Chit Chat Stocks - BONUS Interview - CEO Lars Wingefors - Embracer Group (EMBRACB)

Episode Date: December 22, 2021

Lars Wingefors is the CEO of Embracer Group a Swedish video game holding company. Lars has been an entrepreneur his entire life, starting when he was selling comic books. Now Lars runs a 10 billion dollar public company. Listen in to hear Lars describe how he did it and more about Embracer Group. Enjoy the show! We will conduct Bonus Interviews periodically whenever Brett and Ryan are eager to speak with a certain guest but know that the discussion wouldn't fit our traditional show format. This episode is sponsored by Stream by Mosaic, the highest quality expert network library. Sign-up here:  https://streamrg.co/CCM Want more of Lars Wingefors? Find him on Linkedin here: https://www.linkedin.com/in/lars-wingefors-a366314/ Want updates on future shows and projects? Follow us on Twitter: https://twitter.com/chitchatmoney Rather watch us on video? Subscribe to our YouTube channel: https://www.youtube.com/channel/UCG5Ni-SI-jyrEsoNUhqftNQ Contact us: [e-mail] Timestamps Founding Embracer Group | (4:08) Mobile Gaming | (32:27) Disclosure: Chit Chat Money hosts and guests are not financial advisors, and nothing they say on this show is formal advice or a recommendation. Brett Schafer and Ryan Henderson are general partners and portfolio managers at Arch Capital. Arch Capital and its partners may hold securities discussed on this show. Learn more about your ad choices. Visit megaphone.fm/adchoices Learn more about your ad choices. Visit megaphone.fm/adchoices

Welcome to Chit Chat Money. Today we have a bonus interview with Lars Vinterfors. He is the CEO of Embracer Group, which is a gaming company based in Sweden. Do you want to kind of, we get right into it. So do you want to describe what Embracer Group does? Yeah. So they buy up studios that produce video games and they have a lot of them. They basically have the head, which Lars is running as the founder and CEO, and they have people working there. And then they have eight separate operating groups who have either internal studios or they're the publisher or they're really just one big studio maybe. And they focus on different niches, maybe different games, stuff like that. But they have a lot of autonomy for each operating group. So they're almost like separate companies, but it's all one big corporate entity. Lars will get into more of that, how they set up incentives, all that good stuff. But that should be, hopefully you can go into it now, understanding how Embrace Your Group, the business works. And I should say they're based in Sweden. So if you're looking them up, they're going to be on the Swedish one.

Well, they could be like a Nordic stock exchange. I forget exactly what it's called, but they're not, they have a US listing, like an ADR, I believe, but it's a Swedish company. They don't have a giant presence in the United States. Yeah. And I will also add, feel free to go look up his kind of story because he started the business or his first business originally in high school. And it's really kind of a cool entrepreneurial path. And he's been in the gaming business for a long time. So it's fun to learn about that. But before we get to that, we have a word from our sponsor, our new sponsor, Stream by Mosaic. Stream by Mosaic is an expert interview transcript library. And so we've used them here before.

It's a great addition to your research process. You can get, I think it's 8,500 plus call transcripts are available and they add 300 different expert interviews each week. 70% of those experts are exclusive to their platform. You are familiar with Stream by Mosaic. What do you think of it? Yeah, it's great. If you want to get up to speed on a certain industry, if you're not sure about competitive dynamics between certain companies, I mean, these call transcripts can be fantastic for

understanding that, you know, you can get the basics of a business from its investor relations page and SEC filings, but really the more of the gray area stuff, any sort of dynamics between culture, brand, how employees treat them or not, how employees treat them, how they treat employees, all that good stuff you can get from all these transcripts. And they got thousands of them and they're on all sorts of different companies. Yeah. I mean, usually these people were, or have been associated with the company. So you get a lot more candor than you might get just from their IR site. So why don't you go ahead, go to streamrg.com and you can sign up for a 14 free, 14 day free trial using pro promo code CCM. Anything else that we should add?

I guess. I don't think so. Oh, you can use our code chitchat at 7investing. You get $50 off the annual. I think this is one of the last times it runs out on January 1st. So use it before the new year. Without further ado, let's get to the interview. Welcome to Chitchat Money. On this show, hosts Ryan Henderson and Brett Schaefer interview industry experts and riff on the world of investing. As a quick reminder, Chitchat Money is a CCM Media Group podcast. Ryan and Brett are also general partners at Arch Capital, and Arch Capital may have positions in the securities discussed in this podcast. Anything discussed on Chitchat Money by Ryan or Brett or any other podcast guests is not formal advice or recommendation. Now, please enjoy

this episode. Okay, today we are welcomed by, I'm going to go ahead and try to get it right, Lars Vingafors. How was that? Was that a decent presentation? Great. Fantastic. Okay.

