Tomb Raider Games Firm Embracer Falls After Partnership Talks Collapse
Swedish gaming group Embracer said on Wednesday that a major planned strategic partnership had unexpectedly failed and that it had lowered its earnings guidance, sending shares into a tailspin.
The developer, which last year bought several development studios and the intellectual property rights to several games, including the new Tomb Raider game, said the deal would have “set a new benchmark for the games industry”.
“Late last night, we were informed that one major strategic partnership that has been negotiated for seven months will not materialize,” the statement said.
The deal being negotiated included more than $2 billion in contract development revenue over six years, it said.
“The deal would have made it possible to pay off already capitalized costs at the time of the deal for several big-budget games, but also significantly improve medium- and long-term returns and the predictability of cash flow for the duration of game development projects. .”
Shares in Embracer fell 40% at 0753 GMT, hitting an all-time low. Analysts said the drop was due to trade news as well as a downgraded outlook.
Hit by game delays, weaker demand and a “lack” of some new titles, Embracer on Wednesday reported an adjusted operating profit of 915 million kroner ($90.1 million) for the period, roughly in line with last week’s profit warning.
It said that in addition to the collapse of the partnership agreement, it had had to postpone the planned releases of several games in development, resulting in its adjusted profit forecast for the current year being cut to 7-9 billion kroner from 10-14. billion seen before.
Embracer declined to say who the potential partner was.
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