Embracer Group Reveals Shockingly Low Purchase Price For ‘The Lord Of The Rings’ And ‘The Hobbit’
Embracer Group recently revealed in their Annual Report a shockingly low purchase price to acquire Middle-earth Enterprises, which controls the rights to J.R.R. Tolkien’s The Lord of the Rings and The Hobbit.
The entertainment giant revealed, “The most significant acquisition of these acquisitions is the acquisition of the Middle-earth Enterprises which owns a vast intellectual property catalog and world-wide 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 Harper Collins, which have yet to be explored.”
They then shard, “The consideration for the Middle-earth Enterprises acquisition sums up to SEK 4,265 million, where SEK 2,901 million has impacted the cash flow.”
4.265 billion Swedish Krona roughly converts to around $398.8 million.
To highlight how shockingly low that number is, Variety claims that “estimates at the time project the rights … were worth up to $2 billion.”
As further evidence, Prime Video’s The Lord of the Rings: The Rings of Power series reportedly paid $250 million to secure the rights to make the show. Ironically, the show’s showrunners admitted that they did not even secure the rights to The Silmarillion or Unfinished Tales, which tell the tale of the Second Age of Middle-earth.
Showrunner J.D. Payne told Vanity Fair, “We have the rights solely to The Fellowship of the Ring, The Two Towers, The Return of the King, the appendices, and The Hobbit. And that is it. We do not have the rights to The Silmarillion, Unfinished Tales, The History of Middle-earth, or any of those other books.”
As for why Prime Video would even greenlight a series set in the Second Age without acquiring the rights to the key source material documenting the Second Age, the series’ other showrunner Patrick McKay explained, “There’s a version of everything we need for the Second Age in the books we have the rights to.”
“As long as we’re painting within those lines and not egregiously contradicting something we don’t have the rights to, there’s a lot of leeway and room to dramatize and tell some of the best stories that [Tolkien] ever came up with,” he added.
With the acquisition of the rights to The Lord of the Rings, the company’s Interim Chief Operations Officer Matthew Karch detailed his plans to exploit the IP.
During a recent press conference providing details on the company’s restructuring and layoffs, Karch answered a question about the potential growth opportunities he sees for the company amid the restructuring.
He responded, “With some more centralization, and I’m obviously not implying we are moving from one model to another, but we are going to incorporate elements of consolidation and centralization into certain aspect of our business.”
“We are going to have a much better picture of the teams that are coming available,” he continued. “And we are going to have much better data to support product selection and to create product which is going to ultimately achieve better results than some of our past products have. And so I have a high degree of confidence that this entire process is going to easily translate into better product selection that is more profitable and that gives us a better opportunity for growth in the future.”
Specifically referencing The Lord of the Rings, Karch said, “And that helps to leverage the IP that we own within our organization. I mean we own The Lord of the Rings. We know we need to be exploiting Lord of the Rings in a very significant fashion and turning it into one of the biggest gaming franchises in the world. And that’s obviously something that we are going to be doing. That’s a much better use of resources than some of the other projects that some of our teams have been working on.”
“Working together we have those opportunities and we are super excited to put that to work relatively quickly,” he concluded.
To that end, Embracer Group recounted in their Annual Report that the company “announced on February 23, an agreement with New Line Cinema and Warner Bros. Pictures to conclude a multi-year agreement to collaborate on feature films based on The Lord of the Rings and The Hobbit. The strategic agreement covers multiple feature films based on the revered works of J.R.R. Tolkien, expanding upon the much-loved world and characters of Middle-earth.”
They also noted that “the acquisition of Middle-earth Enterprises has generated a lot of interest among both internal and external partners for The Lord of the Rings IP, across different media formats. There are currently four games in production by external partners, to be released in financial year 2023/24. There is also one film in production by an external partner.”
That film is the upcoming The Lord of the Rings: The War of the Rohirrim animated feature that is expected to arrive in theaters on April 12, 2024. As for the four games, they include: The Lord of the Rings: Return to Moria from North Beach Games, The Lord of the Rings: Heroes of Middle-earth, which released on May 10th, The Lord of the Rings: Gollum, which released on May 25th.
The fourth title appears to be an untitled game that was announced last August that is being developed by Private Division in partnership with Wētā Workshop. A press release from Private Division detailed they are “developing a new game set in the Middle-earth universe of J.R.R. Tolkien.”
The press release added, “This title is in early development and does not yet have an announced release date. It is expected to launch during Take-Two’s Fiscal Year 2024. Private Division and Wētā Workshop look forward to sharing more details about this game in the future.”
What do you make of the low purchase price for The Lord of the Rings rights?
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