And he's the CEO of Embracer Group, which is a publicly traded video game publisher, kind of a holding company. I guess there's a lot of studios under their umbrella, based in Sweden, I believe. So let's go back to the beginning. What kind of inspired you to start with Embracer Group? I know you have a pretty unique story you started when you were young. So can you go back to that as well? Sure.

No, I started doing business very young when I started collecting comic books and then started my mail order business with comic books. And then I got into other things. So when I was 16, I started the mail order business in video games and trading old NES games, Super Nintendo. and you know had like had like a an exchange on video for video games online or or by mail so and then start importing started my own retail you know had distribution so so that business kind of expanded in the 90s and brought in uh you know during the dot com i

I got acquired of a public company so I got to know how it was to work within the public company. They went under so and then I had venture capitalists coming in work with them for a few years and but since 2004 I've been on my own together with my business partners um and we decided to to you know go public with the business we started thq nordic 2011 so we decided 2016 to go public and that's now five years ago in order to get access to growth capital for both organic investments meaning making more games and then doing acquisitions yeah and we'll talk about that you know your guys's m a strategy is you know pretty unique uh but we'll get to that later but i want to just kind of connect everyone to where we are in the

present now so what were the early days like say you know you guys started this new business in 2004 and then how has it evolved kind of the big changes to where the business is now yeah so going back to 2004 before then i had like an end consumer business mail order and so on In 2004, we decided to focus around low-price discount games on retail, so that became really successful. Remember, this was at the peak of the physical video games, and people bought all these Nintendo Wii games and PlayStation 2 games and Nintendo DS and all that. and that market peaked 2009 and since then you know the physical market has been you know stable or or in decline but obviously the growth in the industry has come from the digital transition of games being bought online or digitally or a new business model

such as mobile so and that's why i decided 2009 to well 2008 we we start allocating our first profits or capital to making our own games so we made a fairly successful karaoke music game called we sing that sold over a million units in europe uh but that was on nintendo only so we kind of closed that down in a way and and then then the situation came from a austrian company that went ran out of money and and they they were public a small public company in austria a publisher called you would so they kind of called me uh and then took a while and then we i you know we acquired all assets and ips and set up a new company so first business in vienna we

had like seven people employed and obviously now that is one of our eight operating groups but now there are 800 people wow are uh are you a gamer yourself yeah i love games it's just a time allocation is obviously hard in terms of games so you know when I was younger I loved playing this you know Metroid on NES and the C64

games and Super Nintendo games but nowadays to be fair I play a bit of my you know casual games for example the Easy Brain games we have and then I play with my son occasionally Okay.

Yeah, I can't sit down for the full console experience anymore. All right. So let's dig into the M&A a little bit. Obviously, acquisitions are a pretty big part of your strategy now. So what do you look for when you guys are making acquisitions? Is it more IP-focused, more focused on the team that they have, or is it kind of a blend of everything? Yeah, so I think it's important to understand,

You know, why we exist and what's the difference of Embracer and others and that's coming into M&A. So obviously, Embracer is all about finding great entrepreneurs or leading entrepreneurs in gaming that want to join the group and to allocate more capital into those businesses and have them expanding organically and inorganically. Last year, we made 37 acquisitions, but most of those acquisitions are companies they are bringing into their groups like Sabre Interactive or THQ Nordic. Normally, it's games developers. We have 86 game development studios across the group now, but they are constantly obviously you know trying to add more and and then we are organically setting up new ones do you uh do you give autonomy to the the groups because you have the you know

you have you you guys at the top the the headquarters and then you have the eight operating groups do you give them autonomy to make acquisitions yeah pretty much obviously that's this one one of our strengths and the operating model to empower leading people to do what they're good at. Whether I'm making a game or running a business, I don't believe that I should decide how they should manage their business. Otherwise, I shouldn't have acquired them. Obviously, if Randy or Clemens tells me that, hey, this is a fantastic games developer. I want to bring them into a group. We find a reasonable transaction here. Obviously, I'm normally very supportive.

