Embracer Group Plans to Split Into Two Public Companies, With Fellowship Entertainment Taking Over Tomb Raider and Lord of the Rings

Key Highlights:

• Embracer Group plans to split into two separate public companies in 2027

• The new company, Fellowship Entertainment, will focus on game development, publishing, and IP licensing

• Fellowship will take over stewardship of and franchises including Tomb Raider, The Lord of the Rings, Dead Island, Darksiders, Kingdom Come: Deliverance, Metro, and Remnant

• The remaining Embracer company will retain franchises like Gothic, Wreckfest, Killing Floor, Titan Quest, Destroy All Humans!, and licensed titles such as Hot Wheels Unleashed and SpongeBob SquarePants

• Current Embracer CEO Phil Rogers will become CEO of Fellowship Entertainment

Embracer Group has announced its "intention" to divide into two separate publicly listed companies, with a new entity called Fellowship Entertainment set to take stewardship of some of gaming's most recognizable franchises. The split is currently planned for 2027, with Fellowship Entertainment expected to be listed on Nasdaq Stockholm.

The new company will be built around an IP-led model, focusing on game development, publishing, and licensing. According to the official announcement, Fellowship Entertainment will take over iconic franchises including Tomb Raider, The Lord of the Rings, Dead Island, Darksiders, Kingdom Come: Deliverance, Metro, and Remnant, among others.

The studios joining the new company include Crystal Dynamics, Eidos-Montreal, Warhorse Studios, 4A Games, Dambuster Studios, Gunfire Games, Flying Wild Hog Studios, Fishlabs, Redoctane Games, and Dark Horse Media.

Lars Wingefors, Chair of the Board of Embracer Group, laid out the strategic thinking behind the decision. "This separation is about sharper management focus and clearer accountability, giving each business the structure and leadership to realise more of its full potential," he said.

He added that he believes the assets within Fellowship Entertainment are "among the most undervalued in the industry," and that the split is his way of correcting that. In his view, Fellowship Entertainment "could reach industry leading profitability and show healthy long-term organic growth above the industry average."

One notable aspect of the new company's plans is a dedicated licensing business unit. As per the announcement, Fellowship Entertainment intends to generate recurring revenue by allowing external partners to use its franchises across games, film, consumer products, and more. This includes its biggest properties but also extends to lesser-utilized IPs. Wingefors specifically noted that the company plans to "more actively be exploring external partnerships around our roster of other well-known IPs such as Saints Row, Legacy of Kain, Deus Ex, Red Faction, The Mask, Thief, TimeSplitters, amongst many others."

Dark Horse Media will play a key role in this effort, as it will operationally become part of the new IP and Licensing business unit, bringing its experience co-producing film and TV projects with Hollywood partners.

Meanwhile, the remaining Embracer Group will not exactly be scaling back. The company will continue to oversee a broad portfolio, including THQ Nordic and its 35 studios and subsidiaries, Aspyr, CrazyLabs, Limited Run Games, Milestone, Tripwire, Vertigo Games, and more. Its IP lineup includes Gothic, Wreckfest, Killing Floor, Titan Quest, Destroy All Humans!, and licensed titles such as Hot Wheels Unleashed and SpongeBob SquarePants. According to the company, Embracer's restructured form will allow it more flexibility to pursue targeted mergers and acquisitions.

On the leadership front, current Embracer Group CEO Phil Rogers and COO Lee Guinchard will transition to the same roles at Fellowship Entertainment once the spin-off is complete. CFO Muge Bouillon will follow them, and she has also been appointed Deputy CEO of Embracer Group in the interim to help establish a stronger governance structure ahead of the separation. A search for a new CEO and CFO for the remaining Embracer entity is already underway.

Wingefors also addressed the elephant in the room. Embracer's acquisition spree earlier this decade became something of an industry cautionary tale, leading to thousands of layoffs and multiple studio closures as part of a 2023 restructuring effort. The company also sold off Borderlands developer Gearbox and Saber Interactive during that period. "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.

The split is still subject to shareholder approval at a general meeting, but if all goes to plan, both companies will be publicly listed and operating independently by 2027.