Apparently out of nowhere, it was announced this week that Borderlands studio Gearbox, which had been run independently since its founding 21 years ago, had sold the company to Sweden’s Embracer Group for up to $ 1.3 billion. Gearbox CEO and founder Randy Pitchford has now shed light on why he entered into the agreement and why he believes it is in the company’s best interests going forward.
Speaking to VentureBeat, Pitchford said selling the company never came to mind in a serious way before. “I’ve always been allergic to the term [mergers and acquisitions]He said that “every single partnership company”
“Many companies we’ve never worked with would strike up a cold call, an unsolicited suggestion. I’ve always been allergic to it,” Pitchford said.
Pitchford was cautious about the previous acquisition proposals because a typical acquisition means that the acquired company will be “centralized” in the parent company. “It’s more of a narrow-minded approach. It presupposes that we can not make our own way, that we do not know how to win with what we are experts at,” he said.
But with the Embracer Group, Gearbox was offered the opportunity to remain decentralized from the corporate structure. He said he was told by Embracer Lars Wingefors that, “” We must do the opposite of control. We have to give them fuel. “Let’s see how fast and far entrepreneurial groups like Gearbox and the other members of the Embracer Group can run if empowered instead of held back,” Pitchford said.
Pitchford said he was not aware that this type of scheme could even exist.
“When I realized what Lars had built, what he was doing and what the strategy was, it’s simple and obvious, but it’s completely counterintuitive to the way the rest of the industry works,” he said. “I realized that Lars is not the suit I have navigated around. Lars is me, just comes to it from an access to capital point of view. I come to it from building the product.”
Also in the interview, Pitchford said that Gearbox was an attractive acquisition target because the studio and its games never lose money. Not all Gearbox games have been homemade – for example, Battleborn was just shut down – but the company has been profitable every year since 1999, Pitchford said.
“We’ve never lost money. For us, that part of it – I feel like Neo in the Matrix after he sees it. I just need more capital so we can do this faster and better,” he said.
Pitchford owns the majority of Gearbox, so he makes a lot of money from the sale, but he also structured the studio in a unique way. Pitchford owns 70% of Gearbox, while employees own the remaining 30%. This setup, along with what Pitchford called the “most generous royalty bonus program in the industry’s history” for its employees, is why people like working in Gearbox and sticking with it.
“Compliance has been created between each individual person who participates in the profitability of our products,” he said.
Gearbox’s agreement with Embracer is structured in such a way that Gearbox can make even more money on the road if it hits certain milestones for performance.
Despite the sale, Gearbox will continue to work with 2K Games on the Borderlands series, although no new titles in the series have been announced.
Pitchford also recently revealed that the studio is also incubating several new game ideas that he believes could shake up the video game industry as Borderlands did.
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