adminThe planned Embracer Group Fellowship Entertainment spin-off would create a publicly listed company focused on premium intellectual property and game development. The announcement came alongside the group’s fourth-quarter and full-year results, which included lower net sales and a significant non-cash impairment.
Image credit: Warner Bros.
Embracer Group Fellowship Entertainment spin-off: what is planned?
Embracer Group says Fellowship Entertainment will become a separate, publicly listed company. Its portfolio is expected to include Kingdom Come: Deliverance, Tomb Raider, The Lord of the Rings, Dead Island, Darksiders, and Remnant.
The proposed company aims to release at least two major games each year starting in FY 2027/28. That is a forward-looking target, rather than a confirmed release schedule for specific titles. Players following the plan should watch for future announcements about the separation and individual game launches.
The remaining Embracer business is expected to operate with a more efficient structure, tighter cost control, and disciplined capital allocation. Chairman Lars Wingefors also addressed the decision in an open letter to shareholders.
Image credit: Embracer
Steps toward the separation
Embracer plans to begin reporting its business in segments in Q1 FY 2026/27 as preparation for the proposed split. Group CFO Müge Bouillon has been appointed deputy CEO, a change intended to strengthen governance.
Segment reporting can make it easier to assess how different parts of a business are performing. The announcement does not, however, provide a completed separation date or confirm that the new listing has already taken place.
Financial results behind the announcement
For the quarter, Embracer reported net sales of SEK 3.93 billion ($414.5 million), down 24%. It also recorded a non-cash impairment of SEK 7.2 billion ($765.2 million). Of that amount, SEK 6 billion ($637.7 million) related to goodwill and M&A intangibles, while SEK 1.2 billion ($127.5 million) was associated with an unannounced ongoing AAA game project.
Q4 figures: three months ended March 31, 2026
- Net sales: SEK 3.93 billion ($414.5 million), down 24%
- PC and console games: SEK 1.55 billion ($159.5 million), down 46%
- Mobile: SEK 682 million ($72.5 million), down 28%
- Entertainment and services: SEK 1.69 billion ($170 million), up 23%
Full-year figures: 12 months ended March 31, 2025
- Net sales: SEK 15.90 billion ($1.6 billion), down 25%
- PC and console games: SEK 6.6 billion ($702 million), down 29%
- Mobile: SEK 2.3 billion ($244.6 million), down 57%
- Entertainment and services: SEK 6.9 billion ($734 million), up 6%
When comparing these figures, note that the quarter and full-year periods are reported separately. The stated reporting dates are reproduced as provided in the results information.
Game performance and portfolio changes
PC and console sales saw the largest quarterly decline. Net sales from new releases totaled SEK 379 million ($40.3 million), 72% lower year over year. One factor was the strong contribution from Kingdom Come: Deliverance 2 in the prior quarter, which made the comparison difficult.
Reanimal, a new IP developed by Tarsier Studios and published by THQ Nordic, sold more than one million copies after its February 2026 release. Milestone’s Screamer and Ride 6 also contributed to segment sales.
Sales from back-catalogue games increased 4% year over year to SEK 994 million ($105.7 million). Kingdom Come: Deliverance 2, Dead Island 2, and Echoes of the End were among the titles supporting that result. For readers assessing the portfolio, this distinction matters: quarterly performance reflected both the timing of new releases and continuing sales of existing games.
Embracer reported losses of more than SEK 200 million ($21.2 million) from financial write-downs and reductions to co-publishing and work-for-hire projects. A further SEK 40 million ($4.2 million) loss came from writing down non-core IP.
Development teams and other business areas
Across the full year, the number of game development projects fell from 94 to 79, while headcount declined from 6,875 to 6,090. The company said 4,485 employees are game developers.
Mobile net sales fell 28% year over year to SEK 682 million ($72.5 million), mainly following the divestment of Easybrain in January 2025. By contrast, Entertainment and Services grew, supported by Plaion Partners releases and ongoing activity involving The Lord of the Rings IP and Middle-earth Enterprises.
The update follows reports that Amazon cancelled a Lord of the Rings MMO being developed with Middle-earth Enterprises, a project first announced in 2023. The results announcement does not state that the cancelled MMO is part of the proposed Fellowship Entertainment release plan.
What the Embracer Group Fellowship Entertainment spin-off could mean
The proposed separation would place a collection of well-known game franchises and development projects in a dedicated listed company, while the remaining Embracer business pursues tighter cost control. The plan is not yet a completed transaction, and the target of at least two major releases annually begins in FY 2027/28. For now, the key points to follow are the segment-reporting changes, further details on the split, and updates to the planned release portfolio.
