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.
Fellowship Entertainment will concentrate on its premium IP and development portfolio, including Kingdom Come: Deliverance, Tomb Raider, Metro, Dead Island, Darksiders, and Remnant.
The company aims to release at least two major games annually beginning in FY 2027/28.
The remaining Embracer entity will focus on “a more efficient structure, tighter cost control, and disciplined capital allocation.”
Embracer chairman Lars Wingefors discussed the decision further in an open letter to shareholders.
Embracer will begin segment reporting in Q1 FY 2026/27 to prepare for the split. Group CFO Müge Bouillon has also been appointed deputy CEO to strengthen governance.
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).
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.
Here’s what you need to know:
The numbers
Q4 (three months ended March 31, 2026)
- Net sales: SEK 3.93 billion ($414.5 million, down 24%)
- PC/Console games: SEK 1.55 billion ($159.5 million, down 46%)
- Mobile: SEK 682 million ($72.5 million, down 28%)
- Entertainment & services: SEK 1.69 billion ($170 million, up 23%)
Full year (12 months ended March 31, 2025)
- Net sales: SEK 15.90 billion ($1.6 billion, down 25%)
- PC/Console games: SEK 6.6 billion ($702 million, down 29%)
- Mobile: SEK 2.3 billion ($244.6 million, down 57%)
- Entertainment & services: SEK 6.9 billion ($734 million, up 6%)
The highlights
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.
This was largely because Kingdom Come: Deliverance 2 generated significant net sales in the prior quarter.
New IP Reanimal, developed by Tarsier Studios and published by THQ Nordic, sold over one million copies since its February 2026 release.
Screamer and Ride 6, both developed and published by Milestone, also contributed to segment net sales.
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.
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.
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.
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 in January 2025.
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.
This follows recent reports indicating that Amazon cancelled its Lord of the Rings MMO, which was in development with Middle-earth Enterprises and initially announced in 2023.
‘ The preceding article may include information circulated by third parties ’
‘ Some details of this article were extracted from the following source www.gamesindustry.biz ’
