Now that almost all studios have been shut down and most of the developers kicked out, backlog sales are enough to turn the result seemingly positive, but every new release has been loss-making for nearly a year now. The stock price rose unexpectedly at the beginning of the year and Lars has found AI tools to generate corporate fluff.
ROI table:
Average ROI has already dropped to the 1.8x level, and not a single game has been released in a year that has even reached the Break Even point. PC/Console revenue is -46%, but EBIT has somehow been adjusted into the black. This is some wild accounting wizardry. Mobile game revenue is -28%.
The results in the accounting have been so incredibly good that Lars basically gave the CEO the sack, but isn’t saying it out loud yet. I would be surprised if Phil Rogers actually moves to lead the new Fellowship, given his abysmal track record. CD/Eidos, led by Rogers, has yet to release a single game under Embracer’s ownership.
A new stronger governance structure led by CFO and Deputy CEO Müge Bouillon is now being put in place for the business segment Embracer. To be clear, the current Embracer Group CEO Phil Rogers will be leading the overall group until spin-off, at which point he will assume the new role as Group CEO for Fellowship Entertainment. The recruitment of a new CEO for Embracer has been initiated, and the new leader is planned to be in place well ahead the separation. Phil Rogers has done great in the past years and especially since my transition as CEO on 1 Aug 2025, becoming the natural leader also for the future Fellowship Entertainment. He is steadily building a unified company with greater synergies, better execution, and tighter cost control.
The Adjusted EBIT slide raises a lot of questions—so many, in fact, that “Emppu” immediately announces that in the future you should follow Cash EBIT, because it’s easier to adjust and “correct” the numbers.
In the forecast, Cash EBIT is the new emperor, and even though he has no clothes, you’re not allowed to say it out loud. Every Q1 release has flopped, so this new CASH EBIT will be negative in the next quarter, but will turn positive by the end of the year (MAYBE).
Accounting trickery has truly been taken to completely new spheres.
Fellowship’s pipeline reveals a lot without revealing anything:
Crystal Dynamics / Eidos officially only have Tomb Raider games under development; other projects are in the concept phase. Insider-gaming, among others, has reported extensively on Crystal Dynamics’ projects and their challenges, and apparently, no projects have made it into production, so it is very likely that once TR is finished, the studios will be closed. This spinoff might still save the studios, but the future doesn’t look bright.
Gunfire Games has two projects under development. Darksiders has been announced, but that other project in development is more interesting and it has to be Remnant III. Adding to the interest is the fact that ARC Games, which botched the previous game’s launch, is no longer part of the group, and THQ Nordic, which supported the launch, stays under Embracer—meaning Gunfire will likely be responsible for publishing themselves.
All AAA studios would be under the same roof in the future, and I see a lot of potential here, but the failure of a single project could topple the entire house of cards and cash flow. Another risk is the release cadence. Once Tomb Raider and Metro are out, we’ll have to wait years for the next game—for example, KCD2 development took 6 years, and CD/Eidos doesn’t seem to get projects out of their development pipeline into production at all. KCD3 and LOTR RPG are officially in development, but the games will be released in 2030 at the earliest.
The remaining Embracer contains all the “eurojank” trash and a terrible accounting and management culture. More is Less. There are still too many moving parts, and even though it looks on paper and in Lars’s ChatGPT letter like a lot has been learned, the company still hasn’t fixed its quality issues. They do a lot, but they do it poorly. The company’s challenge is also the changed gaming market; they make bad games for which there is no demand and that do not sell.
Last year was the best year ever for the Swedish gaming industry, with numerous indie hits; Swedish games’ share was over 20% of Steam’s revenue, while at the same time, the mega-corporation Embracer only manages one successful release (KCD2)—and even that was worked on for 6 years, whereas the mega-hit PEAK was developed in a month.
