Group strategy

Empowering great people, great companies, and great ideas

Strategic Philosophy

Embracer Group has come a long way on its journey to be a substantial, lasting, and sustainable enterprise. The strategic philosophy has been developed and refined over time and serves as a guide for future profitable growth. Great people are trusted and empowered to pursue great ideas and reach their full potential with their unique culture and strategy.

Long-term mindset

The company history dates to the early 1990’s when the CEO and co-founder Lars Wingefors started a used comics business at age 13. More than thirty years on, the emphasis on curiosity, taking initative and entrepreneurship is still reflected in the Embracer culture. Founders and entrepreneurs joining Embracer Group want to stay with the company, feel at home and prosper through the freedom to develop even greater businesses. The model works as evidenced by the fact that 106 out of the 108 entrepreneurs who have joined through inorganic growth since 2016, when Embracer Group was listed, are still with the company today.

Culture of freedom and diversity

At Embracer Group, it doesn't matter who you are, where you come from or what you look like. The Group advocates a belief that diversity, different perspectives, and skillsets lead to a better environment for all, and to better results for the business. Operating in more than 40 countries across the globe, representing 69 nationalities, Embracer is a truly international company. The diversity in experiences, skillsets, and perspectives is beneficial. Local company cultures are endorsed and supported by the decentralized operating model. Leading entrepreneurs, creators, and other management are encouraged and expected to make their own decisions.

Quality comes first

Embracer Group has one of the largest and most diversified portfolios of IP's and game franchises in the industry. This is a key strength and enables the operative groups to make the right long-term decisions. The right decision is always to put the product quality first, even in cases where short- term gains seem tempting. Therefore, decisions to postpone, or even cancel releases are not seen as failures but as evidence of an active quality control.

OUR DECENTRALIZED OPERATING MODEL EMPOWERS PEOPLE, FOSTERS AUTONOMY, SPEED AND CREATES SUSTAINABLE ORGANIC SYNERGIES ACROSS THE GROUP’S ECO­ SYSTEM. EMBRACER’S ROLE IS TO UNLEASH THE FULL POTENTIAL OF EACH TEAM AND SUPPORT THEM WITH THE RESOURCES NEEDED TO SUCCEED.
/ Lars Wingefors

The Embracer Ecosystem

Group Level

The Embracer Group head office hosts control and support functions, provides access to capital, shared knowledge, soft synergies and a solid governance framework. The organization is lean as the operative groups are commercially responsible, which includes a considerable part of financial control, governance, compliance, human resources and communication.

Operative Groups

The operative groups serve as primary ecosystem building blocks. They have full financial and operational responsibility and run the businesses independently from each other and the Group, based on Embracer Group’s values and governance model.

Companies and Studios

Embracer Group adapts a multi-brand strategy where game and entertainment consumers meet Embracer through any of the numerous brands, each with its unique way, style, and spirit.

Scale and diversification

Embracer Group compromises an ecosystem for studios, publishers and other gaming companies. The collaborations, financial empowerment and business opportunities presented to companies are unique and provide a strong incentive to join. This is how the Group has grown from 370 to more than 15,731 people since 2016 and the growth continues.

Scale enables taking on risk

Any approved individual game development project has a considerable business opportunity, but there is also a key risk element. Therefore, diversification really matters. Embracer Group can encourage individual game development studios to put quality first and create games that stand out – as the depth of the diversified games pipeline lowers the aggregated project risk at Group level. There are currently more than 200 games under development across genres and targeting different audiences.

The company has grown from 1 to 11 operative groups since 2016 and there was no single gaming title which generated more than five percent of group revenues in the financial year 2021/22. With limited dependency upon single titles, enhanced creativity in product development is enabled. Creators are encouraged to be brave and bold in their mindset when developing games.

Diversification enables transmedia development

The convergence of media, platforms and technologies, offers increasing opportunities for creating transmedia IP’s. In addition to traditional licensing, in-house creators are provided with collaboration arenas, thereby enabling the original creators to contribute to the development. Such cross fertilization is actively encouraged as it increases the likelihood of transmedia success across segments.

Through the acquisition of DECA in 2020, Embracer entered the mobile gaming segment and through the acquisitions of Easybrain and CrazyLabs in the year, Embracer expanded further in the segment. The portfolio was further broadened by Asmodee and Dark Horse, providing presence in the board games and comics markets, respectively. These, and all other acquisitions carried out during the year, represented transformative steps, and solidified the company’s position as the leading independent gaming Group. The aim is to be a business partner in the gaming and entertainment industry, and work together with leading companies, brands, and platforms.

