Support NeoGAF

[YuLY]

I fucking hate Embracer so much, my fav franchise after mass effect. Fuck em I hope they implode for good. Maybe this way someone decent gets the IP.

 

[Robochobo]

You have got to be SHITTING ME

 

[Iced Arcade]

Eraser Group.

What a mess of a generation ffs

 

[pasterpl]

I dont care who buys them, I need new Deus ex game.

 

[Morrie’s wig shop]

What the fuck maaaaaaan….. sighhh

 

[Cyberpunkd]

Did they bite off more than they could chew? What's up with all this? Why buy all these companies if you can't afford them? Doesn't seem profitable if the companies you do buy aren't going to be at their best to be able to produce products that will make you money.

They were counting on Saudi money to make all their efforts sustainable, when that didn’t work out they were left with massive studio upkeep costs and limited revenue.

Basically they applied startup strategy of burning cash and raising money to game development and acquisitions, and like startups once in a while you won’t raise a new round and you are looking at a prospect of surviving 6-12-18 additional months with same cash reserves.


Having said that - original IP over Deus Ex?

 

[CamHostage]

I haven't been following this thing all that closely so could someone please explain to me what's up with all this. Let me know if I have the facts correctly. Embracer Group comes in all big and bad and buys up a ton of companies and then not too long after has some type of financial issues and needs to start making severe cuts and layoffs?

It's been long-enough after.

Embracer started in 2011, and really began this path in earnest in 2013 when they bought THQ. (Before it was "Nordic Games Group", which was sort of a budget gaming / re-market seller for European territories, doing a lot of Wii originals like We Sing and Dance Party at the time that the major publishers were dismissing the platform for bigger consoles. (Nordic Games had gone bankrupt in 2004 and survived wheeling and dealing before the Wii opportunity came around.)

When THQ went out of business in 2013, Nordic was in a position to make moves for global markets after its success as a European player... they also were one of the few publishers interested in the franchises which THQ failed with (aside from WWE, Nickelodeon, Warhammer, and a few other brands, some of which eventually ended up at Embracer anyway after further studio acquisitions.) So they bought up a lot of the brands and some of the development studios, formed the Embracer model (first THQ Nordic), amassed 896 IPs, commenced several hundred games (I'm not seeing a good count of how many games Embracer actually shipped, partly because there are so many Embracer studios that you'd have to track each little one back to the beginning, but they did list 221 games in development last year before things went bad,) and became one of the few "normal" publishers left in game publishing putting out lots of titles across multiple genres.

https://gamerant.com/embracer-group-221-games-in-development/

The model worked for a time, but it was either always doomed to fail (because the house was built on the same matchsticks that burned THQ) or they caught the whiplash of doom the moment that the $2bil money investment didn't pay out. Either inevitable or unfortunate, Embracer was not built to survive hardships, and now they're suffering one of those hardships and we don't know what'll be left when or if they come through.)

 

[Games of Today]

Metro VR + Deux Ex being a real thing but cancelled is a terrible combo. No hope for Kingdom Come at this point. Of all the bad things that happened in gaming these last years Embracer is probably the worst by far.

What happened to Kingdom Come!?

 

[Futaleufu]

Two years in pre-production and had yet to even enter production? Is that normal? I the Xbox 360 days you would get sequels in two years. Here they hadn't even started?

I think publishers are trimming all the fat they gained in the covid era. I wonder if they even had a working prototype on those 2 wasted years.

 

[Dazraell]

What happened to Kingdom Come!?

So far nothing, Warhorse still operates and works on their next project, which is presumed to be Kingdom Come Deliverance's sequel. I think they are just worried based on Embracer's recent moves with shutting projects and game studios, which are indeed concerning

 

[SJRB]

FUCK

EMBRACER

 

[Mibu no ookami]

“Extremely” expensive is total hyperbole. If Crystal Dynamics is an extremely expensive studio to buy, what does that make Activision Blizzard? Super extremely? Hyper Extremely: Turbo Edition? We also don’t even know what sort of a deal Sony would get if this were to ever happen.

