“Lord of the Rings” owner Embracer Group delivered a mixed bag in its fourth-quarter 2024 results on Thursday, reporting a 56% rise in adjusted operating profit to 1.4 billion Swedish kronor ($132 million), but not entertainment and services revenue. The division, which now owns the Tolkien and “Tomb Raider” IP, is down 15%.
The Sweden-based gaming giant also revealed that CFO and Executive Vice President Johan Ekström would step down after five years for personal reasons. He will focus on splitting Embracer into three companies from September 1, but will remain with the company until March next year.
Ekström will be replaced as CFO by Müge Bouillon, currently deputy CFO, while Phil Rogers will take on the role of deputy CEO of Embracer in addition to his current role as CEO of Crystal Dynamics-Eidos and leader of Middle-earth Enterprises & Friends. Three new companies to emerge from Embracer's shell.
The overall operating profit increase for the period from January to March 2024 was driven by the company's tabletop gaming segment, which generated more than $290 million in revenue thanks to a “better product mix,” the company said. It was revealed. PCs and games recorded the second-largest decline in sales (down 10%) after entertainment, but still generated the most revenue, driving sales across the group with $291 million.
Mobile games recorded revenue of $127 million, up 4%.
This made the Entertainment & Gaming segment the lowest-grossing segment, down 15% from $139 million to $118 million. Embracer CEO Lars Wingefors described this as “lower number of new releases and products compared to the previous quarter.”
After that quarter, it was revealed that two new “Lord of the Rings” movies were in the works at Warner Bros Discovery, and Embracer's Crystal Dynamics inked a deal with Amazon to produce a new “Tomb Raider” movie and series.
In a Q&A following the report, Wingefors said Embracer is getting its “fair share of the profits” from every “Lord of the Rings” film to be released by Warner. “The two films we announced in recent weeks will definitely have an impact in 2026 when the first film is released,” Wingefors said. “And the agreement we had with Warner, which we had with New Line Cinema in the '90s, is a beneficial agreement for both parties. It has a notable potential royalty stream for us. Old movies have generated billions of dollars in revenue and we are very happy because we keep a large portion of the profits from these movies. However, there will be no contribution to that contract at all this fiscal year.”
In the attached fourth quarter report, Wingefors described his vision for the mid-tier company: “We see great potential in the ‘Lord of the Rings’ IP and believe space can be a key driver in the coming decades. It will please fans all over the world,” Wingefors said. “The new ‘Tomb Raider’ story in streaming and movies allows us to further nurture and grow another unique IP, taking it to new heights. Warner Bros. complements our capabilities. “Strong partners like Discovery and Amazon MGM Studios are an important part of our IP strategy.”
Embracer will acquire 'The Lord of the Rings' in 2022, ponying up 300 million won for the rights to Middle-Earth Enterprises, which owns various Tolkien IP, amid a two-year buying frenzy that also includes 'Tomb Raider' owner Crystal Dynamics. They paid $95 million. , comics company Dark Horse and animation company Anime Ltd.
Due to global economic turmoil and declining gaming revenues following the pandemic, tabletop and computer game companies have undergone major restructurings, including selling companies and closing game studios. According to the fourth quarter report, compared to the same period last year, headcount decreased from 16,601 to 12,069.
Last month, Embracer said it planned to split the conglomerate into three publicly traded companies: Asmodee Group, Coffee Stain & Friends and Middle-earth Enterprises & Friends.