Just a couple of months ago we reported that Swedish gaming giant Embracer Group, chaired by Lars Wingefors, had lost a super contract apparently clear with an unnamed partner, which led many to speculate that it was Sony or Microsoft. We now know that this was not the case. Apparently, the frustrated agreement, valued at $2 billion, was with Savvy Games Group, which has the financial backing of the Saudi Public Investment Fund (PIF), led in turn by Mohammed bin Salman. This has led to Embracer closing down game studios and laying off staff, as we previously reported on Gamereactor.
Embracer received $1 billion from the Saudi Arabia Public Investment Fund in 2022 and hopes to build a new deal with the Arabs, who have said on several occasions that they intend to make Saudi Arabia one of the world’s leading gambling hubs. PIF CEO Brian Ward is a true industry veteran who has worked for EA and Activision, among others, and we look forward to learning more about this failed deal in the future.
Axios writes the following:
Why It Matters: The fallout from the deal’s failure sent shares of The Embracer Group, Savvy’s potential partner and one of the most voracious buyers of game studios in recent years, plummeting, forcing it to cut costs.
More generally, the disclosure may raise questions about how Saudi Arabia will proceed with its controversial ambitions to invest $38 billion in the video game industry.
The news: Axios learned of Savvy’s involvement from four sources familiar with the deal who were not authorized to discuss it publicly, and after reviewing documentation related to the planned partnership.
An Embracer spokesperson declined to comment for this article. A representative for Savvy did not respond by press time.
Get up to speed quickly: The $2 billion deal would have seen Savvy invest in Embracer’s game development and publishing, helping to establish the Saudi company as a major gaming label. Embracer had been promising investors news of a lucrative “transformational partnership…with various industry partners” since November 2022. But in a May 24, 2023 memo, Embracer’s management announced the collapse of one of those massive partnerships, while carefully avoiding naming the partner.
In the May note, Embracer said the parties had reached an oral commitment in October 2022 that would have resulted in more than $2 billion “in contracted development revenue over a six-year period. All documentation was finalized and ready as of yesterday,” the company said. “We requested execution of the deal prior to our fourth quarter announcement. However, late last night we received a negative response from the counterparty.”