It was a foul day for low-key gaming colossus Embracer Group, which introduced in its full-year monetary report {that a} “groundbreaking strategic partnership” price greater than $2 billion had fallen by means of on the final minute.

Embracer did not identify the opposite firm concerned within the deliberate partnership, however stated {that a} verbal dedication to the deal, which “would have set a brand new benchmark for the gaming business,” was secured in October 2022. 

“The transaction had most of the highest rated international advisories onboard with a number of hundred individuals engaged on each side,” Embracer stated. “All documentation was finalized and able to go as of yesterday [May 23].

“The particular deal included greater than $2 billion in contracted improvement income over a interval of six years. The deal would have enabled a catch-up fee at closing for already capitalized prices for a spread of large-budget video games, but additionally notably improved medium-to-long-term revenue and money move predictability all through the game improvement tasks.”

Embracer had requested that the deal be closed earlier than its announcement, presumably so it might finish the yr with a bang. As an alternative, lower than 24 hours earlier than the discharge of its year-end outcomes, “we acquired a damaging end result from the counterparty,” Embracer stated. In different phrases, the putative companion pulled the plug.

That is presumably the deal Embracer introduced in November 2022 as “a transformative partnership and licensing deal that now we have labored on with a number of business companions,” which was anticipated to cowl “a spread of large-budget upcoming video games over the approaching six years.” 

Regardless of the collapse of the deal, Embracer stated it can proceed to pursue partnerships and collaborations with different firms. However it’s an enormous loss for Embracer, and frustration and upset was plainly seen on the face of CEO Lars Wingefors throughout at this time’s buyers livestream.

“It has been a tough night time. Getting that call when you may have all the things ready, presentation, communication, and clearly you have been working day and night time for nearly half a yr to realize one thing. However hey, that is enterprise. I do know shareholders and different stakeholders, they anticipate me to win each battle. It was an enormous one, and we did not win this one.”

The apparent query at this level is, who was Embracer’s dance companion? The corporate has spent the final couple of years on a spending spree, buying studios together with Crystal Dynamics, Eidos Montreal, Sq. Enix Montreal; extra just lately it struck a cope with Warner to make “a number of Lord of the Rings motion pictures,” one thing it might probably do as a result of in 2022 it additionally snapped up the rights to adapt JRR Tolkien’s books into movies, video games, and different types of media. Earlier this month, Amazon introduced that it had reached a cope with Embracer to make a brand new Lord of the Rings MMO. However this deal was for “contracted improvement income,” somewhat than a studio acquisition, and as Embracer stated final yr, concerned a number of exterior companions.

Predictably, Embracer Group’s share value took a pointy tumble after the information was introduced: In response to FT, it was the largest one-day proportion drop because the firm’s itemizing on the Stockholm trade in November 2016.