Rise of the Tomb Raider came out 9 years ago, scored 86 on MC, sold 12 million copies to date. Mankind Divided came out 7 years ago and got an 84. Tomb Raider is a strong enough IP that did pretty well with its last trilogy, which is their highest sold games to date. It’s a strong enough IP, and a very recognizable one too. So it hasn’t been a decade. Even the less well received Shadow of the Tomb Raider managed to eventually climb to 8 million sales.

Saying CD is no better than Bend Studios seems weird, considering Tomb Raider outsold and got higher scores than Days Gone. I don’t know man, these arguments you gave me are pretty weak.

You don't understand. It's not just about buying a studio. You have to fund the studio. 273 employees across 3 studios. The fixed expenses related to operating costs are high here.

You're probably looking at 30-40 million dollars a year to operate Crystal Dynamics. Over the course of 5 years, that is 150-200 million dollars.

Rise of the Tomb Raider didn't sell 12 million copies at full price. If we assume an average price of 35 dollars that's 420 million dollars in revenue, but then you have to account for development costs (~150 million) as I said, platform/retail cost (126 million), marketing and publishing (at least 10 million), and then taxes (even assuming a 21% (88 million)... that all adds up to 46 milion in profit, ignoring any other expenses and being super conservative on some of these figures.

And as I mentioned before their games have reviewed worse and worse and sold worse and worse since then, while their costs have only gone up.

Somehow people think you buy a studio and that's the end of the cost. The reality is that Crystal Dynamics is almost certainly a net negative which is why Square Enix was just happy to sell them and get any sort of profit rather than layoff the staff and have to pay them severance and get nothing.

You mention Tomb Raider but fail to understand that Crystal Dynamics doesn't own it. Embracer sold it to Amazon.

Bend studio isn't nearly as expensive to operate as Crystal Dynamics. So selling over 7.5 million units largely on one platform with a much smaller team is certainly better business.

 

[Shake Your Rump]

This is why acquisitions are so insidious. These smaller groups that might actually create games get smothered because there won’t be enough profit.

 

[Dr.brain64]

Nooooooo!

 

[DarkArterialGore]

Source

Official statement:

 

[AltogetherAndrews]

Edit: meh

 

[Mibu no ookami]

It seems like Embracer is really hoping for great success with the AITD reboot. That game was delayed 5 months while other studios have been shut down, projects cancelled, etc. Technically it's THQ Nordic but i assume Embracer is green lighting these delays.

You can't cancel everything. If the game is nearly finished, canceling it at this point doesn't help you out much. It's canceling games that are earlier in development where you get actual savings.

This is why acquisitions are so insidious. These smaller groups that might actually create games get smothered because there won’t be enough profit.

It's actually a catch 22. A lot of these smaller studios would have gone under by themselves too. Lots of small studios are laying off staff or closing, they just get less attention.

Gamers decry games moving to 70 dollars, but they also don't care about operating costs, meanwhile, they also complain that games take too long to develop, while they don't buy the games that have come out... They also complain that games are too samey, but largely do not reward most games that are innovative or risky.

 

[SplunkyMunkey]

Sony buying Eidos and Crystal seems like a no brainer.

Yeah I would love Eidos and Crystal I would love Sony to have another 3 aswell 3D realms , slipgate iron works and 2B Games know for there great RTS tempest rising. And gearbox aswell for borderlands

 

[Wildebeest]

Just to keep the score. Jon Romero's Ion Storm made us their bitch by making the one truly great Deus Ex game. Bad guy western game hating business incompetent Square Enix made two Deus Ex games. Saviour of the real western gaming experience and genius business angel investors Embracer made zero Deus Ex games.

 

[StreetsofBeige]

You don't understand. It's not just about buying a studio. You have to fund the studio. 273 employees across 3 studios. The fixed expenses related to operating costs are high here.

You're probably looking at 30-40 million dollars a year to operate Crystal Dynamics. Over the course of 5 years, that is 150-200 million dollars.

Rise of the Tomb Raider didn't sell 12 million copies at full price. If we assume an average price of 35 dollars that's 420 million dollars in revenue, but then you have to account for development costs (~150 million) as I said, platform/retail cost (126 million), marketing and publishing (at least 10 million), and then taxes (even assuming a 21% (88 million)... that all adds up to 46 milion in profit, ignoring any other expenses and being super conservative on some of these figures.

