Embracer’s problems

Video games is one of the strong technology sectors in the Nordics (King.com, Supercell, Paradox Interactive, DICE, Embracer and many more companies).

It’s noteworthy that Embracer, the largest publicly-traded publisher and developer, missed future revenue expectations and lost 44 % of its market value and is now valued at about 28.5 billion SEK. The reason was that a strategic partnership didn’t happen which meant Embracer missed expectations.

Embracer has had a great, acquisition-driven growth run over the last couple of years. But games development is a volatile and somewhat unpredictable business as you cannot know if the games that you are building will be fun and as a result sell well. This have been an increasing challenge for Embracer, as I understand it, as they have gone upwards from lower cost games and remakes to AA and even AAA titles with larger development budgets.

I haven’t deep-dived into Embracer’s problems, but hope they are mainly about missing expectations and that problems with revenue growth will be short-lived and turned around quickly. Not least due to the fact that a strong public Swedish games publisher is a good thing for the Nordic ecosystem.

Author: Henrik Torstensson

Partner at Alliance VC. Investing in Nordic early-stage tech startups.

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