Business model

Operating model

Embracer Group employs a decentralized operating model. This is considered key to empowering talented developers and entrepreneurs across the Group. The model gives commercial autonomy to operative group CEOs, founders, and studio heads to run business operations in the way they see fit, while following Embracer Group’s framework for reporting, control, Code of Conduct and governance. The approach fosters creativity, speed and relevance as decisions are taken closer to the relevant markets and communities.

While employing a decentralized operating model, the company seeks to realize synergies where possible and deemed appropriate, for instance IP or talent sharing between operating groups. The spread of best practice across the group as well as collaboration is encouraged.

Financial model

A strong balance sheet is emphasized which reduces the financial risk and maximises strategic flexibility. Operating cash flow is reinvested in organic growth activities to as large extent as possible, and retained cash is used to finance bolt on acquisitions. To align interests with founders, management and key shareholders in acquired companies, Embracer Group often issue equity and put in place long term earnouts as part of the consideration.

Market segments

Embracer Group extended the addressable market segments during the year and the operative Groups met gamers and customers on several new platforms. More people played games than ever before in 2021, totaling 3 billion players globally according to market research for Newzoo. The interest in gaming reached new heights, as demonstrated by the number of TV and film content based on gaming origins.

PC, Console, VR

• AAA
• AA / A / Indie
• Free-to-play
• MMO (Massively Multiplayer Online)
• Asset Care
• VR
• Work-for-hire

Mobile

• Free-to-play
• Pay-to-play

Tabletop

• Board games
• Trading card games

Other

• Comic books
• Film
• TV
• e-Services
• Merchandise
• Distribution

Market value chain

Embracer Group retains a strong position in all major value creating areas of the gaming market value chain. The Group hosts an intellectual property portfolio consisting of more than 850 game titles, 132 internal development studios world-wide and a global capacity for online and physical retail publishing.

Driving profitable growth

Embracer Group aims to achieve a predictable long-term growth in revenues, earnings, and cash-flow. Operating cash-flow is to a large extent reinvested into game development and other organic growth initiatives with an attractive expected return on investment. Acquisitions of companies provide incremental organic growth opportunities.

Organic growth

Organic growth is driven by the release of new games, additional content and revitalized IPs, and increased investments in user acquisition activities and marketing. A quality first approach implies that games are released when the return on investment (ROI) potential is maximized. Increased investments in user acquisition activities are justified when demands on return of ad spend are met.

The Group has more than 200 ongoing premium game development projects, of which 60% are based on new IP’s or revitalized franchises. The remaining 40% of investments relate to existing franchises and active trademarks. Licensed IP’s will also be an important source of organic growth. Publishing will contribute to organic growth through new publishing deals with external developers and by internalizing publishing for internally developed games. For mobile games, investments in user acquisition activities are particularly important for driving organic growth.

For board games, increased brand recognition and shelf space for existing franchises are key growth drivers.

Inorganic growth

Embracer Group strives to be the first choice for companies looking to be part of a larger group. A strong cultural fit is a prerequisite for any merger or acquisition. After closing, the approach is to empower acquired companies in order to enable accelerated organic growth. Bolt-on acquisitions are made to strengthen the existing operating groups through adding talent and IP’s.

Embracer Group is continuously evaluating larger, transformative merger and acquisition opportunities, which would improve the ecosystem and could result in a new operating groups.

Growing earnings and cash-flow

Increasing sales needs to be accompanied by growing profits and cash-flow as well as an adequate return on invested capital. Organic and inorganic growth are primarily aimed at growing absolute profit and cash-flow over time. Expanding the profit margin is secondary. Embracer Group’s increasingly diversified portfolio across markets, segments, genres, titles, and across the operating Groups, brings the benefit of a more resilient earnings profile.

No forced synergies

Synergies between operative groups, championed and approved by the operative CEO’s, are encouraged, not forced. Centrally mandated extensive integration between operating groups to extract potential cost saving benefits are refrained from, as it violates the decentralized operating model and comes at a likely high alternative cost in terms of lower organic growth. The ambition is rather that the company culture fosters the extraction of win-win synergies between the operating groups, regardless of it being revenue synergies or cost synergies. Operating in fast-growing, creative industries, the primary focus is to pursue growth in profit and cash-flow by enhancing long-term organic growth.

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Embracer Group is a parent company of businesses led by entrepreneurs in PC, console, mobile and board games and other related media. The Group has an extensive catalog of over 850 owned or controlled franchises.

With its head office based in Karlstad, Sweden, Embracer Group has a global presence through its twelve operative groups: THQ Nordic, Plaion, Coffee Stain, Amplifier Game Invest, Saber Interactive, DECA Games, Gearbox Entertainment, Easybrain, Asmodee, Dark Horse, Freemode and Crystal Dynamics - Eidos Montréal. The Group has 132 internal game development studios and is engaging more than 15,731 employees and contracted employees in more than 40 countries.