The Lord of the Rings and The Hobbit Rights Sold

The Saul Zaentz Company, owner of The Lord of the Rings and The Hobbit rights since 1976 has sold those rights to the Embracer Group for undisclosed amount. The rights, held under "Middle-earth Enterprises", was sold to Embracer for an undisclosed amount but it was floated over a year ago that they will looking for around $2 billion for the rights. Based on a recent financial impact statement, they may have got that amount as company indicates all their recent purchases (so not just Middle-Earth) are around $570 million.

Movie producer Saul Zaentz bought the full rights to the books for purposes of everything about them that isn't publishing. That means rights for merchandise, TV, movies, and video games for anything involving the books. This ownership eventually resulted in The Lord of the Rings and The Hobbit trilogies, dozens of video games, and a mountain of merchandise based mostly on the movies. This also includes the Appendices so it gives Middle-earth Enterprises a stake in the upcoming Rings of Power TV series on Amazon.

Embracer Group is a Swedish company that has been purchasing video games and other media interests with buying Middle-Earth Enterprises likely their most significant purchase yet.  Amazingly this company started as more or less as a copy of Gamestop only for the Sweden market as Nordic Games which sold used video games in the 90s. The company eventually sold to others, the chain of stores failed but it was revived itself in last 2000s selling repackaged games from EA and other gaming companies before itself  moving into video game publishing with release of We Sing and Dance Party Club Hits. From there they acquired many bankrupt video game publishers like THQ.

Now in the 2020s, Embracer moved to even bigger fish with purchases of Gearbox Software, Asmodee (tabletop games), Cryptic Studios, Crystal Dynamics, Eidos-Montreal, Square Enix Montreal which includes the full rights to Tomb Raider and Deux Ex.. They also moved in to media buy Dark Horse Comics, a 3D Animation Studio, a German VOD service, among others with Lord of the Rings being their biggest by far.  While buying Middle-Earth, they also closed deals to buy Bitwave Games, Gioteck, Limited Run Games, Tripwire Interactive and few others. The company now owns 120 game development studios just to give you an idea of their reach in the industry. 

As for why the purchases, Embracer Group tells you in their press release saying, "Other opportunities include exploring additional movies based on iconic characters such as Gandalf, Aragorn, Gollum, Galadriel, Eowyn and other characters from the literary works of J.R.R. Tolkien, and continue to provide new opportunities for fans to explore this fictive world through merchandising and other experiences. The acquisition of the rights is in line with Embracer’s IP-driven transmedia strategy. The Lord of the Rings and The Hobbit are among the world’s largest, most enduring iconic entertainment franchises and birthed the fantasy genre."

Simply put, they are expanding from video games to the TV and movie business. The Middle-Earth purchase will give their 120 game developments studios plenty of work, it will give their new table-top company plenty of IP to create more games, and it lets them move into creating more movies and TV. Combine this with Dark Horse, Tomb Raider and other purchases and in short order their media side could outpace the video game side in profit generation. What this means in the long term is expect more Lord of the Rings video games and movies.

In the short term, nothing changes. Warner Bros still retains the movie making rights to the franchise as long as they keep making movies from it which is why there is a Helm's Deep animated movie coming. Embracer's ambitions would indicate they are up to expanding the relationship with Warner Bros as suspect any movie involving the LOTR characters would have to go through the WB, which itself was recently acquired by penny pinching Discovery. This could mitigate Embracer's movie ambitions so what happens from that should be interesting. Video games already in the pipeline will likely continue but do not expect a sequel as game creation will likely be brought in house. As for Rings of Power, that will have no impact as while the company has a financial stake due to The Appendices, the Second Age rights are between Amazon and the Tolkien Estate. On the merchandizing side of things, again no change except maybe even more of it. The books, of course, are not impacted at all as publishing remains fully under the Tolkien Estate's control. 

Warner Bros should have been the ones to buy the rights, its unknown if they were ever offered the chance. In the past there was several lawsuits against WB over their creative accounting regarding the movies so would not be surprised if they never got the chance to bid. Interesting times to see a Swedish once video game company grow in 20 years to the point that they could buy the rights to one of the largest movie franchises in history.