Legally, all acquisitions need to be signed off by me or the board. But I would say for smaller acquisitions, it's more a formality. Obviously, we look into everything and there is a due diligence process and there is a lot of formality around it. But in the end of the day, I would say Embracer is about trusting people, I would say, the most. On the side of the company that's being acquired, how do they benefit from being under the Embracer Group umbrella? Is there something they get out of it? Is there maybe guidance, I guess?

Yeah, there's tons of things. What we have seen in the companies that we have acquired, and especially the more sizable ones, they've been growing organically post-acquisition. Going from a private company to a public company, we are unlocking a lot of ambition. They want to do more things, they want to do more games, they want to set up more offices, They want to do more business, and we are unlocking that ambition that these entrepreneurs have been thinking about for years but not have been able to do because they've been restricted being a private company or with a shareholder that is very risk-averse.

I think now since we have a much more diverse revenue streams and profitability, a business risk, one game is not a huge business risk because we have 200 games under development. An average game is not a huge business risk, but for a private company, one game could be a huge business right right now yeah that totally makes sense um so we're sorry yeah sorry go ahead yes i think it's just you know embrace about this embrace we are like an ecosystem of opportunities we have hundreds of ips uh development resources access to marketing we have 17 publishers QA services, translations, there are tons of things you can have access to if you would like to.

Some people joining the group, they use a lot of services within the group, either the existing vertical or across the group. Some companies, in reality, they just continue doing what they did before but perhaps taking a little bit more business risks but so it really varies uh depending on what you know the the mindset of the management joining right okay and one thing i think anyone familiar with say publicly traded video game publishers or studios is that at least in the united states a lot of them have focused on building you know really big but focusing only on three or four maybe large franchises. And the thought is for them is that that focus allows them to make them bigger

and bigger and bigger. But you guys kind of have the opposite approach, or at least it's built out that way since you give everyone full autonomy. And you have 197 projects in development, like you guys said, and almost 7,500 game developers, if I'm reading your guys' letter correctly. How do you guys, what is your strategy to manage such a large set of assets and studios? I know talked about it a bit but is there anything else that you guys try to do to help enable success no each decision is is made you know within you know first of all i want people to make decisions as close as they should be taken as possible so each each decision of making a new game is taken at the studio level at publishing level or incorporation and and if needed it's

signed off you know with me or the board but i would say rarely for small and mid-sized projects um whether they make a triple a game or we can make a double a game or a triple indie game or something else it's it's about you know how how the allocation of resources meaning the developers and other resources it's really up to the publishers and development teams Some games developers wanted to make the transition from being AA to AAA, which is a big change, or from an indie game to something else. We are supportive of that. We decided at the last quarterly reporting to show a little bit of this upcoming pipeline.

So far, on a performer basis, we have only released two AAA titles so far, but we have 25 AAA titles now under-planned or under-production over the coming four and a half years. So I think we will see more sizeable games coming out. It's not really a strategy just to make or start making more and more AAA. we decided to show a little bit of this pipeline. Obviously, we will have tons of great AAA indie game or triple indie game or indie games or AA games and so on as well. The most important thing that at least we hear publicly from other publicly traded companies in the video game industry is how important developer count is and a total employee count.

you see some people uh you know really telling that they're able to attract some and then there's others um you know that i think are very well known that have had that have other struggles with acquiring developers in the last year or so how important is developer talent or not maybe not even talent just total head count for getting games out like what is the dynamic there like how many do you need is there like a maximum or it's kind of a black box for something that's not in the industry. Yes. Talking AAA, our definition of the AAA, the product has to be at least 100 premium games developer at peak, but normally it's more. Let's say up to 250 across our portfolio. Obviously, development resources is one of the biggest bottlenecks

of the for growing in the industry there is a lack of talent and resources to to to make you know enough games so and obviously that's why we have been you know organically trying to add you know as much talent as possible and i'm super proud of we're able to increase organically 25% year-over-year headcounts. On top of that, we're doing M&A. I think it's critical. I'm happy to see that there are more and more countries and studios coming up across the world that are able to produce high-quality content. It's not only limited to america or sweden anymore so you can find real talents all across the world that are able to also produce premium games do you do most of the studios have remote work do most of your

