Who owns The Lord of the Rings rights? Embracer Group buys in, but it’s not the only player

Embracer Group has acquired the rights for films, games and merchandise based on J.R.R. Tolkien’s J.R.R.A. to be made by the acquisition-hungry, ambitious Swedish gaming conglomerate Embracer Group. Tolkien’s The Lord of the RingsAnd The Hobbit.

It’s not expected that this deal would be made. Variety published a report earlier this year about the Saul Zaentz Company’s sale of rights. It stated that the potential buyer was a Hollywood studio or tech firm. Amazon will soon debut its streaming series. The Lord of the Rings – The Rings of PowerThe prime candidate was, however, Variety stated that rights could fetch as much as $2 billion. Although it was not disclosed what the price of the acquisition was, Embracer appears to have purchased Middle-earth Enterprises (the Zaentz company that holds the rights), for significantly less.

Embracer also announced the acquisition of five smaller companies: Limited Run Games (publisher of collectable, physical games); Tripwire Interactive (developer and publisher) of games such as The Killing FloorAnd ManeaterSingtrix, which creates voice effects technology for karaoke, gaming, and Tuxedo Labs that develops the destructive game Teardown. The sixth and final acquisition remains secret for now — but Embracer said it was the third or fourth largest of the deals, so it’s not major.

Embracer noted in a financial note that the estimated total cost to acquire the six businesses over the next period of time is 8.2 Billion Swedish Krona. That’s roughly $788 Million. Even if we assume the value of Middle-earth Enterprises to make up the vast majority of that sum, it’s still less than half what the prized Lord of the Rings rights were expected to fetch.

How did this happen? And how come Amazon or another major entertainment industry player wasn’t interested?

Middle-earth Enterprises — and now Embracer — owns the worldwide rights to make films, video games, board games, merchandise, theme parks and stage productions relating to the Lord of the Rings trilogy and The Hobbit. However, there are a few caveats and exemptions that may be necessary to fully understand the scope of your rights.

The publishing rights to the books themselves aren’t included; they remain with the Tolkien estate and publisher HarperCollins. The licensing rights to Tolkien’s other Middle-earth works, The Silmarillion The Unfinished Tales of Numenor & Middle-earth, are also still controlled by the Tolkien estate and HarperCollins, although Embracer says it now owns “matching rights” to these works — meaning it has the right to match any offer the owners may get from elsewhere.

Television rights are another exclusion. Per Variety, the right to produce a TV series longer than eight episodes was carved out of the deal Tolkien’s estate made with Saul Zaentz back in the 1970s, meaning Amazon was able to deal with the estate directly when it bought those rights in 2017, cutting Middle-earth Enterprises out of the deal. Nevertheless, Embracer says Middle-earth Enterprises has a “financial interest” in The Rings of Power, as well as Warner Bros.’ upcoming animated film The War of the Rohirrim, and EA’s in-development mobile game Heroes of Middle-earth.

Finally, there’s a question mark over the extent of the film rights Embracer has just bought. Warner Bros., the studio behind Peter Jackson’s Lord of the Rings and Hobbit trilogies, has held the rights for years, but prior to the sale, the Saul Zaentz Co. was arguing that the rights reverted to it in 2021 because Warner Bros. had not been actively developing new film projects. According to Variety, Warner Bros. didn’t agree — and it’s entirely possible that The War of the Rohirrim was greenlit precisely so Warner Bros.’ lawyers could dispute this claim.

That’s a lot of asterisks. Particularly, any developments in the legal battle with Warner Bros. which make the film rights appear less secure would deter many Hollywood buyers and bring down the asking prices for Middle-earth Enterprises.

But Embracer could not be concerned. Asmodee is a tabletop publisher that makes Lord of the Rings, under license titles, for over a decade. Embracer may regard the videogame rights as the real jewel of the deal. Embracer has been on quite the acquisition spree over the last few years, and it recently snapped up both Dark Horse Comics and Square Enix’s Western gaming studios, including the rights to Tomb Raider.

Square Enix thought the deal with Square Enix at $300 million was a great deal, and Square Enix said it was happy to let go of its Western business. It seems Embracer has once again swooped in on a desperate buyer, and bought the rights to a precious fantasy franchise — however disputed, or limited — for a song.