By Migue Porter
Embracer Group THQQF recently reported its Q2 2022/2023 earnings, with net sales of $910 million - of which $390 million come from PC and console video games and $137 million come from smartphone games.
Embracer’s sales have grown exponentially: most recent numbers show a 190% increase in comparison with the previous financial year. Thus, these figures represent a contrast with the general decrease in the industry.
Organic Growth
In 2022, the company became a protagonist of the videogame industry as it acquired Crystal Dynamics ("Tomb Raider") Eidos Montreal ("Deus Ex") and Square Enix Montreal. In addition, Embracer announced the expansion of the Gearbox studio ("Borderlands") and the launch of several projects for PC and diverse consoles.
The acquisition of Crystal Dynamics, Eidos Montreal and Square Enix Montreal contributed to the 190% increase. Yet, the company's executives are positive that “35% of the growth was organic.”
PC and Consoles Video Games: Risks, Consequences and Long-term Decisions
Which factors were responsible for Embracer's amazing sales numbers?
The company points, first and foremost, to sales of video games on consoles and PC, especially those of the recently released "Saints Row."
"Saints Row," developed by Volition, is a reboot of the iconic open-world action, comedy and exploration saga. The video game was not well received among the specialized press, which scored 65 points on Metacritic, and the gaming community did not receive it with much success on consoles and PC either (with a weak 3.8 rating points on the Epic Games Store).
See also: Could The Future Of Mobile Games Be Microsoft, Netflix, PlayStation? What Are They Up To?
Embracer claimed that the reception of 'Saints Row' did not meet the full expectations and left the fanbase partially polarized.
What’s the result?
Volition, a studio known for its relative successes and failures with "Saints Row" and "Agents of Mayhem," will merge with Gearbox, the creators of "Borderlands."
[Gearbox] has all the tools, including an experienced management team in the US, to create future success at "Volition."
The founders of "Borderlands," one of the greatest exponents of the "loot-shooter" genre, also added a new headquarters: Eidos Shanghai, which was renamed "Gearbox Studio Shanghai," without publicly attributed projects.
At the same time, Embracer acquired the IP "Risk of Rain," a cult work by Hopoo Games, which now belongs to Gearbox Studios.
Revenues from Smartphones and Recession Problems
As mentioned before, revenues from smartphones gave $137 million in sales to Embracer. It's an interesting number, no doubt, but it doesn't reach the volume of sales of PC and console titles.
The company attributes this to the impending recession and some lingering effects of the IDFA changes, and claims Embracer was positioned favorably, with a model based primarily on advertising revenue.
Embracer’s financial report highlights the company’s plans to conduct a special revision of its business and to adapt to the new market conditions and the macroeconomic realities.
Past And Present Acquisitions
Since 2020, Embracer began a path of acquisitions that would make it one of the most important companies in the video game industry. The purchase of Gearbox for $1.3 billion meant a turning point for the company, and the next few months were uninterrupted.
In the world of video games, the Swedish giant owns THQ Nordic ("Darksiders"), Gearbox ("Borderlands") and 3D Realms ("Duke Nukem 3D"). It also took over Square Enix Montreal, Eidos Montreal ("Deus Ex"), Crystal Dynamics ("Tomb Raider") and the Argentinean studio Nimble Giant ("Quantum League").
Most recently, the expansion of Embracer into the interactive field brought the studios and publishers Bitware Games, Tripwire Interactive and Limited Run Games into its ranks.
But the corporation also opened its wallet to take over transmedia productions. Embracer bought the rights to "The Lord of the Rings" (Middle-Earth Enterprises), landed a major production slot in Amazon AMZN Prime Video series, "Rings of Power," and another deal for the animated film "The War of the Rohirrim" and the mobile video game Heroes of Middle-Earth, developed by Electronic Arts EA.
Last year, Embracer acquired Dark Horse, a company known for adapting videogames into comics ("Assassin’s Creed Valhalla," "God of War," "Tomb Raider," "Overwatch," "The Witcher") and a company that also owns pop culture franchises as important as Sin City ("Frank Miller’s") and Hellboy.
To this date, Embracer Group has 15,731 employees, of which 10,899 are developers. Right now, the company is working on 237 video game projects, its largest source of sales.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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