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Embracer Group sees record shift toward digital due to COVID-19

The ongoing global pandemic is affecting video game companies in different ways, but one notable shift highlighted in several recent quarterly financial reports is an increased interest in digital game sales.

The ongoing global pandemic is affecting video game companies in different ways, but one notable shift highlighted in several recent quarterly financial reports is an increased interest in digital game sales.

Embracer Group, the parent company of THQ Nordic, Coffee Stain, and others, is no exception. The Group closed out the quarter ending March 31, 2020 of its 2019-20 financial year with 78 percent of its game sales coming from digital sources, a record high proportion for the company.

CEO Lars Wingefors suspects the split, and a recent “overall increased consumption of games” is largely due to the COVID-19 pandemic. It's something he says is made more evident by the fact that Embracer had no major releases during March and that its already seeing a “boost in consumer activity” alongside game launches in the current quarter.

For Q4, net sales in the Group’s Games division decreased to SEK 903.5 million (~$94.2 million) from last year’s SEK 1.03 billion (~$107.8 million), though Embracer notes the decrease is exacerbated by last quarter’s high sales from the launch of Metro Exodus.

Its Partner Publishing/Film business saw net sales fall to SEK 435.6 million (~$45.4 million) from last years 595.6 million (~$62.1 million), a drop driven by the pandemic-driven closures of many physical retailers.

Despite those decreases, Wingefors calls Q4 a stable quarter and says overall profitability was right in line with its expectations, noting as well that Q4 made for the games division’s second-best quarter ever in terms of net sales.

For the full year ending March 31, 2020, Embracer saw net sales in its games business increase 31 percent to SEK 3,196.5 billion (~$333.3 million) while net sales for the company as a whole increased 3 percent to SEK 5.249 billion (~$547.5 million).

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