guys studios it varies by studio i think more i think most of them have yes okay and has it how has it impacted the the industry at least again just anecdotally from us hearing from reading other people's conference calls and stuff like that they've said they they felt a bit of a head win for making that adjustment have you guys seen that or i guess how do you see the work environment changing for maybe more of a distributed workforce is that a positive or negative or maybe just kind of a weird part of the video game development story going forward i don't have the full science on this i think you're right that this post-pandemic has definitely changed dynamics especially for certain studios that has been you know used to work in a quite close

environment in office space in a small mid-sized city they could struggle because then they now the talents working there could get offers from other studios you know on distance or global offers at the same time this is an opportunity and again we grow our headcounts organically 25 percent so um so i i think there is for us it's it's hard to say what the net thing is i i think for us is net positive uh for most our studios but i i know some studios has been you know it's been tough and and especially if you have very sizable teams and and you know it could be tough if you have not all people in the same room sometimes or people, you know, obviously quitting

and moving to other studios and stuff. So I think we are adapting and I believe our decentralized management model works well here. You know, we are entrusting the local studio heads and the CEOs to adapt and to work the with the employees and find you know the right ways here what uh what metrics do you use to kind of evaluate the success of embracer group i guess long term the profitability okay that's it that's

an easy one what uh well what kind of so that's the thing with video game companies you're not a lot of the times it can be lumpier now you guys are more you have a lot more diversified assets so it may not be as lumpy as say a studio that's doing a game every every three years or something like that but how do you look at that as i don't know how do you track that you know like what kind of indicators can show you that you're on the right path towards say growing your profits per share or something like that yeah so we have started doing forecasts on the on the profitability defined as operational diabetes which is basically the profitability before goodwill amortizations and acquisition related amortizations and and you're right you know profits per share is

i would say also obviously very important now we are very financial obviously you can put tons of other KPIs and keeping your employees working on the long term, building new IPs, customer retention. So there are tons of other KPIs. But at the end of the day, we are a holding company and we are entrusting entrepreneurs and creators to make their best decisions, to build their business and games and what's paying the bills in the end of the day we need to make a business meaning a profit and i'm trying to avoid having margin chasing higher margins all the time for me capital allocation decision is the risk adjusted decision you need to make sometimes you you take less business risk but you make a safe return sometimes you take a lot of business risk but

you have the potential to make enormous margins. For example, in profitability, we're talking about having absolute numbers rather than a percentage, so we don't focus on the top line in order to avoid making stupid decisions. Cash flow is obviously important at the end of the day, but But right now, our strategy is to reinvest as much as we can, meaning hiring more or less old people that we think make sense to make more and better games. and so start having a cash flow forecast i think would endanger that's right it's not it wouldn't then it wouldn't really work to to have the strategy of then to invest as much as possible so that's why we just came up to the conclusion profitability that's that's kind of the the target okay no that makes total sense and the i guess the concern

in general when investors look at a conglomerate especially you guys are getting a lot bigger is how much more can you reinvest that's the big question people always have do you think and this is probably a tough question you may have something you don't want to disclose but how how many operating groups do you think you could have how many like is there i know yeah is there a ceiling out there or do you think with i mean the gaming industry is so large but with your guys's strategy what do you think any sort of upper limits could be that you may be watching out for you know i i think there is not a simple answer to that question obviously Basically, we are evolving our operating model and we could for sure add more operating groups.

Then you can question how many more. We have been adding a lot of people to the parent company. We started with three people, now we are 31 people at the public parent company in terms of to integrate, to do financial control, the compliance, governance. So I think we have extended the ability to manage a lot of more businesses. So at the moment, it's not a major concern for me whether we're having eight or 10 operating groups. The question is whether you can have 20 or 15 or whether that would make sense.

I think right now we are focusing on continuing building and continuing doing our strategy. Okay. Go ahead, Ryan. Do you prefer to grow organically or do you like the process of acquiring companies? We prefer organic. I think all businesses, we love buying businesses with people that have a lot of ambitions to either make more business or to make a bigger or greater game, and that is organic investments. But you need to have a platform to allocate capital through.

