Jun 13, 2022 - Technology

Gaming CEO defends $1 billion Saudi deal

Video game screenshot of a woman leaping across a chasm toward an ancient temple

Rise of the Tomb Raider. Screenshot: SquareEnix

Embracer Group CEO Lars Wingefors has published a 1,200-word defense of his company’s agreement to accept a $1 billion investment from the Saudi-backed Savvy Gaming Group.

Why it matters: It's an unusually blunt acknowledgment of the controversy tied to a type of deal that's become common in the industry this year.

  • Saudi funds, with ties to the country's government and its Crown Prince, have poured billions into Nintendo, Activision, EA, Take-Two and more in the past year.
  • Leadership at those companies has largely kept quiet, even amid controversy around the deals.

What they're saying: “I understand and respect that there are different views on this topic. I don’t claim to have the right answers, but I want it to be clear that this decision was not taken lightly,” he writes.

  • He acknowledges criticism of "accepting investment from an entity in a non-democratic country." Regarding that, he said the company has been open to investors from all regions and believes Savvy has "genuine" ambitions to support the global games industry.
  • On issues of rights and values, he says Embracer and Savvy CEO Brian Ward share "a strong belief in diversity and inclusivity."
  • The chairman of Savvy's board is Crown Prince Mohammed, who has overseen his country's devastating war in Yemen and been implicated in the brutal assassination of journalist Jamal Khashoggi.

Between the lines: Wingefors frames the deal as essential to Embracer, a voraciously acquisitive company that purchased Gearbox for $1 billion last year and is in the midst of buying the rights for Tomb Raider and the studio behind it.

  • "In order to stay as an independent company based in Sweden, we have been searching for more international long-term partners with capital that supports our strategy," he said.
  • Savvy bought its Embracer shares at a premium through a special offering. "I can’t comment on why SGG didn’t buy shares in the market, but for Embracer, it’s obviously much better as we are getting capital injected into the company," Wingefors writes.

Flashback: In 2020, Riot Games cancelled an esports partnership with Saudi Arabia, after pushback from many of its players.

The bottom line: Wingefors says the deal won't alter Embracer's vision nor change its leadership.

  • He said he'd be supportive of giving Savvy a board seat, believing Ward's team shares his mindset.

Go deeper: Interview: New Saudi gaming company is well-funded and controversial

Sign up for the new Axios Gaming newsletter here.

Go deeper