3D Realms Entertainment ApS (EMBRACB) Earnings Call Transcript & Summary

I think as Arthur mentioned, I think it's fair to say that we've more or less grown along with the growth of the VR market over the past 6 years. And as Arthur just pointed out, we really, really enjoyed a very close partnership with Oculus, working on creative work for hire and launch titles for almost every single one of their VR devices that they launched. And because of that, we've been able to more or less build and grow this -- what actually is amazingly talented and wonderful group of people. And they are now capable of delivering best-in-class VR experiences and games. And obviously, now that the VR market is growing and you've got next-gen devices that are going to be hitting the market soon, I believe that we're starting to see the moment where consumers are going to be looking for full-featured console-style AAA VR games. And I'd like to think that we are a fantastic team. We're more or less perfectly positioned to deliver on those kinds of applications. And the only question that remain for us was will we be doing that independently or as part of a larger group? And the answer was more or less quite simple. When you have the opportunity to partner with yourselves, arguably one of the most successful developer and publishers in VR over the past 5 years, and you're also located in the same [ roots ], this opportunity to create the world's biggest VR studio, a true VR powerhouse, which will allow us to focus on a truly creative, truly VR development instead of -- exciting, but still with the kind of stuff that we've been doing, it was simply an opportunity that we couldn't pass on. And that's obviously even regarding the fact that Vertigo is part of the Embracer Group and the subsidiary, of course, in Deep Silver, because as far as that, that was the icing on the cake, to be part of such a large and diverse group with all these amazingly talented and different development studios, some of which we have been listening to today. I think it's tantalizing from a creative and a commercial point of view in terms of VR. The fact that we're able now to engage in discussions with our fellow new colleagues and studios about bringing some of these beloved franchises into the world of VR is extremely exciting.

And certainly, from our perspective, bringing together these 2 studios allows us to much more rapidly grow in terms of our internal development, capabilities and what we can bring in terms of AAA VR. We've talked about this a lot as a group. But for those who may not know, we're certainly -- the VR market continues to grow rapidly. We're seeing continued growing investments from third-party platforms to grow the installed base of this market and really believe that this transaction helps us stay in and continue to be a leader in this segment. From your perspective, Arthur and Martin, what do you see these acquisitions -- what does this mean for the VR landscape? And maybe a little bit more of what you see the group's ability to do?

Well, I think we're definitely showing the larger game industry and the route to success in VR. Vertigo has already done that. And now we're really upgrading the whole company to a new level. A lot of the bigger publishers and colleague studios have always been waiting for it to happen. And I think we're definitely sending out a clear signal together with, of course, the growth that everybody is noticing in the market. And I think we're going to be taking a lot of people along in our slipstream into this new and exciting entertainment platform.

Yes, I echo that. It feels like a perfect combination. We've got Vertigo and Force Field as veteran VR developers, many of the very successful publishing power and know-how vertical publishing. And then we have the, if I can call it that, the IP candy shop of Embracer, which I think is a recipe for creative and commercial success because the market is growing, the stakes are getting bigger. Yes, and you've got consumers craving for console style to play VR experiences. So I think there's never been more exciting moments for VR both commercially and creatively. And I think the coming 5 years are going to be amazing. If you're a hardware VR gamer and you like some of Embracer's most popular IP, then I think you have every right to be excited by this announcement and partnership.

Thank you so much. Thank you, John. Thank You Martin. I'm super excited about what we'll -- what the future will bring with you in VR. So with that said, I would like to thank you, the team in Amsterdam and L.A. and move over to somewhere in France. Where are you? Are you out there camping?

Yes, we are. I don't know if Klemens is there today.

Yes, I absolutely -- I am following the presentation of trends in VR. It's -- for Koch Media, this is a big day. And we are about -- this industry is about creativity and other companies building few IPs bigger every year. We believe in diversification. And VR is very close to our heart because it's going at a far base than the [ gen ] business. And the other areas where we believe we can [indiscernible] and this is narrative games. This takes me to DigixArt where -- which we are presenting now. Two years ago, we -- this was the first touch point with DigixArt was -- The Road it was called at the time. And I mean we see hundreds and hundreds of games, right? But then we are all looking for this -- the hidden gem. We are looking for something we have not seen before, and The Road really ticked all these boxes. So we're really following closely the development of the game itself and then got in touch with the team behind it. And I must say it was a way to see [indiscernible] in their office now. And we immediately clicked. And so Yoan and Anne-Laure, please tell me -- tell us about your story and your vision. It's an amazing unique setup that you have there.

