Embracer Group has announced its intention to split into two public companies, with a new spin-off taking over its biggest game IPs, including Tomb Raider.
Fellowship Entertainment is planned to be established in 2027 and will be an “IP-led” entertainment company built around the development, publishing, and licensing of games, with a single, centralized business plan.
The new company will take over stewardship of The Lord of the Rings IP, and game franchises such as Tomb Raider, Darksiders, Dead Island, Kingdom Come Deliverance, Metro, and Remnant.
Studios joining the new company will include 4A Games, Crystal Dynamics, Dambuster Studios, Dark Horse Media, Eidos-Montréal, Fishlabs, Flying Wild Hog Studios, Gunfire Games, Middle-earth Enterprises, Redoctane Games, and Warhorse Studios.
Embracer will operate as a highly decentralized organization with distinct strategies across its business segments, and oversee IPs including Destroy All Humans!, Desperados, Gothic, Killing Floor, Kingdom of Amalur, MX vs. ATV, Reanimal, Ride, Screamer, Titan Quest, and Wreckfest, as well as licenses such as Hot Wheels Unleashed and SpongeBob SquarePants.
Companies remaining with Emrbacer include Aspyr, Beamdog, CrazyLabs, Deca, Demiurge, DPI Merchandising, Limited Run Games, Milestone, Plaion Partners, Plaion Pictures, THQ Nordic (including 35 studios and subsidiaries), Tripwire and Vertigo Games.
According to an announcement, the split will allow Embracer more flexibility to pursue mergers and acquisitions, while Fellowship focuses on its studios and publishing efforts.
Embracer Group’s current CEO Phil Rogers and COO Lee Guinchard will transition to become the CEO and COO of Fellowship Entertainment, along with CFO Müge Bouillon. A recruitment process for a new CEO and CFO for Embracer has been initiated, the company said.
Lars Wingefors, chair of the board of Embracer Group, said in a letter to shareholders that the main rationale to spin-off Fellowship is “to increase management focus to capture the full joint potential of the IPs, their respective communities and some of the best game developers in the world.”
He said: “Just like Asmodee and Coffee Stain, we believe Fellowship Entertainment will thrive the most by becoming its own standalone business.
“I think the assets held by Fellowship Entertainment are among the most undervalued in the industry and I feel it’s my duty as the largest shareholder to change this and create a structure to realize their full potential. I’m convinced that Fellowship Entertainment could reach industry leading profitability and show healthy long-term organic growth above the industry average.”
Wingefors went on to acknowledge Embracer’s now-notorious acquisition spree, which resulted in thousands of layoffs and multiple studio closures as part of a 2023 reset, which also saw it sell Borderlands maker Gearbox and Saber Interactive.
“Even if, for some, we have become closely associated with industry layoffs, the reality is that we have worked hard to retain as many people as possible through a very difficult period, while balancing the needs to drive a profitable business operation,” he said.
“That reflects our commitment to our people, our portfolio of beloved IPs, and the promises we have made to entrepreneurs. Looking back at the large adjustment we made in 2023, we decided not to do a hard “US Corporate style” headcount reduction, but to give a number of studios and IPs the chance to prove themselves.”
