Embracer leans on back catalogue as game delays shake industry profits
FILE PHOTO: Embracer Group's computer games are seen in Karlstad, Sweden March 8, 2021. Picture taken March 8, 2021. REUTERS/Naina Helen Jama/File Photo
Tomb Raider owner Embracer is leaning on its back catalogue to maintain cash flow while fewer AAA games are being released, but this is not a long-term shift, CEO Lars Wingefors said on Thursday.
As game development becomes slower, riskier and more expensive, studios are facing growing pressure to justify their budgets for major releases in a market where consumer sentiment and profitability are wearing thin.
"I think it's more important than ever to make sure the game is polished because it's very hard to repair a buggy or unfinished product," Wingefors told Reuters.
French peer Ubisoft showed a similar approach with its newest Assassin's Creed game, which debuted with positive reviews on Steam after being delayed twice.
Gaming groups thrived during COVID lockdowns, but delays and weak demand have hit Embracer's new titles, pushing it to lean on older games seen as a safer bet amid faltering blockbusters.
It has sold studios to cut costs and manage debt in recent years, and is now splitting into three listed companies.
On Thursday, it forecast slight revenue growth and broadly unchanged earnings for its fiscal 2025/26, and said that realistically, at least one of its nine AAA game releases slated for the following two financial years would be pushed back, without specifying titles.
GAME DELAYS SHAKE INDUSTRY PROFITS
Studios are pouring time and money into increasingly complex games, but returns are hit-or-miss and long delays mean many will not see cash back until much later.
On top of it, fewer games break through and slower cash generation strains studios, which has made older titles a more attractive and dependable revenue stream for some.
Ubisoft recently delayed key titles and pushed profitability expectations to 2026, underscoring sector challenges in converting content into cash.
It told Reuters it planned to be more selective and turn blockbusters into "evergreen" franchises that generate steady revenue long after launch.
"We will still look to create some new IPs, but will be more discerning in favour of gameplay breakthroughs based on disruptive or emerging technologies," Ubisoft said.
Wingefors also said that tools like AI could boost efficiency over time in minor titles, with the industry rapidly adopting them to improve energy gains and technology sales.
($1 = 9.5615 Swedish crowns)