Here. So first of all, we're really happy and excited to join the Koch and Embracer family today. So we founded DigixArt, so Yoan and I, 6 years ago. And our goal is to create a meaningful narrative stories. And so I will let explain, Yoan.

So yes, we are working on the third title right now. Like you said, Klemens, Road 96. We're launching, in fact, in a few days, on August 16, on the Switch and PC. So it's a very exciting moment. It's a big year for us. And we are really happy to join the group that will allow us to expand and to double the studio very soon because we have a lot of ideas. We have a lot of things we want to make. And now we can do it. So it's a really nice thing. And we are based also in the south of France, as you can see on the map, in Montpellier. It's a very nice area for video games. There are a lot of developers and talents here, a lot of nice schools also in the area. So it allows us to expand quickly in the next months because we have so many ideas we want to try in the narrative adventure space, more than just narrative, in fact. So we want to explore new fields, how -- like how can multiplayer interact with narrative, for example. This is kind of thing we want to try. So we are really innovative based. Road 96 is a procedural narrative game. That can sound a bit strange, but we managed to make this. So we believe we can do other new things in the future, very exciting for players. And when we see the whole hype around the game, we are pretty sure it's a good way to go to try very different things. So it's a very exciting moment.

So as a publisher, we are always looking for the next thing. We are always looking for innovative studios. And this team, it is a small team. It's an indie studio. But strategically, I believe that this is a great launch for us as a global partner. [indiscernible] and big [indiscernible] wait until Road 96 launches. But then the future will really show -- a good potential for many of similar games. And this is a new area in a new type of games in our roster. We, as you know, Deep Silver and Prime Matter and Ravenscourt, we have a wide portfolio of games. But narrative games are underrepresented, and this is now the starting point of -- we are opening a door into a new era.

And then when we look at all the IPs that are -- within been Embracer, we really think there are good synergies we can make and I... [Technical Difficulty]

I think we lost you there. Yoan?

Sorry.

Yes. Don't worry. But I think we need to thank you very much. And again, very welcome to the group. And thank you, Klemens, for joining this presentation as well. So leaving France, we are...

Thank you very much.

Heading over to Denmark again and [indiscernible]. So I think we have Frederik and Andrey here, Andrey from Saber on the call.

Yes, and me.

And Tim. Sorry. Great. Great to see you all here.

Yes. We're all here. We're all here.

I know it's in the middle of the night in the States, but thank you for staying awake.

No problem. It's very exciting for us. The Slipgate and 3D Realms, we've always been a big fan of what they've done. The legacy of 3D Realms and the exciting new projects that Slipgate has currently worked on is -- and is currently working on are very exciting to us. And we feel that we'll have many opportunities to do something exciting.

And Frederik, are you online?

Yes, I'm here. Hi, Lars. Hi, Tim.

Hey. So finally, we got together in the same family. We got to know each other a few years now through THQ Nordic, I think.

Yes, absolutely. I think we've been working together for -- yes, it's almost 5, 6 years now in different capacities.

And so why Embracer, Frederik, and Saber?

So we started working with Saber, I think it's almost a few years ago now. We had a very aligned strategy overall. Also with Tim and Todd joining Saber, there's a lot of both creative and business alignments with Saber Interactive. And we've had the honor and pleasure of working together with Saber now for some time on various projects. And when this opportunity came to us, it was very clear that Saber was the perfect home for us. We also knew you, Lars, and we knew Embracer from previous collaborations, previous IP that we have worked together on a few years ago. So this was pretty much a match made in heaven for us.

Thank you. And can you tell us a bit about how Slipgate is looking today?

