Embracer goes on spending spree as U.S. game spending falls 9% in July
“Game On” is The Fly’s weekly recap of the stories powering up or beating down video game stocks.
This week’s major game release is Embracer’s (THQQF) “Saints Row” reboot, which launches August 23 for PC, Google Stadia (GOOGL), Xbox One (MSFT), Xbox Series X/S, PlayStation 4 (SONY), and PS5. Also out this week is Bandai Namco’s (NCBDY) “Pac-Man World Re-Pac,” a full remake of 1999 platformer “Pac-Man World.” The game launches August 26 for PS4, PS5, PC, Xbox One, Xbox Series X/S, and Nintendo Switch (NTDOY).
Last Thursday, Swedish media and gaming holding company Embracer Group made a number of key announcements, including the acquisition of multiple video game developers. To start, Embracer, which was established in 2011 as parent of publisher Nordic Games, announced the formation of Embracer Freemode, an operative group comprised of certain gaming and entertainment companies owned by Embracer focused on classic gaming and entertainment, game developer and production, devices, gear and collectibles, and more. The company then announced, through its Freemode and Saber Interactive subsidiaries, it entered into agreements to acquire collector-focused publisher Limited Run Games, karaoke technology effects company Singtrix, “Teardown” developer Tuxedo Labs, and “Maneater” developer Tripwire. Embracer also acquired a number of other small developers, including Tatsujin, Bitwave Games, Toaplan, and Gioteck.
Most notably, however, Embracer entered into an agreement to acquire Middle-earth Enterprises, a division of The Saul Zaentz Company, which owns a vast intellectual property catalogue and worldwide rights to motion pictures, video games, board games, merchandising, theme parks and stage productions relating to the iconic fantasy literary works The Lord of the Rings trilogy and The Hobbit by J.R.R. Tolkien, as well as matching rights in other Middle-earth-related literary works authorized by the Tolkien Estate and HarperCollins.
While Embracer did not disclosed the terms from any of its agreements, the company said the financial impact from such acquisitions is expected to be around SEK8.2B, or $770M. The Fly notes, though, that the announcements come several months after Embracer acquired Crystal Dynamics, Eidos Montreal and Square Enix Montreal from Square Enix (SQNXF) in a $300M deal.
Several days after the announcements, Bloomberg’s Jason Schreier reported that Embracer has shifted development of the upcoming remake of “Star Wars: Knights of the Old Republic,” which was initially announced as a PlayStation 5 console exclusive, from one of its subsidiaries to another. The project was initially in development at Aspyr Media but is now being led by own of Saber Interactive’s Eastern European studios, Schreier reported, citing a person familiar with the change.
Last Friday, NPD analyst Mat Piscatella said that July 2022 consumer spending across video game hardware, content and accessories in the U.S. fell 9% when compared to a year ago, to $4.18B. The total is just slightly lower than the $4.19B generated in July 2020. Year to date spending has reached $30.5B, a 10% decline when compared to the same period in 2021. Subscription spending gains has not been able to offset declines in other content segments. 2022 consumer spending on video games returned to near 2020 levels in July, after having trailed that year’s pace since April. Video game hardware dollar sales increased by 12% when compared to a year ago, to $362M. Year to date spending on video game hardware has fallen 7%, to $2.5B. Sony’s PlayStation 5 led the market in hardware spending during both July and 2022 year to date, while the Nintendo Switch sold the most units in both time periods. PlayStation 5 and Xbox Series dollar sales each experienced double-digit percentage growth when compared to a year ago.
In addition, NPD’s Piscatella said Warner Bros. Discovery’s (WBD) “MultiVersus” was July’s best-selling game in the U.S., driven by sales of “MultiVersus” Founder’s Packs. Warner Bros. published two of the top 3 best-selling games of July, with “LEGO Star Wars: The Skywalker Saga” also ranking 3rd. Nintendo’s “Xenoblade Chronicles 3” debuted as the #4 best-selling game of July despite digital sales not being included in the ranked reporting. It also ranked as the best-selling game of July on Nintendo Switch. Bandai Namco’s “Digimon Survive” was July’s other new release placing among the top 20 best-sellers, ranking 8th overall, despite only having 2 days in market during the tracking period. Other premium games in the top ten in sales for the month of July in the U.S. include Bandai Namco’s “Elden Ring,” Activision Blizzard’s (ATVI) “Call of Duty: Vanguard,” Sony’s “MLB The Show 22,” and EA’s (EA) “F1 22.”
Last week, Kotaku’s Sisi Jiang reported that game testers at Nintendo of America, which typically uses contractors for such roles, are saying that they have faced years of sexual harassment while working at the gaming giant, as the company fostered a “frat house” culture tended to alienate female workers. Jiang reported later in the week that Nintendo of America president Doug Bowser issued an internal message to staff acknowledging “media coverage involving claims about worker conduct,” adding that the company has “and will always investigate any allegations we become aware of, and we are actively investigating these most recent claims.” “We have strict policies designed to protect our employees and associates from inappropriate conduct and expect full compliance with these policies by all who work for or with us,” the Nintendo of America president wrote in the message. “We have and will always investigate any allegations we become aware of, and we are actively investigating these most recent claims.”
OTHER STORIES TO WATCH:
- Nintendo plans to increase Switch supply by shrinking the size of the console’s packaging, VGC reports [more]
- Sony said that PlayStation VR2 is coming in early 2023 [more]
- Sony is facing a GBP5B lawsuit in the U.K. over claims of overcharging on its digital PlayStation Store, VGC says [more]
- The PC port of “Marvel’s Spider-Man Remastered” is the fourth biggest PC game launch in the year in the U.K., Gamesindustry.biz reports [more]
- Deutsche Bank analyst Benjamin Soff downgraded Take-Two (TTWO) to Hold from Buy over a lack of near-term catalysts [more]
Originally Posted August 23, 2022 – What You Missed This Week in Video Games
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