Did Embracer Group Not Learn From The Past?

Embracer Group has hit troubling times. They are one of the largest third party publishers in the gaming industry, yet you may not know it. That’s because unlike EA or Ubisoft for example, Embracer Group don’t publish games under their own. Embracer Group are more like Take-Two Interactive whom own Rockstar Games and 2K Games which are the brands you’ll see their various franchises all released under. With Embracer Group, perhaps the most known of the publishing labels is THQ Nordic and Gearbox Publishing. 

As a publisher, over the past decade, Embracer Group has managed to acquire a significant number of developers and publishers and have done so at a relatively quick pace. The problem is that the speed in which these companies were all purchased has outpaced the actual profits that have been made. Sure, Embracer Group has a huge back catalogue of IPs as well as a large library of games available to purchase, but the biggest issue seems to be nothing they are releasing is generating enough income to offset the huge amounts of money Embracer Group must owe.

Buying any developer or publisher is rarely ever cheap. Unless you’re Nintendo, in which case the very few they have bought over the past two decades seem to all have been very much on the low side. Though it’s not totally easy to know for certain because the actual agreement to acquire say, Next Level Games, was never disclosed. But you can be sure it wasn’t anything expensive. Though to be fair, Nintendo has so much spare money in its pockets let alone the bank, I doubt they needed to worry about loans to buy anyone. Embracer Group on the other hand seem to be the opposite. While they’re market value has certainly increased, they don’t have the capital to back up these large scale buyouts. And it shows, because right now there’s about to be a large scale restructuring of the business as a whole. Developers will be closed down. People will lose their jobs. One I’m expecting to disappear is Deep Silver Volition whom are the team behind Saints Row. The last game bombed and it’s pretty likely they are in for the chop. Another possibility is Free Radical Design which was only recently relaunched to take on the development duties of a new TimeSplitters game after many years of gamers begging. 

The thing that strikes me is that, this happened a lot during the 1990s when European companies suddenly went in a buying spree which resulted in a massive increase in revenue, market value and for a time, increased share price. The problem was that none of this was big enough to pay off the mounting debts the new giants were taking on. To top it off, the games that were being released were degrading in quality with every release.

Infogrames went through over a decade with serious debts that just kept mounting. Ocean Software, Gremlin Graphics and GT Interactive we’re amongst the incredibly expensive purchases and all within five years. It’s amazing they survived, or for that matter, were able to purchase Atari Inc and do a total rebrand. That’s not cheap and though it did seemingly help in the very short term, it was never going to last. Titus Interactive is another which expanded quickly then went bankrupt, taking down Interplay and Avalon Interactive which was formerly known as Virgin Interactive. It wasn’t just in Europe this happened though. Acclaim Entertainment was based in North America and yep, they also expanded quickly throughout the 1990s and then went bankrupt in the early 2000s. 

So when you have history that shows this stuff has happened multiple times before, you’d think someone would be smart enough to look at what the results could end up being. Now I’m not saying Embracer Group is going under. But they definitely need to really think carefully about how they go about not just the restructuring but the games they release. And let’s not forget the use of the Lords of the Ring IP they have also purchased.

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