Following a botched $2 billion deal, Swedish gaming conglomerate Embracer Group has been offloading studios — like Saints Row developer Volition — in an effort restructure the company. Its next target? Borderlands developer and publisher Gearbox Entertainment, Reuters reported on Monday.
Embracer is reportedly looking at its options for the U.S.-based developer, which last released Tiny Tina’s Wonderlands and New Tales from the Borderlands in 2022. Third parties have expressed in the studio, Reuters said. An Embracer representative, noting that the company does not respond to rumors, declined to comment. Embracer reportedly had a $2 billion deal in the works with Saudi government-funded Savvy Games Group, which had previously invested $1 billion in Embracer, but Savvy ultimately backed out, Axios said. And so, Embracer’s industry consolidation started to collapse as the company looks to reduce its debt to under $930 million.
Embracer has only owned Gearbox since 2021, when the mega-publisher bought the company in a deal worth nearly $1.4 billion. That same day, Embracer announced the acquisition of two other studios.
The rapid expansion was not surprising for the Swedish publisher, which has been known for its aggressive expansion strategy. It owns the rights to Tomb Raider, acquired when Embracer bought Eidos, Crystal Dynamics, and Square Enix Montreal from Square Enix in 2022. That same year, Embracer bought licensing rights to The Lord of the Rings and The Hobbit by buying rights holder Middle-earth Enterprises. This year, the company said it had five Lord of the Rings games in development.
“We know we need to be exploiting Lord of the Rings in a very significant fashion, and turn that into one of the biggest gaming franchises in the world,” Embracer chief operating officer Matthew Karch said in June. “And that’s obviously something that we’re going to do be doing. That’s a much better use of resources than some of the other projects that some of our teams have been working on.”
Embracer Group employs nearly 17,000 people; an unspecified number are expected to be laid off as the restructuring continues through multiple phases into March 2024. Saints Row developer Volition and Copenhagen-based Cabal Campfire, which was spun up only in 2022, have been shut down by Embracer. Several Gearbox Publishing employees have been laid off, too.
Update: An Embracer representative replied to Polygon following publication. This story has been updated to include the declined request for comment.