And as I mentioned before their games have reviewed worse and worse and sold worse and worse since then, while their costs have only gone up.

Somehow people think you buy a studio and that's the end of the cost. The reality is that Crystal Dynamics is almost certainly a net negative which is why Square Enix was just happy to sell them and get any sort of profit rather than layoff the staff and have to pay them severance and get nothing.

You mention Tomb Raider but fail to understand that Crystal Dynamics doesn't own it. Embracer sold it to Amazon.

Bend studio isn't nearly as expensive to operate as Crystal Dynamics. So selling over 7.5 million units largely on one platform with a much smaller team is certainly better business.

Another thing that adds to project based kinds of companies is cash flow. If a studio lets say takes 4 years to make a game, there's zero cash coming in until the game releases and hopefully it a big seller like hitting the jackpot. Most games dont sell great to begin with. And only a portion are at full price like you said. Though to be fair it seems like console gaming a lot of sales are front loaded I think.

So all those costs for 4 years are covered by cash (if the company has tons of money lying around) or compounding debt. So it just piles up along with opportunity costs which is another miss.

Traditional companies selling stuff in a store have products always selling so cash influxes are always there and payment terms from retailers are usually 30-60 days. Many will pay in 15 days to get a 1-2% discount paying early. So similar to a utility company with money coming in from customers every month, there's much lower risk. And thats why these kinds of boring companies pay dividends so often since money is always coming in.

 

[Roni]

Embracer will go down in history as the herald of the second collapse for the industry.

 

[DeleteriousObnoxious]

You can't cancel everything. If the game is nearly finished, canceling it at this point doesn't help you out much. It's canceling games that are earlier in development where you get actual savings.

It's actually a catch 22. A lot of these smaller studios would have gone under by themselves too. Lots of small studios are laying off staff or closing, they just get less attention.

Gamers decry games moving to 70 dollars, but they also don't care about operating costs, meanwhile, they also complain that games take too long to develop, while they don't buy the games that have come out... They also complain that games are too samey, but largely do not reward most games that are innovative or risky.

Meanwhile Palworld which is a AI art generated content flipping is trending in 5 million sales... We need a crash and fast.

 

[Boss Mog]

I'll never understand why Sony or MS didn't step up to buy those IPs and Studios from Square-Enix. Those are top notch studios and IPs that would've made fine additions to either 1st party lineup.

Instead they let Embracer have them for chump change and now here we are. Pisses me off. I really like Deus Ex and the devs had a lot of passion and ambition. They said they wanted the next Deus Ex to surpass Cyberpunk 2077.

 

[Astray]

I haven't been following this thing all that closely so could someone please explain to me what's up with all this. Let me know if I have the facts correctly. Embracer Group comes in all big and bad and buys up a ton of companies and then not too long after has some type of financial issues and needs to start making severe cuts and layoffs?

Did they bite off more than they could chew? What's up with all this? Why buy all these companies if you can't afford them? Doesn't seem profitable if the companies you do buy aren't going to be at their best to be able to produce products that will make you money.

Interest rates went up massively and now they can't get cheap money to borrow and pay for growth via M&A.

 

[Mibu no ookami]

Another thing that adds to project based kinds of companies is cash flow. If a studio lets say takes 4 years to make a game, there's zero cash coming in until the game releases and hopefully it a big seller like hitting the jackpot. Most games dont sell great to begin with. And only a portion are at full price like you said. Though to be fair it seems like console gaming a lot of sales are front loaded I think.

So all those costs for 4 years are covered by cash (if the company has tons of money lying around) or compounding debt. So it just piles up along with opportunity costs which is another miss.

Traditional companies selling stuff in a store have products always selling so cash influxes are always there and payment terms from retailers are usually 30-60 days. Many will pay in 15 days to get a 1-2% discount paying early. So similar to a utility company with money coming in from customers every month, there's much lower risk. And thats why these kinds of boring companies pay dividends so often since money is always coming in.

This is why Naughty Dog and Sony writ large have focused on remasters which are quicker ways to keep revenue coming in between major releases. Somehow people are super offended by this, but it's good business sense and can stave off a lot of the inherent risk involved with game development and hopefully prevent the need to layoff staff.

