The future of European publishing is diversity, not concentration | Opinion

It would be easy to look at this week’s headlines and conclude that Europe’s game publishing sector is in terminal decline. Results from Ubisoft and Embracer, released within hours of each other on Wednesday, both looked bleak in different ways. Ubisoft’s revenue slumped again, while Embracer beat its Q4 estimates – but the focus for both firms was on their years-long restructuring efforts, which have yet to bear much fruit that isn’t hard and bitter.

The two companies – arguably Europe’s last remaining large-scale AAA publishers, though they’re both dwarfed by US and Japanese giants – have a similar story in the broad strokes, but the details are very different. They both inflated to enormous scale in the cheap-money era, fuelled by debt or acquisitions, then hit the skids the moment that the money dried up.

Since then, both companies have spent literal years trying to reconcile their bloated scale with what has often been relatively weak commercial performance. Both are arguably sitting on IP goldmines, but the majority of their valuable franchises have sat fallow (or worse, had new games announced only to rug-pull the fanbase with a cancellation), while the companies struggled to restructure their sprawling networks of studios and subsidiaries.

The approach taken to that has been very different. Embracer is in the process of fragmentation, selling studios where it can and splitting the company itself up into various chunks, in what certainly looks like an attempt to make parts of it more appealing to the significantly thinned ranks of potential acquirers.

Ubisoft, on the other hand, has been trying the opposite strategy – holding as much of its business together as possible and continuing to play the part of the global AAA publisher, even in the face of collapsing share prices and a financial situation that’s required a liquidity injection (in exchange for a large stake in the subsidiary housing the company’s most valuable IPs) from Chinese giant Tencent.

So, is the bell tolling for European publishing? Is the continent – so often lambasted for its failure to produce tech giants on the scale of the US and China – now faced with seeing the game publishing industry also consolidate around Asian and US majors?

“The European publishing scene is far from a desolate graveyard”

If the yardstick you choose to measure by is whether Europe has publishers that stand toe to toe with those giants, then it’s hard to argue otherwise. Whatever emerges from the restructuring of Ubisoft and Embracer, if it’s anything healthy at all, will be leaner, smaller, more focused businesses, not publishers exchanging blows with Take-Two or EA.

If, however, those companies can get through this and come out the other side as smaller, healthier firms, they will be in very good company. The European publishing scene is far from a desolate graveyard; it’s absolutely teeming with smaller, focused, smartly run companies that never tried to achieve scale at any cost or to challenge the global majors on their home turf.

Some of the focus of Europe’s impressive cohort of smaller publishers is simply about managing scale effectively and resisting the siren call of using cheap debt to artificially pump up growth. Some of it, however, is about creativity – publishers that find a creative niche that they know inside out and choose to stay within that niche, understanding their genres and their audiences with a depth that sprawling, multi-genre AAA publishers cannot rival.

The most prominent example is Paradox Interactive, which has an absolute chokehold on grand strategy and simulation games. But you could also point to the likes of Techland and Focus Entertainment as bastions of AA action/horror titles that punch significantly above their weight (and their budgets), while Devolver Digital is a really interesting example of a publisher that has been successful while keeping itself deliberately small and curated.

That curation is also apparent across Europe’s indie publishing scene. From the headline success of Kepler through to smaller but seemingly healthy firms like Raw Fury or No More Robots, skilful curation and maintaining sensible scale are vital components. Nowhere, of course, is creative curation more apparent than in the continent’s self-publishing studios – companies like Larian and CD Projekt that run under the radar for years in between launching industry-shaking hits like Baldur’s Gate 3 or Cyberpunk 2077.

It’s notable that while Scandinavia and Western Europe are heavily represented among those companies, Eastern Europe is an increasing force in small- to mid-scale publishing, with the aforementioned Techland and CD Projekt being joined by companies like 11-Bit Studios, People Can Fly, and GSC Game World – a Ukrainian company that shipped Stalker 2 in the midst of the Russian invasion. Only a couple of decades ago, the Eastern European games industry was better known as a cheap outsourcing destination for major studios elsewhere – for it to have come this far, this quickly, is nothing short of incredible.

None of those names will ever be the next Ubisoft – and that’s the point. They all operate almost entirely differently from the way that legacy AAA publishers have done business for the past 15 years. They focus on a single genre or a small cluster of related ones, so that the company’s creative curation and taste can actually matter, and decisions are being made by people who actually know the games they’re making. They generally cap their headcount fairly carefully, so organisation size doesn’t run out of control. Most of all, they’re mostly either privately held, or have a public listing that still keeps control in the founders’ hands – so posting growth figures in the next quarter actually can play second fiddle to stability, consistency, and good management for the long term.

Ubisoft and Embracer represent the last bastions of sprawling, scale-at-all-costs AAA publishing in Europe – and their woes are arguably especially acute examples of structural problems that have plagued the legacy, multi-genre AAA model globally for the past few years. Below that tier, however, the European publishing industry is healthier than it has been in a very long time – founder-led, genre-focused, and increasingly showing that it’s capable of producing both big cultural moments (Clair Obscur: Expedition 33 being the most obvious recent example) and solid franchises like Crusader Kings or Dying Light. Europe may not have any remaining large-cap games publishers within the next few years – and to be clear, none of this can replace the sheer revenue that the likes of Ubisoft represented at its peak – but there is, at least, a thriving, stable, and diversified publishing industry already growing to fill the gaps.