Embracer Group, the video game holding corporation well-known for ownership of studios such as Crystal Dynamics and Deep Silver have reported eleventh-hour loss of a $2bn deal.
The deal - with an unnamed third party - was purportedly valued at the $2bn in terms of revenue for the company, with some speculating it would have involved a long-term game development plan. However, according to CEO Lars Wingefor earlier today as part of their latest finanacials, the deal fell apart at the eleventh-hour after Embracer was already confident that it would go through and had received a “verbal agreement.”
“The deal would have enabled a catch-up payment at closing for already capitalised costs for a range of large-budget games, but also notably improved medium-to-long-term profit and cash flow predictability for the duration of the game development projects,” Wingefor wrote in a statement to investors.
What’s the damage?
The fallout from the loss of the deal was rapid with shares in Embracer down 40% this morning before hitting an all time low with the impact on long-term revenue that they would have gained being particularly relevant to the company's success going forwards.
Although in the same breath, Wingefor does offer a hopeful outlook for the coming years, it's this particular loss of prospects that's damaging confidence right now, despite Embracer subsidiary Crystal Dynamics recently striking a high-profile Tomb Raider deal with Amazon after acquiring them from Square Enix earlier that year.
“We have a solid pipeline of ongoing development projects, but multiple projects will need more time to live up to our high expectations of quality and to reach their full commercial potential,” Wingefor added.
Wingefor aimed to put a silver lining on the news, and insist that Embracer will continue its long-term plans for deals, as he said, “We will continue to seek partnerships and collaborations with third parties across all our segments, including opportunities within transmedia. The demand for content has never been greater, and Embracer is well-positioned to meet that demand.”