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"We know we need to be exploiting Lord of the Rings," embattled Embracer says

"In a very significant fashion."

A strip-mined Isengard from Peter Jackson's The Lord of the Rings.
Image credit: New Line Cinema

Video game mega publisher Embracer, which this morning announced a "comprehensive restructuring plan", says it must now "exploit" the fact it owns the rights to Lord of the Rings and the Hobbit "in a very signficant fashion".

Speaking via an investor call held in the wake of today's announcement that it would restructure the company, Embracer's newly-promoted interim exec Matthew Karch said the business must now prioritise pumping out Lord of the Rings projects ahead of other game ideas which might not perform as well.

"We own Lord of the Rings, and we know we need to be exploiting Lord of the Rings in a very significant fashion and turning that into one of the biggest gaming franchises in the world," Karch said. "And that's obviously something we're going to 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. Working together we have those oppurtunities and we're super excited to see that working relatively quickly."

Digital Foundry looks at Gollum.Watch on YouTube

Embracer has announced plans to close studios, end projects and cut staff to turn the company around following the loss of a lucrative proposed $2bn business deal last month, and after last year's high-profile failure of the Saints Row reboot.

"I have a high degree of confidence that this entire process is going to easily translate into better product selection that's more profitable and that gives us a greater opportunity for growth in the future, and that helps to leverage the IP we own within our organisation," Karch said.

Exactly which existing projects and studios will now be closed, Embracer is not yet willing to say.

"Unfortunately we're going to have to close some studios that are underperforming or not creating profit up to our standard," Karch continued, adding that it was unlikely this would impact any in-development games that had already been announced.

"We're going to terminate projects that have - for the most part - not been announced, that will have a material impact on our profitability because they have projected lower-than-expected returns," he said.

This morning, Tomb Raider developer Crystal Dynamics marked itself as safe from any impact on its game development.

As for job losses, Embracer will look to make cost savings across its dozens of companies by "identifying redundancies amongst the group".

"We're such a large group of companies it's obvious there are going to be positions which are redundant," Karch said, "functions that are redundant. By combining those functions in a meaningful fashion we'll be able to get a lot more out of our resources and spend less doing so."

Embracer announced it had bought the rights to develop video games based on Lord of the Rings and The Hobbit for an undisclosed sum back in August 2022. It also acquired the film rights to the two JRR Tolkien works as well, and discussed "additional movies based on iconic characters such as Gandalf, Aragorn, Gollum, Galadriel, Eowyn and other characters".

Fast forward to February 2023, and Embracer had signed a movie deal with New Line Cinema and Warner Bros. for "multiple" films. At the same time, Embracer also said it had five Lord of the Rings games in the works, one of which was likely the recently-released and critically-panned The Lord of the Rings: Gollum, which Embracer received royalties on.

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