Absolutely. So Slipgate was founded in 2017. The core team was established way back in 2011 under the name Interceptor. We did the first -- you can call it, the first boomer shooter that kind of created this whole subgenre of old-school, retro first-person shooters with a very obscure game called Rise of the Triad. It became kind of a viral hit. It was a very [ junky ] game, but a very fun game. This was way back when Steam was still at its infancy almost. But the game did incredibly well for us, and we built up Interceptor and our team. We did a few more games. The last game we did, we sold to THQ under Embracer. And then we, in 2017, rebranded as Slipgate. We almost exclusively do hard-core action games in first-person shooters. As some of you might know, Slipgate actually stems from a series that Tim was very involved with, the Quake series, where the Slipgate portals were essentially ways that you go through the different universes in the Quake universe. And we named our studio Slipgate because that resonates really well with what we do. We primarily focus on hardcore, old-school shooters. Over the past 4 years, we started expanding what we do to other subgenres of the games industry. We started helping out some of our good friends with some of their games. We've built up an expertise for almost a decade in -- specifically Unreal Engine going back to the early days of Unreal Engine 3 and then, of course, following all the different revisions. And we started helping out other studios within also the THQ and Embracer family with their games using the Unreal Engine, helping them port the different games to other platforms. This is a way for us to both learn more but also help out studios that we really like working with on other projects. So as part of that, we established a porting department, where we don't necessarily market ourselves as a supporting studio, but we like helping out studios that make games that resonate really well with what we like to do. We then, as part of that, also started codeveloping. The biggest game -- one of the biggest games of this year, Ghostrunner, we co-developed almost from day 1. We were presented with an early vertical slice of the game a few years ago and have been working on that game together with All In!, One More Level and 505 for a few years. The game was released recently to fantastic reviews. We have also done all of the ports for the game, including all the way from Switch to the next-gen ray-traced ports for PS5 and Series X. And then last but not least, we have our internal development, where we're currently making 4 games internally at Slipgate, almost all original IP. The games range from classic hardcore first-person shooters. We also have an unannounced real-time strategy game that we're working on with some great partners, one of them also being THQ from Embracer. So we have our hands in a lot of different things these days. But I think what's common for all of it is that it's all within this genre that we feel really comfortable with, hard-core action games.

Yes. As a hard-core action game studio, they fit so well with Saber and what we do and how we are improving our portfolio. And as Frederik said, his old retro shooters are some of the games that I worked on. I feel like I'm getting old. But the -- but their future is more than just updating retro shooters. Like he said, the portfolio is increasing. And we really see exciting things, Frederik, for you and your teams in the future as well.

Thank you so much, Tim.

Yes.

I move the slide over to 3D Realms. Could you explain the connection here? And what's the ambition is with 3D Realms? I know it's a well-known brand for a lot of people.

Absolutely. We have been working with 3D Realms from day 1. The first game we did on the Slipgate under the Interceptor name was actually a 3D Realms IP. Way back in the early days of the first-person shooters, they made a game under the Apogee name called Rise of the Triad, which was originally called Wolfenstein II, Rise of the Triad. And the first game we did was a remake, a reboot of that game. So we had a long relationship with 3D Realms. And in 2014, we were lucky enough to acquire parts of 3D Realms and help build up a new version of 3D Realms, which homes back to the -- you can call the good old days of what 3D Realms were known for in the mid-90s, games like Duke Nukem, Max Payne, Shadow Warrior, Prey and so on, a lot of classic games that many of us grew up playing. These days, we have built up 3D Realms as a new publisher and, call it, a team builder. What we primarily do is build smaller development teams and create new IP just as 3D Realms did back in the day. Among those are games like Iron Fury, which came out last year, which was a big success for us, a spiritual successor to the classic first-person shooter made popular with games like Quake and Duke Nukem. We also have brand-new IP and new teams that we're working together with Core Decay and Raft being some of them. And then we're working together with other great partners such as Interplay and Nightdive on bringing back some of the old-school shooters, which were part of the legacy of the '90s, games like SiN, which was a game originally done by Ritual Entertainment, which was a studio formed by previous 3D Realms employees. Kingpin as well, kind of a forgotten classic also from the mid-90s, first-person shooter. So as you can see, the theme under 3D Realms is mostly what it was back in the '90s. We focus on what we're good at and what we know best, which is hardcore first-person shooters. We also have some new titles that are unannounced. We have a big event coming up here in a few weeks, where we're going to announce a range of new titles under the 3D Realms label. So we're incredibly excited to have the honor to follow and build this company that was founded the year I was born.

Yes. Fantastic.

Yes. Yes. For us, having -- 3D Realms has a name that we're all familiar with. And to now have these titles and these legacy brands in our portfolio and to now be able to [ do exciting things ] with them, for Saber, working with Frederik and his team is again very, very exciting for us. So we're looking forward to it.

