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Embracer CFO Set to Exit as ‘Lord of the Rings’ Owner Reports Rise in Operating Profit, Drop in Entertainment Division Sales

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Lord of the Rings” owner Embracer Group delivered a mixed bag during its fourth-quarter 2024 earnings Thursday, revealing that while its adjusted operating profit had risen by 56% to 1.4 billion Swedish krona ($132 million), sales in its entertainment and services division – which currently houses its Tolkien and “Tomb Raider” IP – had dropped by 15%.

The Swedish-based gaming conglomerate also revealed CFO and deputy CEO Johan Ekström is set to step down after five years for personal reasons. He will stay with the company until next March although from Sept. 1 he will be focused on splitting Embracer into three companies.

Ekström will be replaced as CFO by current deputy CFO Müge Bouillon while Phil Rogers will take on the role of deputy CEO of Embracer in addition to his current roles as CEO of Crystal Dynamics-Eidos and leader of Middle-earth Enterprises & Friends, one of the three new companies that will emerge out of the shell of Embracer.

Covering the period between Jan. and March 2024, the overall rise in operating profit was driven by the company’s tabletop games division, which delivered sales of over $290 million thanks to a “better product mix,” the company said. While PC and games delivered the second biggest drop in sales after entertainment – falling by 10% — the division still delivered the most sales, bringing in $291 million, driving sales for the group overall.

Mobile games showed a 4% increase, delivering sales of $127 million.

That left the Entertainment and Games as the division with lowest sales, of $118 million down from $139 million, a decrease of 15%. Embracer CEO Lars Wingefors put this down to “fewer new releases and products compared to previous quarters.”

After the quarter it was revealed that two new “Lord of the Rings” films are in the works at Warner Bros Discovery while Embracer’s Crystal Dynamics has inked a deal with Amazon to create new “Tomb Raider” films and series.

In a Q&A following the report, Wingefors said Embracer has a “fair share of the profits” on any “Lord of the Rings” movies set to come out of Warner. “The two movies recently announced a few weeks ago they will obviously have an impact in 2026 when the first movie is released,” Wingefors said. “And the agreement that we have with Warner was struck in the ’90s with New Line Cinema and it’s a beneficial agreement for both parties. It has notable potential royalty streams coming to us. The old movies have generated billions of revenues and we have a fair share of the profits on these so I’m excited. But we will not seen any contribution for that agreement this financial year.”

In the accompanying Q4 report, Wingefors set out his vision for Middle-Earth enterprises, saying: “We see great potential in ‘The Lord of the Rings’ IP and believe the universe can become a key driver in the coming decades, with the aim to delight fans across the globe,” Wingefors said. “New ‘Tomb Raider’ stories in streaming and film will allow us to further nurture and grow another unique IP, taking it to new heights. Strong partners, such as Warner Bros. Discovery and Amazon MGM Studios, that complement our capabilities are an important part of our IP strategy.”

Embracer snapped up “Lord of the Rings” in 2022, paying $395 million for the rights to Middle-Earth Enterprises, which houses a range of Tolkien IP, amidst a frenzied two-year buying spree that also included “Tomb Raider” owner Crystal Dynamics, comics company Dark Horse and anime company Anime Ltd.

Following global economic turmoil and a post-pandemic revenue drop in gaming, the tabletop and computer games company has undergone a significant restructure including sales of companies and shuttering of games studios. The Q4 report shows year-on-year headcount has dropped from 16,601 to 12,069.

Last month Embracer said it planned to split the conglomerate into three publicly-listed companies: Asmodee Group, Coffee Stain & Friends and Middle-earth Enterprises & Friends.