Embracer Group’s latest financial report shows a positive outlook, with better results since their long, sometimes rocky, reorganization process. The company continues its process to refocus on owned IP, including development of multiple Lord of the Rings-related projects under their deal to acquire Middle-earth Enterprises.
After the long restructuring process, the company is emphasizing the positives and noting what’s still lagging. Divestments made, including Gearbox Entertainment, Saber Interactive, and others, helped the company to have a cash flow of 2 billion SEK (or around $189.7 million) for the first time. Total expenditures are also down year over year, by nearly half.
They also canceled the number of projects, and had a lower number of releases, so their PC and console games growth was actually negative 30% in the quarter because the release of Dead Island 2 in the corresponding quarter last year was so successful. They have a plan to turn this around though.
The report reads, in part: “We have a clear plan to improve profitability within PC/ Console Games. Firstly, our resources are increasingly focused on our own and controlled key IPs, which typically have better unit economics. Secondly, through this year and next, we expect our updated capital allocation process, with improved standards for new and continued investment to improve ROI from new game releases as our pipeline increasingly consists of higher quality games.”
Their plan to turn this around includes leveraging the Middle-earth Enterprises deal to expand with more projects based on the Lord of the Rings and The Hobbit. This year we'll see the first anime feature film based on the IP - The Lord of the Rings: The War of the Rohirrim.
We'll see this even more in the games realm as well. Amazon Games continues to develop a new Lord of the Rings MMORPG, and Embracer has several other concepts in the works.
“We are actively testing and prototyping multiple new game concepts, exploring a wide range of immersive and authentic gameplay within the Middle-earth world. An honest and tactical approach to world-building and authentic storytelling is at the core of these efforts, as we believe that engaging deeply and early with the community is essential to creating experiences that truly resonate.”
How many of these projects go beyond the prototype stage remains to be seen.