Andrey, I know you have been working hard to get this done as well. Do you have any last comments here from the Saber side on this?

I certainly want to welcome Slipgate and 3D Realms personally into the family of Saber Interactive family. Like Frederik said, we met a few years ago. And then, I guess, it was the love from the first sight. We always looked at Slipgate and Frederik as, I guess, Saber's younger days, meaning those guys are doing some work [ for hire ] there, working on original IPs. They are publishing some of their games through some other publishers. And they're bringing some other titles to market themselves, which is kind of similar to what we do. In certain respect, they are creative; in certain respect, they are technical jobs. I would say that Frederik is a little bit of a fearless kind of guy, which I certainly appreciate. When we started working together, we try to encourage him to take on one of a super challenging project, which he was a little bit hesitant of engaging, but I managed to convince him and did a very good -- he and his team did a very good job. And now we can clearly see the results of that -- of those efforts. So I have very high degree of confidence that Slipgate or 3D Realms will do very well as a member of Saber family, and we will be able to grow the team and help elevate them come to -- graduate to the next level.

Thank you so much. And I would like to say as well, I'm happy to see that one of the founders is staying on Board as adviser, Mike Nielsen, one of the most brilliant guys I know in the industry and I know since the '90s and the founder and the past CEO of 3D Realms. So thank you so much and very welcome to the family. With that said, we would like to leave Denmark and move over Sweden again. And I having the honor to present the last acquisition of this morning, which is a bit different from the others, and it's Grimfrost. And Grimfrost is the leading e-commerce merchandise specialists with high-quality viking merchandise under their own brand. And they built a very successful business since the foundation in 2014 with 3 amazing entrepreneurs actually located here in Karlstad and very close by to Falköping. And the idea is to bring them on board. And obviously, I see a number of potential synergies within the group. First of all, the knowledge how to build a global merchandise e-commerce business under one brand, but also the viking-themed merchandise are very well suited against viking-themed games within the Embracer Group. So please stay tuned for further announcements in the future on that regards. We are acquiring 70% of the business and the founders remain with 10% each and have a very long-term commitment. By this investment, the company will be able to grow even faster and more, offering a wider range of products and the better supplier products to consumers. They've already grown substantially in the past years, but we're looking forward to grow even further the coming decade. So I know they are one of the most respected companies within the viking merchandise products. And I know they've been supplying leading TV series and films across the board the past years. So with that said, I know they are online listening here, so very welcome to Embracer family. So with that said, about Grimfrost, I could just say a final word that I'm really pleased to see all these companies joining. It's been a lot of hard work during the summer for all of us in this call. And I can't wait to see what the future will bring. I think all companies have a strategic rationale why they are joining, and it's all making us -- combined us stronger. And as you've been hearing today, it's all about creativity and entrepreneurship. And that's -- it's Embracer is all about. And I really feel a strong connection with all of you guys, and it is -- in that regard. So with that said, I would like to leave over. Please stay online. It might be a few questions from Ben that I can't answer, and you might be able to answer them during the Q&A session. So Benjamin from Berenberg?

Yes. Thank you very much, Lars and to each of the management teams who presented today. Just as a reminder, you can submit your questions on to the message board, and I'll be able to pick up some of those. But perhaps jumping straight into a question from myself, Lars, and before we go into some of the nitty gritty on some of the businesses you are acquiring or merging with today, we've seen a lot of news in the industry that acquisitions are becoming increasingly difficult to complete in the video gaming space, given it's very hot right now, Tencent, EA, Microsoft paying big sums for businesses. You've clearly not had that issue. You've managed to do 8 acquisitions this morning in very different areas of the market, too. Can you maybe just give us an update on practically how you've been able to achieve completing all of these deals in such a competitive market?

