Embracer Teases Unannounced "Notable" Games as "Groundbreaking Strategic Partnership" Falls Through

Today Embracer Group announced its financial results for the fourth quarter of the fiscal year, related to the period between January and March 2023. 

According to the announcement, net sales increased 79% year-on-year to SEK 9,356 million.

Quarterly sales broken down by segment were as follows:

• PC/Console Games: increased by 66 % to SEK 3,478 million.
• Mobile Games: decreased by –25 % to SEK 1,317 million.
• Tabletop Games: increased by 438 % to SEK 3,074 million
• Entertainment & Services: increased by 83 % to SEK 1,487 million.

Earnings before interest and taxes were a loss of  SEK 95 million.

For the full fiscal year (between April 2022 and March 2023), net sales increased by 121% year-on-year to SEK 37,665 million. The breakdown is as follows.

• PC/Console Games: increased by 58 % to SEK 13,444 million.
• Mobile Games: increased by 19 % to SEK 5,819 million.
• Tabletop Games: increased by 2,199 % to SEK 13,132 million.
• Entertainment & Services: increased by 70 % to SEK 5,270 million.

Earnings before interest and taxes were SEK 194 million.

We also hear that a "groundbreaking strategic partnership agreement that would have set a new benchmark for the gaming industry" valued at $2 billion in contracted development revenue over a period of six years fell through "late last night."

"Negotiations have been taking far longer than originally anticipated considering we had a verbal commitment already in October 2022. The specific deal included more than USD 2 billion in contracted development revenue over a period of six years. The deal would have enabled a catch-up payment at closing for already capitalized costs for a range of large-budget games, but also notably improved medium-to-long-term profit and cash flow predictability for the duration of the game development projects.

The transaction had many of the highest rated global advisories onboard with several hundred people engaged on both sides. All documentation was finalized and ready to go as of yesterday. We asked for the execution of the agreement before our Q4 announcement. However late last night we received a negative outcome from the counterparty. This decision was unexpected to the management and the Board of Directors of Embracer."

Negotiations for this partnership with an unnamed counterpart had been going on for seven months and a verbal commitment had been reached in October 2022. Despite this failure, Embracer is still determined to seek partnerships and collaborations with third parties across all of its segments, including transmedia opportunities.

We also learn that several unannounced games have been delayed out of the current fiscal year (ending in March 2024) because they "will need more time to live up to our high expectations of quality and to reach their full commercial potential." They are now slated for the following year (by March 2025).

That being said, the group still has "several additional large-budget games" to be released by March 2024 including "a number of unannounced notable titles" and previously announced ones like Warhammer 40,000: Space Marine 2, Remnant 2, and Payday 3. 

Lastly, we learn that Dead Island 2 has shipped "well over 2 million units."

Back in February, Embracer mentioned that it had 31 AAA games slated to be released by the fiscal year 2027/2028 (by March 2028), with 19 of those set to launch before the fiscal year 2025/26  (by March 2026).