Embracer Group is reportedly considering the sale of Gearbox Entertainment, the eminent U.S. game company known primarily for the Borderlands series. This potential transaction follows a string of major events and decisions impacting Embracer’s standing in the gaming industry.
The root of Embracer’s current predicament is a failed $2 billion deal with Savvy Games Group, a Saudi government-funded entity. This botched agreement had ripple effects, leading Embracer to initiate a restructuring process.
Aimed at reducing the company’s staggering debt, now looming below $930 million, the reorganization has resulted in the closure of long-standing studios like Volition, known for the Saints Row series, and newer setups like Copenhagen-based Cabal Campfire. As the aftermath of the collapsed deal continues, there have also been layoffs amongst Gearbox Publishing employees.
A Swedish gaming conglomerate with a portfolio of prestigious game titles and developers, Embracer Group gained notoriety in recent years for its aggressive if unsustainable acquisition spree, owning iconic titles like Tomb Raider and recently acquiring rights to legendary stories like The Lord of the Rings and The Hobbit. Unfortunately, it’s this very swift and bold expansion that’s causing its upheaval. Their strategy seemed audacious, with Embracer’s COO, Matthew Karch, voicing ambitions in June to transform The Lord of the Rings into one of the world’s most formidable gaming franchises.
Gearbox’s acquisition by Embracer in February 2021, for a deal nearing $1.4 billion, was a significant move. With notable launches like Tiny Tina’s Wonderlands and New Tales from the Borderlands last year, Gearbox also made headlines with its announcement of Homeworld 3, a sci-fi real-time strategy game. Beyond games, the perpetually delayed Borderlands film adaptation is finally coming out next summer.
While there’s ample speculation regarding Gearbox’s future, an email from the company’s chief communications officer, Dan Hewitt, gives some clarity. Addressing Gearbox employees, he stated that while various options, such as a transfer or even making Gearbox independent, are under consideration, the primary goal remains to choose a direction that is mutually beneficial for both Gearbox and Embracer.
However, the potential sale of Gearbox raises questions about its prospective buyers. Microsoft could buy the company if it wasn’t still dealing with its soon-to-be-closed acquisition of Activision Blizzard, which forced it to make concessions. Not to mention, the company had previously shown reluctance to retain Randy Pitchford, Gearbox’s long-time CEO. The presence of Pitchford in the deal is intriguing, to say the least. Despite controversies, he has a reputation for converting innovative game ideas into lucrative ventures.
Notwithstanding any controversies or fiscal challenges, Gearbox’s viability in the market is undeniable. The studio’s flagship product, Borderlands, stands as one of the gaming industry’s most profitable IPs. And with promising projects on the horizon, like Homeworld 3, Gearbox’s appeal is evident. Their robust portfolio, combined with their track record of consistently supporting indie titles, makes them a tantalizing prospect for potential investors.
Ultimately, while the fate of Gearbox remains in flux, its rich legacy and potential make it a valuable asset. Whoever will secure this prize will undoubtedly be significantly wealthier, both in monetary terms and in gaming prestige.