Well, I think that question is somehow better answered, obviously, by the centers and entrepreneurs. But I think to answer it from my side, obviously, Embracer is offering a different proposition. And it's all about the long-term alignment with creating something greater and bigger in the future. And that's why you can see this long-term alignment and earn-outs over up to 8 years. And I think, yes, it's a competitive environment. There is a lot of activity. At the same time, it's a lot of fantastic entrepreneurs and creators out there. And I think our operating model really has -- is the strength here in terms of M&A, obviously, having 8 management teams all across Embracer, most of them working on M&A on a daily basis. It's not all about acquisitions and driving all these financials. It's all about connecting with people. And I think in most cases, what exactly people -- you start doing business, publishing business, you are creating a relationship, that might end up just in a relationship or in the publisher relationship or in an M&A. So -- and I'm super long term. And I think we all are very long-term aligned here at Embracer. I have in decades in my horizon building this. So for me, it's important not to rush any M&A. And I know some shareholders are a bit impatient and emailing me why can't you make an announcement. But I'm please asking all shareholders and to be -- have some patience. It's important that we don't rush and we're making things patiently and that we are bringing the right companies on board with quality. So with that said, as I stated this morning, Ben, that we have -- I stated that last report, but we have a lot of ongoing conversations all the time, I think, more now than ever and including large or even transformative conversation. Whether they will end up in an acquisition or not remains to be seen, but I'm confident about the future of Embracer on the M&A side but also, obviously, on the organic side for most.

Okay. That's very helpful. And one of the areas that clearly with the acquisition of Crazy Labs this morning that you ventured deeper into is the mobile space. And I have to say, looking at some of the KPIs from CrazyLabs, I was particularly impressed, which is interesting because there's been nervousness amongst the investor community in the mobile gaming space in the last few months as a result of IDFA and the challenges it could have potentially on customer acquisition. But growth at CrazyLabs doesn't seem to be affected at all seemingly by this. I'm just interested to hear how they have been able to achieve this when seemingly some of the peers have been struggling.

Do we still have a team from Israel onboard here, Sagi? I think, Ben, either Sagi is on board here and answering that question for you. Otherwise, we need to wait until our public reporting on August 18. As you know, we are in a silent period, and I don't want to comment on things that are outside these acquisitions. And I think that question partly is a bit outside CrazyLabs. But just to say, I'm confident about the team, the CrazyLabs business, their growth and their success. And I'm highly, highly impressed about what they are able to achieve.

Yes. Well, you know how analysts are always trying to get as much information as...

I know that. I know.

But it does seem like a great acquisition and one that's bucking the trend and doing very well. Maybe onto the indie space. I think I'm right in thinking that Ghost Ship and Easy Trigger are Coffee Stain's first or at least amongst their first acquisitions. I know Ghost Ship will operate separately. But with 3D Realms also joining Saber, which will have a strategic focus on publishing of independent developer titles, also, it seems like you're doing more in this space. Is that a strategic push? Was it sort of opportunistic as these good businesses came about and you had started to have discussions with them? Maybe talk to us a little bit about that.

I think you're talking about Coffee Stain. Obviously, it's been a great success and an amazing team. And you're right, they haven't been doing a lot of acquisition. Obviously, Ghost Ship has been one of their key products under the publishing label over the past years and highly successful. And I'm really pleased to see that team joining now as a sister company. There is some substantial ambitions in the future, what we're able to create within that, let's call it, operating group with further successful indie companies. I think stay tuned on that part what will happen in the future. But Ghost Ship is a way in Coffee Stain, they are in Denmark. They are very well connected to the Danish or the global industry and well-respected. So I think it's a strategic value for us to actually being able to fully adding Ghost Ship within the group not only financially -- obviously, it helps. And to be clear, financially, on Ghost Ship, it doesn't actually add any revenues because the revenue is already coming on the Deep Rock right now under the publishing, but it obviously helps the operational EBIT because we're getting the full margin. But obviously, in the future, they would be able to hopefully have more product lines and investments going in under the Ghost Ship. Anton, are you still online here? Perhaps you can just share a bit why -- what you saw with Ghost Ship and Easy Trigger and...

Yes, sure. I think, Lars, I guess, mentioned here, we haven't done a lot of acquisitions, which has been, I guess, kind of natural of how we built Coffee Stain. It's always been about 100% focus on the products and just not focusing on just growing the company in any way pretty much. And so acquisitions has maybe not been a natural part of how we wanted to build Coffee Stain. But I think like when it comes to Ghost Ship, for example, it became very clear for us early that there were so many similarities. And I mean the first time I met Soren, I mean, I think I was super impressed with their thinking being -- I mean, they were a new company at that time. But I mean they're super experienced. They've been in the gaming industry for a long time. And I was so impressed by seeing all their thoughts on how they wanted to run Ghost Ship. And it was -- I think it was very clear already from the beginning that they were very independent. And when we joined as a publisher on the title, it was also, I guess, a special publishing relationship where they do a lot themselves. So when we started discussing, we wanted to get them into the group for quite some time, but it was not maybe super clear to them what the benefit would be. And I think in the end, when we figured out this way, where we would set up the structure where they will reside as a sister company to us and operate kind of independently, that opened up that door. And I think it's a very interesting way forward. So yes, super happy about that. And like when it comes to Easy Trigger, I think it's more of a natural acquisition for us. We've been working with them, I guess, a little bit even more closely as a publisher. And they are a small company in Sweden. It makes total sense for us to get them into the Coffee Stain Group. So yes.

