Skip to main content

Embracer will split into three companies, including Middle-earth & Friends

Lars Wingefors to carry on as "a long-term, active, committed and supportive owner"

The Embracer group logo in white font on a multi-coloured patterned background
Image credit: Embracer

Famed mass-layoff-manufacturing corporation Embracer Group are dividing into three companies, which will be listed separately on Sweden’s stock exchange. Those companies are: Asmodee Group, which comprises Embracer’s tabletop games biz; Coffee Stain & Friends, an evolution of the existing Coffee Stain publisher, who will pursue "a dual focus on indie and A/AA premium and free-to-play games for PC/console and mobile"; and Middle-earth Enterprises & Friends, “a creative powerhouse in AAA game development and publishing for PC and console, as well as the stewards of The Lord of the Rings and Tomb Raider intellectual properties, among many others”.

After writing roughly 100,000 posts about Embracer’s butchering of vast swathes of the games industry, this is surely my chance to raise a cheer and celebrate the conglomerate’s unglomming with a cool glass of turnip juice, but it is Monday, the man next door is shouting again, and I am tired - so tired that only ill-suited Simpsons references come to mind.

Besides, I’m not sure how much of this is Embracer “breaking up” versus Embracer moving the pieces around. Even as Embracer trisect themselves, the investment firm run by CEO and cofounder Lars Wingefors will keep their current holdings within the group - “approximately 20% of capital and 40% of votes” – and will form “a new long-term ownership structure” so as to “remain a long-term, active, committed and supportive owner of all three entities."

The announcement release frames the decision as the result of "a careful and thorough review" in the wake of Embracer's massive cost-cutting enterprise over the past year. It offers the following investorspeak breakdown of the arguments for dividing the pie:

- The entities will have sufficient scale, coupled with clearer operational strategies and financial profiles that enable simplified equity stories to attract a larger pool of investors. Current shareholders can freely decide on their capital allocation between the three entities.

- Each entity will be able to fully utilize its own balance sheet, its own set of financial targets and optimal financing structure and capital allocation strategy that enable their growth ambitions.

- The new structure enables the best possible greenlighting models, portfolios and go-to-market strategies for indie games as well as AAA games through two separate, more focused entities.

- Ongoing and future collaboration around IPs, companies and people will still be enabled and encouraged across the entities on market terms.

I imagine the unwritten fifth bulletpoint here is:

- We have spent around a year axing jobs, closing studios like Volition and cancelling projects like the new Deus Ex game after piling up mahoosive debts over the course of a decade in which we ultimately banked everything on a $2 billion investment deal that failed to materialise. As such, Embracer's name is now mud and we still need to balance the books to the satisfaction of our shareholders, so we'd better spin things out and call ourselves something else.

There's some detail in the release about how the three new companies will be structured. Coffee Stain & Friends will focus on "a variety of games for PC, console and mobile, including community-driven free-to-play games, LiveOps games, and indie/AA games." They're dividing their activities pretty evenly between free-to-play and upfront purchase models.

On the premium game development side, there's Ghost Ship, Tarsier, Tuxedo Labs, THQ Nordic and Amplifier Game Invest, who are working across Deep Rock Galactic, Goat Simulator, Satisfactory, Wreckfest, Teardown, Valheim, "as well as more than 200 other IPs". Easybrain, Deca, CrazyLabs and Cryptic are doing free-to-play stuff in the shape of, Blockudoku, Jigsaw Puzzle, Star Trek Online and D&D Neverwinter Online, amongst others.

Middle-earth Enterprises & Friends, meanwhile, will encompass the former Embracer subsidiaries PLAION, Freemode and Dark Horse, together with Crystal Dynamics, Dambuster Studios, Eidos-Montréal, Flying Wild Hog Studios, Tripwire, Vertigo Games, Warhorse Studios and 4A Games, among other game developers. The new outfit will take charge of such licenses as Dead Island, Killing Floor, Kingdom Come Deliverance, The Lord of the Rings, Metro and Tomb Raider.

Middle-earth Enterprises & Friends will remain within the current listed company Embracer Group, which will eventually be renamed when Coffee Stain & Friends are actually spun off in calendar year 2025.

All this follows news last month that Embracer would sell off Saber Interactive to a new company co-founded by Saber's own original co-founder, and Gearbox to Take-Two, publisher of GTA 6, Borderlands and Bioshock. Embracer have said that their "restructuring" is now over, which suggests that there will be no further mass layoffs, cancellations or closures for the foreseeable. Fingers crossed.

It only remains for me to say that sticking "& Friends" on the end of these newly formed companies makes it sound like they're launching a bunch of kids TV shows. I'm picturing a variation on Get Your Own Back, except that instead of kids making their teachers fall into vats of gunk, they're pushing TimeSplitters 4 into a woodchipper.

Read this next