That's why you need companies with management or entrepreneurs with that ambition and have them growing organically okay and i guess for anyone that doesn't know can you highlight maybe one of your operating groups that can be an example of that you know maybe one of the studios that has a tracker going to building some bigger games i forget some of the names but there's uh you know like borderlands i think was one of the names sorry we're not of the of the game oh yeah of the games for someone to like give an example of how a successful operating group you know would or would release something under you guys yeah what it looks like yes so obviously coach media for example uh was our first transformative acquisition and and is

still our largest operating group that we acquired 2018. uh when when we acquired them they were 800 people today there are 2 200 people and so they've been growing organically and inorganic and a number of the acquisitions with them you know under coach media for example a warhorse that had a very successful release of kingdom come deliverance uh with coach media 2018 and then we acquired them they been growing organically since the acquisition from 30 people to 180 people so now warhorse in prague is one of the leading aaa game developers and in in czech or in eastern europe or central europe that's one example saber saber interactive we we got into the group as operating group in february 2020 last year

and they were about 600 people when we got them into the group now 18 months later they are i think 2500 people um so so they've expanded organically as well as mainly inorganically obviously so their main studio in saint petersburg which i would imagine is the largest premium games developer in in europe has grown from like 500 to 750 people and i think they make 14 games or 11 games so so there is i think there is a lot of different cases across the group of studio tests really have been are growing a lot within the group Okay. And last question, we don't want to hit this topic too hard, but the most interesting thing about you guys is your payout strategy for companies that you acquired. I don't think I've

seen, maybe you make it more public than other people, but can you explain how that works and what inspired you to do this long-term payout strategy? So, when I talk to entrepreneurs, is the likes of myself across the industry that has built various businesses for 10, 20, 30 years. I asked them, what's their ambitions for the future? Do they want to join and so on?

And I think the long-term mindset is just critical. So that is kind of sorting out a lot of entrepreneurs that just want to do an exit. So, and all the respect, making an exit, that's great. If you want to make an exit, that's fine.

But then it's not for embracers. So I'm trying to get people that, okay, I want to do this thing for the next five or ten years, and then they have a really long-term mindset. And obviously, I want to give them incentives aligned with that ambition. So we normally strike a day-one consideration, cash and shares, and then we have an earn-out based on the business plan. They tell me, okay, I will grow my EBIT from whatever $50 million a year to $150 million over 10 years

or 8 years. Then we put milestones across that. With some catch-up mechanism in order to be aligned so it's not like a hard cut. That's kind of

how... Then we're raising equity. So we give them the equity also for the earnouts already at day one of the transaction. And then we have them under clawback. So to have the full earnout, the maximum earnout, then the entrepreneur needs to hit the 150 million EBIT year eight, and then he would have the shares we agreed on.

All right. Well, I have a bunch more questions, but before we get to them, we should hit a quick ad break. this episode is brought to you by kpmg as a business leader how can you innovate build trust and move forward in a digital era kpmg can help by bringing together the right talent and technologies generating insights that spark opportunities to explore their thinking visit read.kpmg.us opportunities this episode is brought to you by lakinta by windham here you are miles from home and ready to start your vacation. Good thing you're staying at La Quinta by Wyndham.

They have free high-speed Wi-Fi to stream all your favorite movies. And in the morning, get fresh waffles with their free bright side breakfast or squeeze in a workout at their fitness center. Either way, you're ready to conquer the day. Tonight, La Quinta. Tomorrow, you triumph. Book your stay at LQ.com. All right, welcome back in. Something I wanted to touch on because you guys have kind of highlighted this as a part of your strategy is the recent focus on mobile so i guess what excites you the most about the mobile market like some fantastic entrepreneurs in mobile with long-term ambitions that really build sustainable growing businesses take easy brain for example that is the category leader on brain brain and puzzle games uh globally

and DecaGames acquiring established IPs, Crazy Labs, one of the leading hyper-casual publishers of the world. They found their niches. They're having a lot of ambition. I'm happily surprised of the stability and the nice growth in the businesses. The cash flow generation is fantastic. Oh, it's nice. I was a bit skeptical. Historically, I've been a bit of a premium games guy, but you learn. well on i guess on that note what is what's the difference in finding success for a mobile game versus a triple a game because some games get really popular on mobile and i would never think that they'd be uh that that kind of game would be would work so i guess like

i don't know what what are the differences are the teams much smaller is it different tactics i Yes. It highly depends on what kind of game there is. A new mobile game could be a very big investment today. Talking about the shooter or a big casual game, it could be a significant team size with years of development. It's quite risky, I would say, if you're in that field of mobile. Our businesses, it's a bit… EasyBrain has found a magic formula to create repetitive successes in

