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Thursday, August 18, 2022

Embracer Group to Acquire Limited Run Games, LotR, and way more

By LUDWIG VON KOOPA - Hey, they've now earned the right to be in a headline without quotes around their name.

You may remember the Embracer Group back several months ago this year when SQUARE ENIX sold off Crystal Dynamics and Eidos Interactive to them. Read KoopaTV's article on that if you want a quick premier on what they are.

Per Embracer Group's press release from August 18 for their first quarter financial disclosure, they are giving a “happy” “welcome” to their new from-SQUARE ENIX acquisitions, and the transaction will close soon. They then described a “strong funnel of [merger & acquisition opportunities]”, but also said they are “increasingly selective” on who they choose to invest. Otherwise, their press release was all about “organic growth” and their projection of an impressive (but widely varying) 20–35% “overall organic growth” for the rest of their fiscal year.

If you don't understand what “organic growth” means—maybe you don't read financial reports often—it's a concept that means how much a company would grow in a time period by itself. As in, without having the growth rate of an acquired company added to it. Growing by acquisition would be “inorganic” growth. Of course, eventually the acquired company's growth becomes part of that organic growth base. But Embracer wants you to know that they don't HAVE to keep acquiring companies to be impressive. ...And yet on the same August 18 day, they announced all of these new acquisition agreements:
  1. Limited Run Games
  2. Singtrix
  3. Tatsujin
  4. Bitwave Games
  5. Gioteck
  6. The non-print publication IP rights to The Lord of the Rings and The Hobbit (Middle-earth Enterprises)
  7. Tuxedo Labs
  8. Tripwire Interactive
  9. An unannounced acquisition in the PC/console gaming space
Limited Run Games (known for partnering up with many game developers to manufacture small batches of physical editions of otherwise digital-only titles) and Singtrix (known for being the ones behind Guitar Hero's controllers) are going to be part of the also-brand-new-as-of-August-18 “Embracer Freemode” operating group, which is apparently about classic/heritage gaming, as well as new technology incubation. The Lord of the Rings IP will also be part of Freemode. The Bitwave Games (a small Swedish studio that likes retro games; they happen to be bringing Zero Wing to PC so you don't need a Nintendo Switch Online + Expansion Pack subscription to play it), Gioteck (a European gaming accessory brand), and Tatsujin acquisitions—Tatsujin being Embracer's first Japanese acquisition—are hidden in that Freemode announcement, since those individual companies apparently weren't worth their own press release. But they'll also all be part of Freemode.

Meanwhile, Tuxedo Labs (founded 2019) will be part of Embracer's Saber Interactive group (they're known for the PC game Teardown, which isn't something I actually know because I never heard of it), as well Tripwire Interactive—a company that is dead to me after what they did to John Gibson, their company's former president. They actually mentioned Mr. Gibson in the press release, just to say that he “will be pursuing opportunities outside of Tripwire.” Meanwhile, all of Tripwire's existing leadership is staying in the company as a subsidiary of Saber Interactive (part of Embracer).

The first place I was reading about all of these acquisitions wasn't Embracer's press release site, but from social media. So I thought by the time they were getting to acquiring The Lord of the Rings IP rights, that this whole series of acquisitions were a satire of corporate consolidation and it was all a joke. Like, it's something you'd see out of a Devolver Digital skit., this is all real. I personally don't think their Freemode group is totally...coherent, but that probably just means they'll be acquiring even more companies to fill that out.

I guess the most surprising part is the The Lord of the Rings part, because the Tolkien Estate is notoriously a bunch of jerks. They actually have a FAQ page where they strongly imply they will sue you if you make fan-fiction based off Tolkien's works. It's pretty popular to hate on Nintendo for taking their copyright seriously, but you don't see Nintendo proclaiming that. (I mean, KoopaTV is still here.) That must have been a lot of money involved for that particular transaction—all of their acquisitions from August 18 total to over half a billion United States dollars in upfront costs. I wonder if it'll pay off for Embracer!

Let KoopaTV know in the comments section if YOU'VE been acquired by the Embracer Group. KoopaTV hasn't, but Embracer apparently has the cash available to do so if they chose that path. Embracer is known for letting their subsidiaries continue to operate as they'd like to, so it sounds like it'd be a good fit.

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