Swedish gaming giant buys "Lord of the Rings" as big media stocks up on super-sticky franchises
Middle-earth… has a new lord of the rings. Yesterday, Swedish gaming company Embracer announced a deal to buy IP rights for "Lord of the Rings" and "The Hobbit." FYI: Embracer is one of the largest game publishers with 120 in-house studios, 230 games in development, and 850 IPs. Under the deal, Embracer can create and sell LOTR-based films, games, merch, theme parks, and stage productions.
- Gi-Ent sized: The deal was part of six acquisitions that Embracer made, totaling nearly $573M. Presale estimates had put LOTR’s value at about $2B.
- Return of the ring: Amazon spent $250M on LOTR rights for its new "Ring of Power" TV series, which debuts next month. Warner Bros. plans to release an anime LOTR film in 2024, and EA is working on a middle-earth mobile game.
One IP to rule ’em all… Embracer’s been on an M&A spree over the past decade, scooping up smaller developers and the rights to classic franchises (like: “Tomb Raider,” “Hellboy”) to build its gaming archive. Rivals including Microsoft and Nintendo are also droppin' big bucks to bolster their roster of classic franchises, even with gaming sales forecast to shrink 9% this year. So far, stocking up is paying off: Embracer’s sales jumped 107% in Q1 of this year.
Super-sticky franchises can pay off big $$… just ask Disney. The Mouse House has made nearly $5B from "Star Wars" box-office sales alone after buying Lucasfilms for $4B in 2012. By grabbing super-sticky franchises, companies like Embracer can expand beyond gaming with name-brand fan faves, and diversify revenue through new channels (think: hobbit-inspired homeware or a Gandalf spin-off series).