Embracer Group, a Swedish gaming conglomerate with a keen acquisition desire, has purchased the rights to create films, games, merchandise, and theme parks based on J.R.R. Tolkiens The Lord of the Rings and The Hobbit.
The sale of the rights by the Saul Zaentz Company came as a surprise. Variety claimed the purchaser would be a Hollywood studio or IT giant. Amazon, which is set to launch its streaming series The Lord of the Rings: The Rings of Power, was a potential buyer. Although the purchase price was undisclosed, it appears Embracer has purchased Middle-earth Enterprises, the Zaentz subsidiary that owns the rights, for substantially less.
Embracer announced the acquisition alongside five other smaller acquisitions: Limited Run Games, the publisher of collectible physical editions of games; Tripwire Interactive, the developer and publisher of games like Killing Floor and Maneater; Singtrix, a company that develops vocal effects for karaoke and gaming, and Tuxedo Labs, the creator of the destruction game Teardown.
Embracer said that the total cost of acquiring the six businesses over a period of time is expected to be 8.2 billion Swedish krona, which is around $788 million. Even if we assume that Middle-earth Enterprises will make up the bulk of the investment, its still less than half what the famous Lord of the Rings rights would fetch.
What happened? And why was Amazon or another major entertainment industry player unable to join the fray?
Middle-earth Enterprises and now Embracer have ownership of worldwide rights to produce films, video games, board games, merchandise, theme parks, and stage productions related to the Lord of the Rings trilogy and The Hobbit. However, there are still several limitations, limitations, and doubts over the scope of these rights.
The publishing rights to Tolkiens other Middle-earth works, The Silmarillion and The Unfinished Tales of Numenor and Middle-earth, are still controlled by the Tolkien estate and HarperCollins, although Embracer claims to now have the rights to match any offer the owners may receive from elsewhere.
The right to develop a TV series longer than eight episodes was carved out of the Tolkiens estate's agreement in the 1970s, thus Amazon was able to deal directly with the estate when it bought them in 2017, thereby excluding Middle-earth Enterprises from the deal. Regardless, Embracer claims that Middle-earth Enterprises has a financial interest in The Rings of Power, as well as Warner Bros.' upcoming animated film The War of the Rohirrim, and EAs'
Embracer has just purchased a piece of the film rights he has previously held. Warner Bros., the studio that created Peter Jackson's Lord of the Rings and Hobbit trilogies, has maintained the rights for years, but before the sale, the Saul Zaentz Co. was arguing that the rights would be transferred to it in 2021 because Warner Bros. had not been actively developing new film projects, according to Variety. It's possible that The War of the Rohirrim was approved just so Warner
That's a lot of asterisks. In particular, if there have been changes in the legal battle with Warner Bros. that have made the film rights seem even less secure, it would have spooked many Hollywood buyers and reduced the asking price for Middle-earth Enterprises.
Embracer may not be concerned at all, as it recently acquired Asmodee, a tabletop gaming company that has been developing Lord of the Rings licensed titles for decades, and it may well consider the video game rights to be the jewel in the crown of this agreement.
Square Enix's $300 million agreement appeared to be a bargain, while for its part, the company was said to be grateful to have left its Western division. Embracer appears to have once again swooped in on a desperate buyer, and purchased the rights to a precious fantasy franchise however disputed or limited for a song.