Thank you, Anton.

Maybe just one very quick follow-up on that. When you're having those conversations, Anton, and looking to publish a title within Coffee Stain, how important is it to see a pathway to potentially sort of acquiring the developer going forward? Is that important to you to be able to think that, that's a possibility?

It hasn't been that important, to be honest. But I think that -- I mean, our strategy has already from the beginning been a little bit different where we've always been very flexible with how we do our publishing and investments. So in the Ghost Ship case, we had the 30% that we own in Ghost Ship from the start. And the idea with that, at that point, was maybe not necessarily to acquire them at some point, but we just wanted to align ourselves more tightly with them. And obviously, if you're just going with only publishing, it's a little bit more short term than what we wanted. So having that minority share from the get-go made it more clear that it was a long-term commitment, but we didn't really know like whether it would end up in an acquisition or not. But I mean, so -- and all in all, everything worked out, and now we're here. And that's great, obviously. So...

Okay. Great. Well, one of the other areas that clearly you've bought into today, Lars, is the VR space. And we know that Oculus is a big area of focus from Facebook. They've been making big hiring into that business unit for them. And they're providing big incentives to developers who create content onto that platform. You completed the acquisition of Vertigo last year and now Force Field today. Is this like a strategic push into VR? How do you see this market developing over the coming years? And I guess how much does VR excite you over the next few years?

Well, obviously, as stated with the acquisition of Vertigo, we are -- really excite me. First of all, it's really -- it's a commercial-viable platform now for developers to build VR products. And the Vertigo, that could be highly profitable as a business. And I see further growth in that market. And as Klemens stated, I think that market will grow with a higher case than the rest of the more traditional gaming market. So -- and I think the plan with Vertigo from the beginning was to also using or having them as how could we expand our business by allocating further capital and resources to Vertigo, so Vertigo becomes kind of an even stronger VR company. And I'm really pleased to see this morning acquisitions. And John, are you still on the call here?

I am.

Do you believe in the VR market, John?

Yes, I do, obviously. I think the big picture of what we're seeing as -- into that and the comments earlier is a rapidly growing ecosystem. And certainly something that Vertigo sees and I, believe, as Lars has said, Embracer and Koch Media do as well that this is an area that's going to grow faster than the overall gaming market because what you're seeing is, one, the creation of a new medium and different creative expressions of what gaming can be. And Martin has talked about that a little bit from Force Field. And then also, there's this amazing opportunity to bring classic and well-known IP from other gaming mediums into VR and allow people to experience these worlds in a way they've never had before. And so we think that also that dynamic creates a lot of opportunity for growth.

I know -- I always said about VR, I know there is a number of other VR games under development across the group. And there's efforts being taken against VR. So we have a long-term commitment against VR. And I know we are working closely with the platforms to support them with content in the coming years. So I'm super excited.

And is Vertigo in time, if you make more acquisitions in that space, could it become its own operating segment? Or will it still remain within Koch Media, Deep Silver?

No. It's not a discussion. I think it will remain within Koch Media. I don't think it makes sense. I think Koch Media has a very strong ecosystem, and it makes sense to have the synergies with that ecosystem with Vertigo. So what I'm hearing, the synergies and cooperation works out very well. And -- but with that said, I -- personally, I love to see more acquisitions or capital allocation and bringing more fantastic creators and entrepreneurs on board Vertigo in the future. It's really up to John and Arthur, Martin and Richard and [ Tamara ] and the team to do that. It's their business, and they are driving it.

Okay. Maybe last question for me before I take a couple from the web. There's been a lot of companies of late who have been delaying titles because of challenges with development. Clearly, a lot of the businesses you have today have got big plans for their pipelines over the next few years. When constructing your earn-out payments, some of which is financial, some of which I know is operational, how important is getting titles out on time view when creating and structuring those agreements with regard to milestone payments?

