Embracer Group, the new owners of Middle Earth Enterprises — the holding company that owns the “Lord of the Rings” among other J.R.R. Tolkien titles — have given the first hint of what they may have planned for the author’s works during a presentation for their Q2 earnings report on Thursday.
Among the rights Sweden-based Embracer Group now own in the “Lord of the Rings” IP, after purchasing Middle Earth Enterprises for an undisclosed sum from previous owner Saul Zaentz Co. in October, are rights to develop and make films, games and theme parks attractions.
Although Embracer co-founder and CEO Lars Wingefors wouldn’t get into specifics, he revealed he has been consulting with “all stakeholders” — including film companies and business partners — about the best way to develop what he described as a “world-leading fantasy IP.”
Wingefors did not specify whether those stakeholders included Warner Bros. Discovery, who are believed to still retain some film development rights to “Lord of the Rings” through their ownership of New Line Cinema, which produced Peter Jackson’s film trilogy (pictured above). It’s unclear how these have been impacted by the sale of Middle Earth Enterprises.
Embracer is primarily known for its gaming output: video games and mobile in the digital sphere and board games and card games in the physical.
Speaking more generally about the group’s move into film and television, Wingefors said he’s been conversing with “top players in the industry” and was pleased to see “the excitement they have around our IPs,” which as well as “Lord of the Rings” also include “Tomb Raider” and “The Mask,” among hundreds of other titles.
But when asked for further news about the Tolkien acquisition, he replied cryptically: “Wow, that’s a very interesting question. Tolkien. We could spend an hour on that.
“Obviously we closed the transaction after quarter end, early October, and are now talking to all stakeholders, the film companies, the business partners, the game companies,” Wingefors expanded. “We are taking the perspective [of] a very long-term view: how should we, together with the other stakeholders, develop this world-leading fantasy IP into the future? Gaming being one part of it. But it’s too early to give color on our specific plans. I think we are still open-minded for […] input into that. I think [there’s] also very interesting conversations around other media than gaming relating to that IP. But unfortunately I have to tell you: stay tuned for the future.”
Asked, during a second Q&A session, about Embracer’s general plans for film and television, Wingefors said: “I think it’s still early days. Now looking on the film and TV side, there is substantial interest in a number of our key IPs for the future. But we haven’t executed [or] assigned things yet. We are still early days, we are still long term. Potentially we need to collect our forces even more to increase our leverage on that front. But I’ve been very pleased to speak with a number of top players in the industry and the excitement they have around our IPs.”
“How long will it be until we see Middle-Earth in this context?” the interviewer, equity analyst Martin Arnell, pushed.
Wingefors replied: “It’s very hard for me to comment anything on that front but if you are long term I am confident you’ll be pleased one day.”
Middle Earth Enterprises is actually owned and operated by Embracer Group subsidiary Embracer Freemode. Freemode, which is led by CEO Lee Guinchard, is a gaming and entertainment company. As well as buying “Lord of the Rings’” holding company, it also acquired Limited Run Games and Inc, Singtrix during the second quarter. Wingefors noted during his presentation that Embracer now has four licensed “Lord of the Rings” games in production with external developers.
Although the Q2 report did not offer specific details about Freemode’s operations in relation to Middle Earth Enterprises, in its overview it stated Freemode had “bolster[ed] its support and leadership team to support the companies on their growth journeys” including hiring three senior employees.
Overall, Embracer Group reported a strong second quarter, with net sales increasing by 190% to SEK 9,569 million (U.S. $910 million) from July to September 2022. However Wingefors warned that future net earnings forecasts had been adjusted downwards to SEK 8.0-10.0 billion ($750 -950 million) to reflect the global economic downturn. “It is fair to assume that all industries, including the games industry, will see some impact from weaker consumer sentiment,” Wingefors warned in a statement accompanying the Q2 report.
As a result, Wingefors revealed, Embracer Groups’ board of directors will launch a “special review” of the business. One outcome may be the board recommending that some of the group’s subsidiaries – including potentially Embracer Freemode – are spun off into separate publicly listed companies “if that is deemed to be the best for its employees, create higher shareholder value and improve our strategic flexibility.”
Over the past 12 months, Embracer has gone on a wild acquisition spree, snapping up some of the most iconic IP in entertainment including Dark Horse Comics, which have published titles including “The Mask” and “Stranger Things” last December, and video games studio Crystal Dynamics, which owns “Tomb Raider” this past May. They also acquired Anime Ltd, a U.K.-based distributor of Japanese entertainment including animation, music and merchandise, just last month.
Despite the gloomy economic outlook — and Swedish currency, the krona, dropping to a historic low against the U.S. dollar in September — Embracer is still open to buying more companies. Asked whether Wingefors had ruled out making more “sizeable acquisitions in the foreseeable future,” the CEO replied: “I don’t think you should rule out transactions. In general, I’d like to be active in the marketplace but it’s difficult to do very large sizeable acquisitions if your currency [is] valued as it is currently. It could be destructive to shareholder value. But obviously, if there is a fantastic, very sizeable company willing to sell at significantly lower valuations, I’m here to talk.”
Read More About:
Source: Read Full Article