Embracer Group, the struggling gaming conglomerate that owns the rights to the ‘Lord of the Rings’ franchise, has announced that it is splitting into three different companies. The group, which has undergone significant restructuring this year and sold off major game studios such as Saber Interactive and Gearbox to reduce debt, will split into Asmodee Group, Coffee Stain & Friends and Middle-earth Enterprises & Friends. The three games and entertainment companies will be independent publicly traded entities, Embracer said, with the split “allowing each entity to better focus on its core strategies and offer more differentiated and clear equity stories for existing and new shareholders .”
This announcement follows a lengthy restructuring process at Embracer, which has resulted in the closure of three studios, the sale of two studios and massive layoffs at Embracer-owned companies. In a press release, the company also confirmed that the Middle-earth Enterprises & Friends entity will retain intellectual property rights for the Lord of the Rings and Tomb Raider franchises and will remain within the Embracer Group, which will eventually be renamed.
In addition, Asmodee and Coffee Stain & Friends shares will be distributed as a dividend to Embracer shareholders and listed on Nasdaq Stockholm. In the case of Asmodee Group, Embracer has also entered into a new financing agreement of EUR 900 million (roughly Rs. 7,991 crore). Proceeds from the financing process will be used to pay down Embracer’s debt and reduce indebtedness, the company said.
Under the transformation plan, Asmodee will continue to operate as a board game publisher and distributor and will retain the rights to its IP addresses. Coffee Stain & Friends, on the other hand, will maintain a “dual focus on indie and A/AA premium and free-to-play games for PC/console and mobile,” the company said.
“This move was made with the intention of unleashing the full potential of each team and giving them their own leadership and strategic direction,” Lars Wingefors, chief executive officer of Embracer Group, said in a statement. “This is the beginning of a new chapter, a chapter in which I intend to remain a part as an active, committed and supportive shareholder of all three new entities, with an evergreen horizon,” he added.
Asmodee owns 23 studios that hold the intellectual property rights to popular board, board and card games such as 7 Wonders, Catan, Exploding Kittens and others. According to Embracer, Asmodee oversees the development of licensed board games based on Lord of the Rings, Marvel, Game of Thrones, Netflix, Lego and Star Wars.
Coffee Stain & Friends will operate across the ‘Premium’ and ‘Free to Play’ segments, with the former including studios such as Coffee Stain, Ghost Ship, Tarsier, Tuxedo Labs, THQ Nordic and Amplifier Game Invest. The premium segment holds IP rights to popular games such as Deep Rock Galactic, Goat Simulator, Satisfactory, Wreckfest, Teardown, Valheim and others. Free-to-Play foreign operations will include Easybrain, Deca, CrazyLabs and Cryptic and IPs like Sudoku.com, Blockudoku, Jigsaw Puzzle and more.
Middle-earth Enterprises & Friends, on the other hand, “intends to remain a creative force in AAA game development and PC/console publishing,” with a focus on Lord of the Rings, Tomb Raider, and other major IPs. The entity will own key game studios such as Crystal Dynamics, Dambuster Studios, Eidos-Montréal, Flying Wild Hog Studios, Tripwire, Vertigo Games, Warhorse Studios and 4A Games, with rights to IPs such as Dead Island, Killing Floor, Kingdom Come Deliverance, The Lord of the Rings, Metro and Tomb Raider.
After years of a spending spree that saw Embracer acquire multiple game studios and intellectual property rights, the company went into damage control mode after a $2 billion (roughly Rs. 16,672 crore) investment deal with Saudi-based Savvy Group fell through last year. Arabia. Embracer has undertaken significant restructuring efforts this year to close over $1.5 billion in debt, selling Gearbox to Rockstar Games parent company Take-Two Interactive and selling Saber Interactive in March. The restructuring process also saw the closure of Embracer’s operations at Saints Row developer Volition Games, TimeSplitters studio Free Radical Design, and newly formed studio Campfire Cabal.