Today is the Embracer Group’s earnings report day, and strangely, no acquisitions have been made. However, CEO Lars Wingefors significantly hinted in his prepared speech at a future cooperation and license agreement that would be game-changing for the Embracer Group and encompass multiple triple-A titles coming in the next six years. Here is Wingefors’ whole statement:
Over the past several years, we have invested significantly in creating one of the largest providers of PC/Console content in the industry. We have close to 10,000 developers creating games, many based on Embracer Group’s deep and growing catalog of IPs. Our efforts in this regard have created significant collective value, which we are now starting to realize. One result of such efforts to capitalize on the value we have created is a transformative partnership and licensing deal that we have worked on with several industry partners. This deal covers a range of large-budget upcoming games over the coming six years.
We expect the whole or parts of this deal will close during this financial year, thereby, it would improve predictability, lower business risk, and provide a positive impact on our cash flow and profits. It would also enable further investments into making even greater games based on both
established and new IPs. The impact of the above-mentioned deal will be a factor in our forecasted Adjusted EBIT range for this and next financial year.
It sounds like a deal with the owner of the platform, such as Sony or Microsoft, to add specific games to their respective subscription services. Currently, this is just conjecture, but since closing is anticipated to take place in the upcoming months, we won’t have to wait long to find out.
The release of Saints Row contributed significantly to the Embracer Group’s 190% net sales rise (or 35% organic growth) during the second quarter of 2022. Wingefors acknowledged once again that the response to the game was divided, but he also claimed that its financial performance in this quarter was consistent with management expectations. Volition, however, has been moved from Plaion to Gearbox Entertainment because the Embracer Group officials think the studio would be able to benefit from the managerial skills of the seasoned staff there. It is the first internal move for a major studio inside the Embracer Group, but, according to Wingefors, it may not be the last.