Embracer cuts forecast after collapse of "groundbreaking" $2 billion partnership deal
Embracer Group boss Lars Wingefors says the company has endured a "challenging" year due to game delays, weak consumer demand, and lackluster reception for notable releases.
Those struggles continued until the very end, with Wingefors explaining that a "groundbreaking strategic partnership" Embracer had been working on for several months fell through at the very last minute.
The CEO claims the partnership would've "set a new benchmark for the gaming industry," and said Embracer had already struck a "verbal commitment" with its would-be partner back in October 2022.
"The specific deal included more than $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," he said.
"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."
The sudden collapse of that partnership caps a mixed year for Embracer, which has become famous for spending big on companies and brands such as THQ Nordic, Gearbox Entertainment, and Lord of the Rings in a bid to realize its video game and multimedia ambitions.
According to Embracer's fiscal report for the year-ended March 31, 2023, consolidated net sales increased by 121 percent to SEK 37.6 billion ($3.5 billion).
Breaking that number down, PC and console game sales pulled in for SEK 13.4 billion,
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