Swede Lars Wingefors , CEO and founder of Embracer Group, opened his first company at the age of 13 and, with the money he made selling old comics bought at flea markets by mail order (the last year before closing he had totaled 300,000 kroner annual turnover), had opened Nordic Games, which in germ constituted the Embrace Group today active in all sectors: from video games to cinema, capable of employing 17 thousand people in a town that barely has 60 thousand.

The very young Lars Wingefors grappling with his first business

THE SUDDEN NAIL OF EMBRACER

A miraculous and limitless growth that had prompted numerous sector publications, including non-vertical ones, to glorify the entrepreneurial intuition of this ardent startupper antelitteram. Then, suddenly, a few hours ago came a sudden nail. “This morning we announced a restructuring program for Embracer Group that will make us a leaner, stronger, more focused, self-sustaining company.” With these words begins the open letter with which Wingefors, number 1 of the Karlstad group, announced a heavy restructuring program, which foresees a period of tears and blood at all levels.

The restructuring program aims to strengthen the company and improve its cash flow so as to "cope with the worsening economic and market situation". The program “will significantly reduce our debt. After the completion of this program, we will generate profitability growth with lower business risks and higher margins in the PC/Console segment in the coming years. This, in turn, will give us the freedom to continue to grow and deliver high-quality experiences that our players truly enjoy.”

THE BEGINNING OF THE END?

It seems that it all began with the bankruptcy of a strategic partnership of enormous importance, quantified at 2 billion dollars, an event that lowered the forecasts for the new fiscal year, leading to the immediate collapse of the value of the shares on the stock market.

Lars Wingefors himself reported it: "Late yesterday evening, we were informed that a large strategic partnership that has been in negotiations for 7 months will not materialize" and consequently lowered the forecasts for the fiscal year 2023/2024 from 10.3-13.6 billion SEK to 7-9 billion.

THE LICENSES AND STUDIES IN THE SWEDISH PORTFOLIO

Until now, the history of Embracer and its founder had been studded exclusively with successes. The coup from the 90s brought him to the point with the acquisition of THQ, one of the rare western software houses of the 90s (if we exclude the giants) still alive.

The Swedish label thus got its hands on IPs of the caliber of Saints Row, Darksiders, Destroy All Humans, MX vs ATV and Red Faction . And they weren't enough, given the close acquisition of Koch Media Holding, now Plaion, of the publishing division Deep Silver (which boasts video games such as Metro, Chivalry and Dead Island ) and finally of the Italian studio Milestone ( Ride, MotoGP ) founded in 1996 in Milan for 50 million dollars.

Then it acquired Tripwire Interactive and Limited Run Games. From the Japanese Square-Enix it has acquired brands of important video game series such as Tomb Raider, Deus Ex, Thief and the respective studios of Crystal Dynamics, Eidos Montreal and Square Enix Montreal. Operations that have brought the total of companies linked to Embrace to 120 scattered more or less everywhere, with 270 video games still in development.

ALSO PLANS FOR THE DEBUT IN THE WORLD OF CINEMA?

Last but not least, the recent acquisition of Middle-earth Enterprises should be mentioned. The amount paid by Embracer Group to win Middle-earth Enterprises , holder of the rights to Tolkien's works, including the main course : The Lord of the Rings, has not been revealed. There is talk of a sum that should be between 600 and 800 million.

Since 1976, the entire package had belonged to The Saul Zaentz Company , which in February 2022 had put it up for sale for $2 billion. Before the restructuring announced in the last few hours it seemed obvious that Embracer Group was preparing to debut in the world of cinema, but now what will happen?

This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/embracer-ascesa-e-caduta-della-piu-mirabolante-software-house-europea/ on Wed, 14 Jun 2023 09:24:22 +0000.