Value Creation and Destruction From Mergers and Acquisitions in the Video Games Industry: A Case Study of Why Embracer Group’s M&A Strategy Failed to Deliver Long-Term Value

Abstract

This thesis examines the failure of Embracer Group AB’s mergers and acquisitions (M&A) strategy, despite aligning with established theoretical value creation logics. Using a qualitative single-case study design, the research analyses Embracer’s acquisition spree and subsequent restructuring in the period from 2020 to 2025, within the context of the video game industry (VGI), focusing on strategic fit, integration approaches, financing structures, and industry dynamics. The theoretical framework integrates M&A theory with VGI-specific value creation logics such as franchises, transmedia storytelling, and IP monetization. The research finds that Embracer’s became financially overextended and that their decentralized model hindered the ability to realize synergistic effects. A lack of integration resulted in underleveraged resources and capabilities. Furthermore, the absence of centralized managerial and operational functions meant that Embracer failed to structure strategic collaborations across the acquisitions. Ultimately, financial overextension from an overreliance on external funding, following the lack of internal value creation, forced Embracer to restructure and split into three separate entities. The findings suggest that successful M&A in the VGI requires centralized strategic capabilities, cautious financial planning, and alignment between integration models and IP-driven and synergistic value logics. This research contributes to the understanding of M&A outcomes in the VGI and offers practical lessons for firms pursuing similar expansion strategies.