The Swedish firm Embracer Group announced yesterday that it has acquired Middle-earth Enterprises from Saul Zaentz Company, which holds the rights to “The Lord of the Rings” and “The Hobbit” film trilogies. The deal also includes the rights to making any Middle-earth-based movies, video games, board games, merchandising, and stage productions; the list goes ever on.
Both sides agreed not to disclose the specific terms of the deal “due to commercial reasons”. However, Embracer Group published a “financial impact” report yesterday and announced that it has paid approximately 8.2 Swedish Kronas (about $778 million) for all five acquisitions the company made. Embracer Group paid this amount to acquire Middle-earth Enterprises, alongside Limited Run Games, Singtrix, Tuxedo Labs, and Tripwire Interactive.
The company didn’t specifically announce how much it has paid for Middle-earth Enterprises, which holds the rights to The Lord of The Rings and The Hobbit, but the official acquisition report shows that it’s significantly less than what Saul Zaents Co. was asking for (about $2 billion) earlier this year.
Embracer Group will pay about 6 billion kronas ($569 million) upfront for the purchase of five studios, of which 4.2 billion kronas ($398.4 million) of it is paid in cash right away, and another 1.3 billion kronas ($123.3 million) in cash will be paid over 12 months. The rest of the upfront payment (adding up to 500 million kronas) will be paid with Embracer B class shares.
The deferred consideration of 2.2 billion kronas ($208 million) will be paid over seven years, 1.5 billion kronas ($142 million) will be paid in cash, and 700 million kronas ($66.3 million) will be settled with Embracer’s B class shares.
What Embracer Group can do with Lord of the Rings
There’s great confusion among the fans on what awaits Tolkien’s fictional world and what they should expect from Embracer Group. The same confusion applies to video games and entertainment veterans as well.
Embracer’s official press release says they know own the “intellectual property catalog and worldwide rights to motion pictures, video games, board games, merchandising, theme parks and stage productions relating to the iconic fantasy literary works The Lord of the Rings trilogy and The Hobbit by J.R.R. Tolkien, as well as matching rights in other Middle-earth-related literary works authorized by the Tolkien Estate and HarperCollins, which have yet to be explored.“
Book publishing rights: No
The book publishing rights belong to the Tolkien Estate (owned by the Tolkien family), not Middle-earth Enterprises, which was acquired by Embracer. This means Embracer Group doesn’t have the rights to J.R.R. Tolkien’s books. The Swedish company still has to get the Tolkien Estate’s approval on a lot of things, and on top of that, The Tolkien Estate has financial interests in motion pictures related to Middle-earth.
This also means they can’t feed on Tolkien’s other works (which were finished by his son Christopher Tolkien) like The Silmarillion, Children of Hurin, Beren and Luthien, The Fall of Gondolin, Unfinished Tales, and so on, at least not without The Estate’s permission.
Movies and TV: Yes, but complicated
Peter Jackson’s The Lord of The Rings and The Hobbit trilogies used to belong to Warner Bros. through New Line Cinema. However, WB was too inactive with the LoTR brand, and Saul Zaents Co. says WB can no longer make a claim for the rights to the existing movies. Saul Zaents also claims WB abandoned the movie rights in 2021, again, due to inactivity.
Meanwhile, experts believe Warner Bros. greenlighted “The War of the Rohirrim” anime movie just to have a standing ground in regards to existing movies’ rights as well as to produce more LoTR content. It’s a pickle that can only be solved via the court or the two giants will have to agree on a deal behind closed doors.
Amazon Prime Video, meanwhile, bypassed Saul Zaents some years ago and directly made an agreement directly with Tolkien Estate to make The Rings of Power series.
Games: Yes!
Considering how Embracer Group acquired Middle-earth Enterprises through its newly formed Freemode entity and has Lee Guinchard as the CEO, it’s somewhat safe to say that Embracer’s main focus —at least, initially— will be on making games that take place in Tolkien’s Middle-earth.
Guinchard is a video games veteran and has over 30 years of experience under his belt, and 11 years of it was with Blizzard.
NEXT: Weta Workshop is developing a new Middle-earth game