If Naughty Dog hadn't done TLOU1 remake, Uncharted Legacy of Thieves Remaster, and the PC releases, they'd probably have been in a similar boat as many other companies, especially after canceling TLOU online, but we've yet to see major layoffs at Naughty Dog. The TV show also probably helped tremendously. A company their size can't carry game development without revenue for 4+ years.

If you look at Insomniac, they're essentially in a hiring freeze despite the success of Spider-Man 2. They canceled their Spider-Man online game apparently, and the smaller margins due to Marvel licensing means they aren't making nearly as much money on these games as you would an original IP.

Most of Sony's largest studios are in a period of general hiring freeze. The last thing they'd want to do is bring on more staff that don't have a great chance at returns. Maybe if they owned IP it would be different. Sony was able to buy Insomniac for a small amount of money because they didn't own much in the line of IP, but doing that with less successful studios can be risky.

Sony just bought Firesprite, but they're already dealing with reductions in force. I wouldn't be surprised if Sony closed them down again in a bit of irony.

 

[winjer]

The people managing Embracer are complete morons. Incompetent morons.

 

[Jesb]

I don’t understand so many games that get canceled this far in development. Even if you release a turd at that point it’s gonna make more money than all that wasted money and nothing to show for it.

 

[Men_in_Boxes]

AA is dead. This industry is big IP + big budget + old formula only.

Thank God for Live Service where lower budgets + creativity still thrive.

 

[Stamps1646]

Embracer, start cleaning from the tops you cowards.

fk!

 

[Papa_Wisdom]

AA is dead. This industry is big IP + big budget + old formula only.

Thank God for Live Service where lower budgets + creativity still thrive.

And retro gaming

 

[Dr. Samuel Hayden]

 

[Mibu no ookami]

The people managing Embracer are complete morons. Incompetent morons.

Embracer, start cleaning from the tops you cowards.

fk!

Silly comments from people, who you'd have to guess aren't very far in their own careers.

First, let's talk about the management at Embracer. They had a general strategy that didn't work out. That doesn't make them morons. You have to take risks in business and their risks didn't pan out. They mistimed things and their gamble didn't pay off. It happens. Sometimes it goes the other way. There are unforeseen factors that contributed to their failure.

Second, if you start firing people "at the top" you still have to replace them. You aren't actively saving much money and you just largely end up losing time and institutional knowledge. The last thing Embracer can do is waste time when they're quickly running out of money.

 

[fart town usa]

You can't cancel everything. If the game is nearly finished, canceling it at this point doesn't help you out much. It's canceling games that are earlier in development where you get actual savings.

Clearly. I should have added that the delays for AITD give me hope that the game is solid. All the delays have aligned with terrible news w/ Embracer so I have to assume they are hoping for some kind of substantial return or the possibility of a healthy franchise moving forward.

 

[winjer]

Silly comments from people, who you'd have to guess aren't very far in their own careers.

First, let's talk about the management at Embracer. They had a general strategy that didn't work out. That doesn't make them morons. You have to take risks in business and their risks didn't pan out. They mistimed things and their gamble didn't pay off. It happens. Sometimes it goes the other way. There are unforeseen factors that contributed to their failure.

Second, if you start firing people "at the top" you still have to replace them. You aren't actively saving much money and you just largely end up losing time and institutional knowledge. The last thing Embracer can do is waste time when they're quickly running out of money.

They had a strategy that was as dumb as a pyramid scheme, constantly depending on new investments to trickle in.
All it took was one deal to fail, for the whole scheme to collapse.

 

[Ozriel]

Putting me to your ignore list doesn't make for a show of confidence in your opinion, but your comments here are generally trash anyway so it's no loss.
I know what embracer is. Most people are smarter than you apparently think. If all you cared about is publisher bottom-line how come you dicksuck suicide squad so much since that one is pretty much a guaranteed disaster?
And two, making divided was marketed horribly. The apartheid thing it was going for was yuck, so you really have no point.

What does his opinion on Suicide squad have to do with his belief that terminating the WIP Deus Ex was a sound business decision for a near bankrupt publisher to make?

