Embracer to Split Into Two Companies, Spinning Off Tomb Raider and LOTR

Embracer Group intends to divide its operations into two separate publicly traded businesses. The board has confirmed that a new spin-off called Fellowship Entertainment will launch in 2027 as an IP-led entertainment company focused on game development, publishing and licensing under one centralized strategy.

Fellowship Entertainment will assume control of The Lord of the Rings intellectual property along with major franchises including Tomb Raider, Darksiders, Dead Island, Kingdom Come Deliverance, Metro and Remnant. The studios transferring across reportedly include 4A Games, Crystal Dynamics, Dambuster Studios, Dark Horse Media, Eidos-Montréal, Fishlabs, Flying Wild Hog Studios, Gunfire Games, Middle-earth Enterprises, Redoctane Games and Warhorse Studios.

Embracer itself will continue as a highly decentralized organization pursuing distinct strategies across its remaining segments. It will retain oversight of IPs such as Destroy All Humans!, Desperados, Gothic, Killing Floor, Kingdom of Amalur, MX vs. ATV, Reanimal, Ride, Screamer, Titan Quest and Wreckfest, in addition to licenses including Hot Wheels Unleashed and SpongeBob SquarePants.

Businesses staying with Embracer reportedly encompass Aspyr, Beamdog, CrazyLabs, Deca, Demiurge, DPI Merchandising, Limited Run Games, Milestone, Plaion Partners, Plaion Pictures, THQ Nordic (with its 35 studios and subsidiaries), Tripwire and Vertigo Games.

The restructuring is expected to grant Embracer greater flexibility for future mergers and acquisitions while the new company concentrates on its studios and publishing activities.

Current Embracer Group CEO Phil Rogers and COO Lee Guinchard will move into the same roles at Fellowship Entertainment, joined by CFO Müge Bouillon. The company has already begun a search for replacements to lead the original Embracer entity.

In a letter to shareholders, Embracer Group board chair Lars Wingefors explained that the spin-off aims "to increase management focus to capture the full joint potential of the IPs, their respective communities and some of the best game developers in the world." He added: "Just like Asmodee and Coffee Stain, we believe Fellowship Entertainment will thrive the most by becoming its own standalone business."

Wingefors described the assets heading to Fellowship Entertainment as "among the most undervalued in the industry" and said it was his responsibility as largest shareholder to create a structure that unlocks their potential. He expressed confidence that the new company could achieve "industry leading profitability and show healthy long-term organic growth above the industry average."

The announcement also referenced Embracer’s earlier 2023 reset, which involved significant staff reductions and the divestiture of Gearbox and Saber Interactive.