Star Wars, LEGO, Lord of the Rings games drive 29% quarterly growth for Asmodee studios, as company prepares to split from Embracer next week

Tabletop gaming giant Asmodee scored a powerful final quarter of 2024 thanks to a strong showing from its games based on third party IPs in the Star Wars, Lego and The Lord of the Rings universes – showcasing the publisher’s strength ahead of its imminent spin off from owner Embracer Group next week.

Asmodee said growth of games published by its own studios was expected to hit 29% for the final three months of last year, largely driven by titles including LEGO Monkey Palace, Star Wars: Unlimited and The Lord of the Rings: Duel for Middle-earth.

The company’s net sales for the quarter reached about €429m, up 11% year-on-year, while its adjusted EBITDA – or its earnings with one-off costs removed – were up about 12% to €89m, according to preliminary data Asmodee released in a trading update today.

Embracer completed a €2.75bn takeover of Asmodee in March 2022, and the board game business has been the group’s standout performer for more than a year, having overtaken Embracer’s ailing PC and Console operation for quarterly net sales towards the end of 2023.

Those days are rapidly coming to an end, however, with Asmodee set to become an independent business when it detaches from Embracer next week. Asmodee’s shares are set to begin trading on the Nasdaq Stockholm exchange on Friday, February 7.

Asmodee CEO Thomas Koegler

Asmodee CEO Thomas Koegler, who became the company’s first new chief executive in 12 years when he took the reins last September, said, “We delivered strong sales and profit growth during the third quarter, an important and seasonally strong period.

“The growth was largely driven by new releases published by Asmodee based on third-party IPs such as LEGO Monkey Palace, Star Wars: Unlimited and The Lord of the Rings: Duel for Middle-earth.

“These games and others positively contributed to margins through a favorable product mix, albeit with somewhat elevated royalty and marketing costs.”

Asmodee is continuing to mine its third-party IPs for new games, making especially good use of its relationship with fellow Embracer Group business Middle Earth Enterprises & Friends, which holds exclusive worldwide rights to motion picture, merchandising, stage and other rights for The Lord of the Rings and The Hobbit.

Last week Asmodee’s co-operative card game The Fellowship of the Ring: Trick-Taking Game, designed through its North American studio Office Dog, surged to the top of the new owner charts on BoardGameGeek just a few days after release.

Interest has also been high for the newly-announced The Lord of the Rings: Fate of the Fellowship game, the latest adaptation of Pandemic from Matt Leacock, which will be published by Asmodee studio Z-Man Games in June.

Last August Asmodee inked a partnership deal with LEGO to launch a dedicated design studio focused on creating new LEGO board games, following the successful unveiling of light strategy game Monkey Palace.

Monkey Palace

Denmark-based Dotted Games will “nurture and develop all games within the LEGO Group and Asmodee’s partnership”, a statement from the pair said, starting with family-weight party game Brick Like This!

Asmodee said that it expects its net sales for the 12 months ending March 31 this year to grow at a low single digit percentage.

The Return of the King

BoardGameWire reported late last year that Asmodee’s impending spin-off from Embracer will be accompanied by the business “reigniting” its strategy of buying up smaller board game publishers and distributors.

Koegler said in November that the company has a pipeline of more than 20 acquisition opportunities, mirroring the heavy expansion the business undertook after being bought by private equity firm Eurazeo in 2014.

Asmodee’s previous buying spree saw it acquire more than 40 companies and IPs over the last decade, including over 20 game studios including Days of Wonder, Fantasy Flight Games, Lookout Games, Catan Studio and Z-Man Games.

Those buyouts saw Asmodee swell from a specialist French operation to a global heavyweight across publishing and distribution, which persuaded Embracer to make its multibillion-dollar buyout of the business.

Asmodee’s acquisition spree came to an end in the summer of 2023 after Embracer’s planned $2bn partnership deal with Saudi Arabia-based Savvy Games Group fell through, leaving the parent company struggling under a $1.45bn debt pile.

Koegler told investors, analysts, and media at Asmodee’s Capital Markets Day presentation on November 19 that its new acquisition targets were “companies that we know in and out”.

Asmodee CEO Thomas Koegler speaks at the company’s Capital Markets Day

He said, “They are most of them business partners of ours on a daily basis, spread through publishing and distribution capabilities, mainly on the publishing side – and we are quite excited to reignite our second growth engine through acquisitions.”

While Koegler said he could not name specific businesses, the presentation pointed to publishers of the best-selling games Asmodee already distributes in particular regions, as well as social and party game studios and IPs in Europe and the US, and miniature and hobby player games and teams – the latter of which would “increase Asmodee’s reach into the heart of its highest recurring buyer player segment”.

It added that the company was also looking at buyouts of local distribution players to open new geographies, or strengthen its position in countries where it is already present.

Koegler also highlighted the huge opportunity for acquisitions created by board gaming’s highly fragmented market, with the report flagging that there are about 470 separate companies in the US market, 460 in France, 320 in Germany and 170 in the UK alone.

A return to acquisitions initially seemed unlikely for Asmodee when its separation was announced last April, after Embracer loaded the board game maker up with €900m of debt in order to pay down borrowing across the rest of its operations – which includes a suite of PC game studios and licensing the worldwide rights to the Lord of the Rings and The Hobbit.

That debt pile was slashed three months ago, however, after Embracer announced it was investing €400m in Asmodee, using proceeds from its $1.2bn sale of mobile game developer Easybrain.

Asmodee is expected to use €300m to repay debt, with the remaining €100m going towards strengthening its balance sheet ahead of its separation – and to “allow it to resume its value accretive M&A strategy”.

Koegler added during last November’s Capital Markets Day that he wanted Asmodee itself to become a “renowned brand” with consumers rather than just a corporate home for its studios.

He said, “It’s a project that’s very dear to my heart. Until now Asmodee has remained a corporate, B2B brand. It’s time to make it a consumer facing brand, complementary to our fan-beloved products and studio brands.

“But having Asmodee as a strong consumer brand will serve as a seal of quality, improve recommendation across products, across studio brands, across play types… leading to more sales.”

2 Comments

Leave a Reply

Your email address will not be published. Required fields are marked *