Was he incorrect about the recent games in the franchise not selling very well?

 

[GutsOfThor]

Just to keep the score. Jon Romero's Ion Storm made us their bitch by making the one truly great Deus Ex game. Bad guy western game hating business incompetent Square Enix made two Deus Ex games. Saviour of the real western gaming experience and genius business angel investors Embracer made zero Deus Ex games.

This guy gets it. The first Deus Ex is the only Deus Ex that matters.

 

[Ozriel]

so they can now make another stupid multiplayer or gaas game. No thanks. This sucks. Really these companies don't want my money. Someone has to cater to us single player gamers , somewhere. Tired of this gaas/mp push. There can only be so many multiplayer games as mp gamers play the same game for 1000s of hours. They don't play new games often like we sp gamers tend to do.

Where are you getting this info that the game is being canned in favor of a GaaS or MP game?
They’re making a Tomb Raider game at the moment that’s certainly none of those things.

I don’t think you people realize that Embracer seems to be in full survival mode at the moment, and they’d probably be freeing up more than $60 million by scrapping the game this early in development. Cash they need to stay afloat.

They had a strategy that was as dumb as a pyramid scheme, constantly depending on new investments to trickle in.
All it took was one deal to fail, for the whole scheme to collapse.

One deal, yeah, but it was a humongous deal that was supposed to be a sure banker. I have no idea why the Saudis pulled out since they aren’t hurting for cash at all. Looks like they truly put most of their eggs in one basket.

 

[CamHostage]

I think publishers are trimming all the fat they gained in the covid era.

Not really, this mostly was fat (if we're calling it "fat") building up long before that. And it's likely not going to settle out once it reaches the same level of whatever COVID bumped it up to.

Also, this is still still the start of new console generation; this is supposed to be a superfat time for the industry, as everybody tries to grab a seat at the newly-set table to eat before the heat dies down. But the eatin's not as good (or isn't doled out in the same bite-sized portions) as past gens.

 

[winjer]

One deal, yeah, but it was a humongous deal that was supposed to be a sure banker. I have no idea why the Saudis pulled out since they aren’t hurting for cash at all. Looks like they truly put most of their eggs in one basket.

At the rate Embracer was buying up studios and IP, it was clear that they were using most of their funds just for acquisitions. And leaving little for maintaining studios and develop new projects.

 

[Ristifer]

This guy gets it. The first Deus Ex is the only Deus Ex that matters.

 

[Punished Miku]

At the rate Embracer was buying up studios and IP, it was clear that they were using most of their funds just for acquisitions. And leaving little for maintaining studios and develop new projects.

All on Elizabeth Warren's watch.

 

[Little Chicken]

Embracer are absolute trash.

 

[winjer]

All on Elizabeth Warren's watch.

Embracer is Swedish.

 

[Ozriel]

At the rate Embracer was buying up studios and IP, it was clear that they were using most of their funds just for acquisitions. And leaving little for maintaining studios and develop new projects.

They built their whole thing on a deck of cards.

I still can’t believe the Saudis bailed on them. There must be something they’re not telling us. Because Saudis are happy to burn hundreds of millions to host unprofitable boxing and UFC matches and to take over golf tournaments etc.

 

[Roni]

You have to take risks in business

Mark my words, this very sentiment will lead to civilization's collapse.

 

[Punished Miku]

Embracer is Swedish.

Touche'

 

[winjer]

They built their whole thing on a deck of cards.

I still can’t believe the Saudis bailed on them. There must be something they’re not telling us. Because Saudis are happy to burn hundreds of millions to host unprofitable boxing and UFC matches and to take over golf tournaments etc.

The Saudis probably saw right thought Embracer schemes.

 

[LordBlodgett]

Why did they even buy the western arm of Square Enix if they were just going to kill the projects and lay everyone off. The hell man......

 

[Mibu no ookami]

They had a strategy that was as dumb as a pyramid scheme, constantly depending on new investments to trickle in.
All it took was one deal to fail, for the whole scheme to collapse.

No their plan was most likely to sell fairly soon after some successful game releases.

 

[winjer]

No their plan was most likely to sell fairly soon after some successful game releases.

Too bad Embracer didn't save some money to make those games.