their core, numbers games and brain and logic games. Crazy Labs has hundreds of game developers out there creating content or games for them. They all have formulas how to create games. I think it's very different from premium games. You are creating a different kind of experience. You're creating a different kind of monetization, which changes the gameplay mechanics. So it's really hard to compare. I think the synergies in mobile gaming and premium gaming

is quite limited, I would say. I think sometimes it's more synergistic with premium gaming and the TV and film production industry. You said you play a little bit of mobile games yourself. Do you have a favorite? Oh, wow. The hard-hitting question here. No, I really enjoyed Easy Brain's latest numbers match game. Okay. And yeah, no, that was great on the mobile and premium stuff. Cause I mean, everyone talks about how like the developers, if, or say development team, if they're going up like a mobile track, it's kind of hard to switch over, but I'm glad you could talk more on that. But speaking more on other entertainment mediums, there are rumors and a lot of talk out there about video game companies investing in TV and film for their intellectual property.

I don't know if we see any big, well, there was The Witcher, I guess it's kind of a big one. There's been a few rumblings. How much of an opportunity do you believe there is in this market? Because I know you guys do have, that's your other big operating segment that's not strictly video game publishing. No. I think we are all passionate about what we define as IP-driven media companies such as film and TV production, board gaming, comic books, sci-fi novels, trading cards, anime.

There is tons of love for this kind of IPs and businesses. I think there are fantastic entrepreneurs out there. We have been updating our investors at our recent AGM that we might, in the future, allocate capital towards this, including M&A. I think we see a lot of opportunities. I think all industries are changing, but I think there is a lot of opportunity to use IPs across various medias and also to put the leading creators in the same room and creating things together or from the same base.

the the support or the growth of unreal is is unreal engine for example is supporting that okay well well on the topic of i guess alternative mediums we can't have a gaming expert on without mentioning uh the the m word as we call it which is the metaverse so do you spend much time thinking about the metaverse um and i guess do you think maybe some of it's overblown or maybe maybe too popular now or i guess just what are your thoughts on it no obviously we are we are them you know we are in the metaverse and we are creating content for the metaverse already um On Thursday this week, we are releasing our first metaverse, true metaverse title after the fall, which will be a true 32 players multiplayer across different VR.

You can hang out with your friends and enjoy a shooter, a zombie shooter. So I think we are one of, hopefully, an important content supplier to the Facebook meta ecosystem. We are hopefully great business partners, or I know we are, to Epic and their ambitions in the metaverse. We don't have a virtual world defined metaverse within the group at scale today. Let's see if we would have that one day, but until then, I think we love to work with partners that have the ambition to create their own metaverses and to be a great content supplier to them.

different is the development cycle for i guess a metaverse game is it much vr vr yeah we are or a virtual mmo or you know it's it's different you know it's more depend what you do obviously but i would say right now it's a bit you know the content you're creating for roblox or or obviously it's not AAA productions as such. So I think there is definitely an opportunity for small and mid-sized games developers to benefit from the rise of the metaverses. Also, VR games development is shorter and cheaper

than normal premium games. Really? Interesting. I would have thought it was, maybe it'll expand over time, but I would have thought it was, since it's more immersive, it would have taken more development time, but it's the opposite. Is there any reason for that? Well, I think, no, I'm not an expert on that, but I would imagine it's less content.

You can't consume so much content over so many hours. You get sick or it could be a problem. So I think that's one of the reasons. Okay. And speaking of the platform, your relationship with platforms and stuff like that, So the big things that I guess investors talk about for the long term with the industry is the subscription services for games and potentially, although it hasn't really worked out so far, the cloud streaming stuff. Stadia is the biggest example. It hasn't really worked out too well so far, but we'll see if it ever gets there.

What opportunities or risks do you see to your business if those type of things become more popular, excuse me, for consumers? No, we love that. First of all, we love when there are big companies entering gaming and with a lot of ambition to build an end-consumer business. We're happy to work with them and happy to supply our IPs and content to them. At Stadia and Google, I think we are the number two content supplier to them. We have been working now with Facebook and Amazon and other companies. I think that's great for us. I love competition.

don't think obviously i i don't want i don't want the gaming universe just to be become one universe one day i love that there is several platforms and several real technologies around that's good for embracer and i think it's good for the industry i have i have one more question on the metaverse which is uh i get do you think it's going to be new types of games that are popular in there or do you think it'll be the existing franchises the popular console types translated over to the metaverse well depending on how you define a metaverse so i think in vr there will definitely be new ips uh becoming popular and new genres but i think there is a market for existing IPs or licenses. Talking about the virtual worlds like Fortnite and Roblox and so on,