Yes. Well, there's a few milestones. It depends on the agreement that there is a definition of number of titles to be released over a number of years. Obviously, again, it's important for us not to construct these milestones that we push -- or the companies are pushing releases too early. So I think we have taken, I'd say, enough space here to be aligned on that. And quality comes first. That's important all across Embracer.

Yes. And it's something that's put you in good stead in many years in the past. So not changing that is probably the right thing to do. So a couple of questions from the web here, one of which is on China. So there's been a lot of news surrounding stricter rules around younger players in China in the past week. I know Embracer hasn't historically had a huge amount of exposure to the Chinese market. But on the acquisitions this morning, do you anticipate these new regulations being an issue for any of the businesses being acquired?

No.

Okay. That's very simple. But we have seen the likes of -- we had an announcement from Team17 a few weeks ago when they acquired StoryToys and albeit in a completely different market. One of the reasons why they bought that business was to expand their knowledge of sort of regulatory hurdles in selling to younger audiences. Is that something that Embracer is concerned about at all like across the broader business? Or is it something that you feel was in check and is more noise in the market than anything else?

Well, it's a delicate question you could spend hours answering. Obviously, we do have products for children, not that much in China, I would say, but obviously for the Western market, even though our core, I would say, still are older audience. But I'm confident about my management teams, how they develop and manage these products against these audiences. So it's not a concern for me. And obviously, we've done a lot of due diligence. And so I'm sorry, Ben, I can't really give you any more color on that.

No, no, that's absolutely fine. And one of the other questions from the web is with regard to sort of first-person shooters. With Slipgate and 3D Realms acquisition this morning, there's an expansion deeper into this market. And you already have a lot of presence in that area already. The question is how much shared learning do you get from bringing more experience and expertise into a specific genre into the group given how sort of decentralized the model works?

I think just from my own point of view, you learn things new every day, and you can never get enough learning and context. And I think the sharing of knowledge across Embracer and each operating unit just becomes greater every quarter and/or every year. So I'm confident there is a lot of synergies in that regard, and let alone the commercial reasons that IP is king and having more IPs available and resources to develop them. Because, again, remember, the bottleneck for growth is the talent. It's always to find the talents and the creators, the developers and the business people to bring more products to the market, that's the bottleneck. And that's why we are making all these mergers or acquisitions this morning.

Okay. Well, that's very helpful. And I think we've run through most of my questions and those on the web as well. So perhaps the last question I'll ask you is over the next or maybe perhaps longer term, few years, clearly, Embracer has got significant opportunities, very well-respected for being a group that sort of harnesses the opportunities of the businesses that join you. What is it that you're, I guess, most excited about from an acquisition perspective over -- both with these acquisitions and over the coming years? That will be my last question, and then I'll let you wrap up, Lars.

No. I'm excited about just seeing all my colleagues and the teams really buying into the model and continue to grow the model. We continue to find and hire more talent, but we also continue bringing more fantastic creators and entrepreneurs on to this platform. And I think the greater and the bigger we get in a way, the greater we become. And I think the ecosystems we are building is unique, it's many ways. And I think it will leverage a lot of businesses that we onboard. And I think it just makes completely sense for people to join because they could see the benefit of becoming part of the group. Obviously, capital, we can bring them, but also all the synergies, IPs, distribution, marketing, technologies. And we have seen nothing yet of this coming out -- or we have seen a bit. But over the coming decade or decades, I think you will see some amazing things coming out from this ecosystem. So I think that's why it makes sense. And that's why -- that excites me that the greater and bigger we become, the great -- the more rationale there is for people to join. And remember, it's not all about owning everything everywhere. It just makes sense, and we are an independent platform. We have no ambition to build our own exclusive end-consumer platform, for example. We are complementing the industry. We work with our industry partners. We work with the leading platforms, and we would like to continue doing that. They are business partners and friends to us. And we are just 1% roughly of the global gaming market. So I could see plenty of growth the coming years and decades to come.

Great. Well, thank you so much for having me, Lars, and thank you to all of the management teams who presented. And I appreciate that some of my questions were a little bit tricky to answer this morning, but I appreciate you taking the time.

No problem. And thank you, everyone. And remember, we have our quarterly report coming up the 18th, August 18, and I'm sure there will be a lot of more questions then from everyone. So thank you.