It was just a few short months ago that we were able to report that the Swedish gaming giant Embracer Group, led by investment mogul Lars Wingefors, had unfortunately lost a seemingly definitive mega-deal with an unnamed partner. , leading many to speculate that it could be Sony or Microsoft. We now know that’s not the case. The $2 billion deal is apparently in partnership with Savvy Games Group, which is backed by the Saudi Arabia Public Investment Fund (PIF), which in turn is led by the much-criticized Mohammed bin Salman. This is now causing Embracer to start shutting down game studios, they’ve been laying off staff, we’ve covered it here at Gameactor.
Embracer has secured $1 billion from the Saudi Arabia Public Investment Fund in 2022 and hopes to strike a new deal with the Arabs, who have repeatedly said they intend to build Saudi Arabia into one of the world’s most important gaming hubs. PIF’s CEO, Brian Ward, is a true industry veteran who has worked at companies like EA and Activision, and we hope to learn more details about this failed deal in the future.
Axioswrote:
Why it matters: The fallout from the failed deal sent shares of The Embracer Group — a potential partner of Savvy and one of the greediest acquirers of video game studios in the past few years — plummeting and forcing it into cost-cutting mode.
More broadly, the revelation could raise questions about how Saudi Arabia will continue with its controversial ambition to invest $38 billion in the video game industry.
Pushing the news: Axios learned of Savvy’s involvement from four sources familiar with the deal, who were not authorized to speak publicly about it, after reviewing documents related to the planned partnership.
An Embracer spokesperson declined to comment for this story. A representative for Astute had not responded by press time.
Quick catch: The $2 billion deal will involve Savvy investing in the development and distribution of Embracer games, illustrating the Saudi company’s emergence as a major gaming brand.
Embracer has been promising investors lucrative “transformative partnerships…with multiple industry partners” since November 2022. But in a report dated May 24, 2023, Embracer management announced the collapse of one of its massive partnerships, while being careful not to name the partner.
In a May note, Embracer said the parties had reached a verbal commitment in October 2022, which would result in “more than $2 billion in contract development revenue” within “six years”.
As of yesterday, all files were finalized and ready,” the company said. “We asked for the agreement to be executed before the fourth quarter announcement. However, late last night we received a negative result from our counterparty.