I'm sure there's room for a few more. There will be games that we are not aware of today coming up in that field. I'm sure there will be similar games very popular on mobile as well in the future. um so let's see i i i'm not uh you know i i'm trying to bring the leading people and and supply people with the content uh and then uh then uh mark and tim and other visionaries they they they outline their future and and we you know make business with them yeah whoever whoever wins uh you guys will you know i'll serve everyone right yeah you'll be there uh for all for all the users yeah one uh the other

kind of fast-growing part of the industry is roblox or anyone similar to them with the i guess it's an entirely different model where it's well it's not too different than you guys where it's more decentralized but it's you don't even have you don't even know who's really making the games or you can i guess you kind of do they work with them sometimes but you have these you know platform-based do-it-yourself almost almost youtube style stuff what are you what do you think the advantages and disadvantages of of that model are no obviously it's fantastic to to have your people creating content for you and and a lot of people are successful so i i think that will definitely evolve over time and uh you know it's i know there's a field we we some people are

looking into with a cross embracer as well so let's see um roblox has built a fantastic universe but i i think uh there there is room for more so you know you've also it sounds like uh you've been a part of the gaming industry for a pretty long time so uh something that i saw on i think it was an investor presentation or something like that was this games archive um what what exactly is that and then kind of what's your ambition with that no i i think you know we're trying to you know build the archive of all games made um here in sweden in karlstad and and you know some Something I'm personally very passionate about, and I have a lot of people here in Sweden that are really passionate about retro gaming and old games. Also, when you bring people here to Sweden and to my hometown, I think there is always a game that someone has been working on or there is a company someone has been working on.

So it's actually quite nice to just sit down and look at a bit of the legacy and the history of the industry. um and i think it will be a tool for us to support potentially in the future museums and institutions or exhibitions or let's say we're doing a star wars game or we can push a bottom and then having all hundreds of different star wars game shipped to e3 or or another trade show so i think it's just a very nice passion-driven function you know which talks to a lot of people and then a lot of people are interested both internally and externally to take part of this yeah all right and are we got two more questions first one's more specific kind of the last one in gaming what what do you think

i guess so the big thing with a lot of franchises is there's been some in gaming that have stayed around for multiple decades and some kind of have one hit wonders and then they die off with this may be something that more of the operating groups themselves deal with but what what do you think makes a franchise have sticking power or staying power excuse me within you know with consumers well you know i i think there are several factors i think one factor you need to a fantastic development team that are developing and extending the IPs and by iterations just improve it and building a community, listening to your customers, and then just constantly improve the product over time. I think that's critical and I think that's why you see more

more games successful that are either early access for a very long time or live operated through very active communities for many years. I think it's a challenge to do these huge AAA games that comes like every five or 10 years. You really need to have a very strong IP and a very strong team to be successful in that. Okay. All right. And we appreciate you taking all these questions. I know we asked a ton, so appreciate that.

But the last one we have, just in general, you have a very successful business going. What's one piece of advice that you have for anyone who is looking to start a business today? Wow. Pick what you know and what you believe in and don't listen too much to what other people. There's going to be a lot of noise, right?

I'm sure you had a lot of people saying that, I don't know, that strategy or whatever, the decentralized strategy wouldn't work. But yeah, that totally makes sense. It's like when you have an issue somewhere and then you're asking the best experts in the world and key stakeholders. If you ask 20 people,

you will have 20 different answers. So in the end of the day, you need to be able to make your own decision what you believe is the right thing. But still, it's important to listen and to gather information. So I think that's critical to be successful starting your own business.

Okay. All right. Well, that's all the questions we have. I guess thank you for taking the time to do this. Thank you. All right. But I guess as far as sign-off goes, do you have a Twitter? Can people follow you on Twitter?

I'm not active on Twitter. I'm sorry. No worries. It's a waste of time. But if you want to check out Embracer Group's games, you can go check out all their studios. Go try out some of the games for yourself. Without further ado, I'm going to do the disclosure here.

Brett and I are not financial advisors. Anything we say or discuss here on Chit Chat Money is not formal advice or recommendation. We are, however, general partners at Arch Capital, so clients may have positions in the securities discussed in this podcast. Thank you all for listening. We'll see you next time.