Embracer Group Forms a Fellowship | Netflix Eyes Cloud Gaming

the gaming tap
Embracer Group Forms a Fellowship | Netflix Eyes Cloud Gaming
Embracer Group Forms a Fellowship | Netflix Eyes Cloud Gaming

Mergers & Acquisitions

Embracer Group
Source: Embracer Group

Embracer Group Forms a Fellowship Conglomerate buys rights to Lord of the Rings & The Hobbit

Embracer Group has acquired the rights to J.R. R. Tolkien’s Middle-earth IP, including the prize jewels of The Lord of the Rings and The Hobbit. This  purchase from the ever-growing European conglomerate is the latest move in Embracer’s long-term trans-media strategy.

Rights to Rule Them All?
It’s a bit more complicated as to what exactly Embracer purchased, besides future video game titles.

  • It didn’t purchase games already in development or full-length movie rights.
  • Given the author’s family still owns publishing rights, it’s unclear to what extent Embracer will be able to leverage crossovers like comic book tie-ins

Appetite for Expansion

It’s no Microsoft purchasing Activision-Blizzard or Sony buying Bungie, but Embracer has been spending billions in a ravenous pursuit of IP and talent. 
  • A trio of AAA developers in May (Crystal Dynamics, Eidos-Montreal, Square Enix Montreal)
  • Dark Horse Media in December 2021
  • Board game maker Asmodee in December 2021
  • AAA-developer Gearbox Software in February 2021

If there is a difference in Embracer’s buying spree compared to the ongoing consolidation in gaming, it’s that its goals are more long term. It’s not buying studios that turn out a big hit every year (Activision-Blizzard’s Call of Duty) or close to releasing a live service game (Bungie). Rather, it’s securing its share of a limited pool of game developers and the IPs that increasingly fuel entertainment.

A Cooling Market
Believe it or not, Embracer appears to have purchased these rights at a bargain. At most, it paid $788 million, and likely substantially less. Compare this to the original asking price in February of at least $2 billion. Maybe romps through Middle Earth aren’t worth what they used to be, but it’s more likely that industry spending is decreasing as the gaming boom fades.

Cloud Gaming

Source: Intel
Source: Intel

Netflix Eyes Cloud Gaming Job listings suggest downloadable games were just the start

Netflix is exploring an expansion from downloadable titles to full-fledged cloud gaming, according to a recent protocol report on the company’s job listings. While cloud gaming is a logical move for the streaming giant and its massive audience, Netflix’s tardy entry could prove a tough obstacle.

Small Beginnings
Netflix dipped its toes in gaming last November by offering games integrated into the Netflix app. Subscribers could download and play these largely indie titles. 

  • Netflix is planning to have around 50 games by end of 2022
  • Hits have included tie-ins like Stranger Things: 1984 & Stranger Things 3: The Game
A Drop in the (Really Big) Bucket
Determining whether or not Netflix’s gaming efforts have been a success is hard to say.  Less than a percent of its subscribers are playing; but with over 220 million subscribers, that translated to 2.9 million game downloads in July. 
  • Xbox Game Pass has about 25 million subscribers
  • PlayStation Plus has around 48 million
  • GeForce Now recently passed 10 million
Why Choose Netflix?
That’s the question the streaming company will have to answer. There’s no denying the advantage of having many times more subscribers already. Will it jumpstart its service by initially offering it for free? Otherwise, Netflix has very limited gaming experience, while its competitors have had years to iron out bugs. 

It’s a Different Game
Gaming is a different beast from streaming. Netflix powered its way to streaming dominance by spending mountains of money with limited regard for quality.

  • For every Witcher, there were several miserable shows like Resident Evil
This reliance on shovelware (think bargain bin) will not work in gaming. Netflix needs quality hits if it wants to compete with other services, let alone replace the humble video game console or gaming PC. This means spending big money at a time when the company is shedding subscribers and cutting costs (and workers).

The good news here is for game developers who will have another platform to shop their creations to. Peripheral manufacturers will also undoubtedly be happy for new customers.

Supply Drop: Games & Players

Upcoming Games (August 19 - August 25)

Are You Smarter Than A 5th Grader? - PC, PlayStationXboxSwitch
Madden 23 - PC, PlayStationXbox
Midnight Fight Express - PC, PlayStationXboxSwitch
Saints Row - PC, PlayStationXbox
SD Gundam Battle Alliance - PC, PlayStationXboxSwitch
Train Life: A Railway Simulator - PC


Comms: Social Campaigns

  • Alienware promotes back-to-school sale with Disney+ offer on August 18 (FB, IG)
  • Acer Predator promotes partnership with upcoming #R6Major tournament on August 12 (FB, IG)
  • CyberPower promotes deals for upcoming Intel Gamer Days event on August 18 (IG)

The Tap: News to Go

  • Cloud Gaming: Nvidia's GeForce Now game streaming service will now offer up to 1440p and 120 fps at its most premium $19/month RTX 3080 tier. This upgrade targets dedicated PC gamers with 1440p monitors and differentiates GeForce Now from competitors like Xbox Cloud Gaming.
  • PC Gaming: Datamining suggests that Sony is weighing a standalone PlayStation game launcher for PC. Its first-party ports are currently offered through Steam. Given the company's focus on becoming a multi-platform gaming service, it's likely that titles would not become Sony launcher exclusives.
  • GPU: Nvidia is reported to be spinning up production of its RTX 3080 12GB after a two month pause. If true, this suggests that Nvidia is racing to offload existing stock, even if its in the form of lower-margin video cards, as its RTX 40-series launch approaches.
  • Mobile: Game engine provider Unity has turned down a $17 billion takeover offer from Applovin. It plans to complete its merger with Applovin rival IronSource, with Unity hoping the deal will improve monetization and lead to profitability.