Structural change announced alongside Q4 results showing a 24% net sales decline and $765.2 million non-cash impairment<\/p>\n<\/p><\/div>\n
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Embracer Group has released its fourth quarter and full-year financial results, along with plans to spin off Fellowship Entertainment as a new publicly listed company.<\/p>\n
Fellowship Entertainment will concentrate on its premium IP and development portfolio, including Kingdom Come: Deliverance, Tomb Raider, Lord of the Rings, Dead Island, Darksiders, and Remnant.<\/p>\n
The company aims to release at least two major games annually beginning in FY 2027\/28.<\/p>\n
The remaining Embracer entity will focus on “a more efficient structure, tighter cost control, and disciplined capital allocation.”<\/p>\n
Embracer chairman Lars Wingefors discussed the decision further in an open letter to shareholders<\/a>.<\/p>\n Embracer will begin segment reporting in Q1 FY 2026\/27 to prepare for the split. Group CFO M\u00fcge Bouillon has also been appointed deputy CEO to strengthen governance.<\/p>\n This announcement follows Embracer’s report of a 24% decline in fourth quarter net sales to SEK 3.9 billion ($414.5 million) and a non-cash impairment of SEK 7.2 billion ($765.2 million).<\/p>\n This includes SEK 6 billion ($637.7 million) related to goodwill and M&A intangibles, and SEK 1.2 billion ($127.5 million) for an unannounced ongoing AAA game project.<\/p>\n Here’s what you need to know:<\/p>\n Q4 (three months ended March 31, 2026)<\/em><\/p>\n Full year (12 months ended March 31, 2025)<\/em><\/p>\n Embracer’s PC and console segment saw the largest decline in Q4, mainly due to lower net sales from new releases, which totaled SEK 379 million ($40.3 million), a 72% year-over-year decrease.<\/p>\n This was largely because Kingdom Come: Deliverance 2 generated significant net sales in the prior quarter.<\/p>\n New IP Reanimal, developed by Tarsier Studios and published by THQ Nordic, sold over one million copies since its February 2026 release.<\/p>\n Screamer and Ride 6, both developed and published by Milestone, also contributed to segment net sales.<\/p>\n Revenue from back catalogue titles rose 4% year-over-year to SEK 994 million ($105.7 million), driven by Kingdom Come: Deliverance 2 (which exceeded internal expectations), Dead Island 2, and Echoes of the End.<\/p>\n The company reported a loss of over SEK 200 million ($21.2 million) from financial write-downs and cuts to co-publishing and work-for-hire projects. It also recorded a loss of SEK 40 million ($4.2 million) from the write-down of non-core IP.<\/p>\n Full-year accounts show Embracer reduced its total game development projects from 94 to 79 and its headcount from 6,875 to 6,090. Of these, 4,485 are game developers.<\/p>\n Embracer’s mobile segment reported a 28% year-over-year decrease in net sales to SEK 682 million ($72.5 million), mainly due to the divestment of Easybrain<\/a> in January 2025.<\/p>\n Its Entertainment & Services division, including Middle-earth Enterprises, achieved growth driven by strong Plaion Partners releases and ongoing activity related to the Lord of the Rings IP.<\/p>\n This follows recent reports indicating that Amazon cancelled its Lord of the Rings MMO<\/a>, which was in development with Middle-earth Enterprises and initially announced in 2023.<\/p>\n<\/p><\/div>\n![](\"http:\/\/www.gamesindustry.biz\/Screenshot-2026-05-20-104207.png\")
The numbers<\/strong><\/h3>\n
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The highlights<\/strong><\/h3>\n