Embracer Group to Restructure, Some Studios to Close and Games Cancelled - News
by William D'Angelo , posted on 13 June 2023 / 3,420 Views
Embracer Group CEO Lars Wingefors in an open letter announced the company will be undergoing a restructure, which will see some studios shutting down and some games getting cancelled.
Wingefors says the restructure will make the gaming publisher "a leaner, stronger and a more focused, self-sufficient company."
"During the past years, Embracer invested significantly both in acquisitions and into a strategy of accelerated organic growth," he said. "We have acquired some of the world’s leading entertainment IP and we have invested into one of the largest pipelines of games across the industry. The program presented today will transform us from our current heavy-investment-mode to a highly cash-flow generative business this year.
"It will enable us to meet the worsening economy and market reality as a strong company and it will fundamentally change our prioritization of growth with raised capital towards optimization and growth based on our own cashflows. The program will lower our net debt significantly. After completion of this program, we will generate growth in profitability with less business risk and with higher margins in the PC/Console segment over the coming years. This, in turn, will give us the freedom to continue to grow and deliver the high-quality experiences our players really value."
Wingefors said the restructure program will happen in different phases that are expected to be done by March 2024 that will "focus on cost savings, capital allocation, efficiency and consolidation."
"Embracer currently engages close to 17,000 people and while that number will be lower by the end of the year, it is too early to give an exact forecast on this," said Wingefors.
"It is painful to see talented team members leave. Our people are what make up the very fabric of Embracer. I understand and respect that many of you will be worried about your own position and I don’t have all the answers to all questions. I want to be clear that the decisions about this program were not taken lightly.
"I am asking all our managers to lead and act with compassion, respect, and integrity. Throughout each phase and wherever possible, we will work to ensure that affected team members receive information first. Where we can, we will try to provide opportunities for our colleagues to transition onto other projects. It’s important to note that while we are removing roles in some companies, we will continue to hire in others.
"We know, understand and respect that this is a challenging time for every person impacted. For me communication and transparency are key, but it’s also an increasingly difficult challenge in matters such as this program."
He added, "The actions will include, but not be limited to, closing or divestments of some studios and the termination or pausing of some ongoing game development projects. It will also include decreased spending on non-development costs such as overhead and other operating expenses. We will reduce third party publishing and put greater focus on internal IP and increase external funding of large-budget games."
The majority of games cancelled will be unannounced projects and all significantly announced games will still be released as planned.
"The potential impact from the program of future game releases will almost entirely be around unannounced projects," said Wingefors. "All announced significant releases will still be released as planned."
He concluded, "I’m proud of what we have built over the past years, and we should acknowledge that we are heading into a solid year with many amazing releases such as Remnant 2, Warhammer 40,000 Space Marine 2, Payday 3, Hot Wheels Unleashed 2: Turbocharged, Arizona Sunshine 2, Alone in the Dark, Homeworld 3, and many many others. Our financial year started with one of our greatest successes so far, Dead Island 2, which exceeded our management’s already high expectations.
"Embracer was founded on the values of trust, a long-term mindset, and a desire to embrace different perspectives. As difficult as some of the decisions we will take over the coming weeks and months will be, we are doing this because we are confident that we will emerge a stronger, more efficient company setting out on a stable future to build even greater value across our many studios and fantastic portfolio of IPs."
https://t.co/bDRpwKvOmv pic.twitter.com/CotpWajxNW
— Crystal Dynamics (@CrystalDynamics) June 13, 2023
Crystal Dynamics, one of the studios under Embracer Group, via Twitter has announced they won't be impacted by the restructure and will continue to work with The Initiative on the new Perfect Dark game and on its next Tomb Raider game in collaboration with Amazon Games.
A life-long and avid gamer, William D'Angelo was first introduced to VGChartz in 2007. After years of supporting the site, he was brought on in 2010 as a junior analyst, working his way up to lead analyst in 2012 and taking over the hardware estimates in 2017. He has expanded his involvement in the gaming community by producing content on his own YouTube channel and Twitch channel. You can contact the author on Twitter @TrunksWD.
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To me this is a sign of a poorly managed company that over expanded during a period of cheap borrowing on international markets. Now that the money has dried up they are left holding the bag.
It’s a shame people are going to be losing their jobs because of this mismanagement
That's very likely a significant factor, yes. They basically bought up everybody they could when the money was free. Money isn't free anymore, so now they have to actually run the business.
Yes going back I remember more than one person criticising their growth policy on this site, but there was one person in particular whose name escapes me who thought the cheap credit and lax lending guidelines climate of the time wasn't the only factor, his take was most of their buyouts were done not with the aim of using that cheap credit to grow Embracer and those studios by investing in and developing those IPs but instead the strategy was one of becoming large enough to attract the attention of a large publisher or sovereign wealth fund, with the endgame being one that resulted in a buy out ,where Embracer got paid a premium on the stock and the board made a killing.
With the huge number of studios that they have under the embracer umbrella, I'm sure some consolidation will be helpful in making the company more reasonable to manage. I also think it probably makes sense to consolidate some of these studios into a smaller number that can each tackle larger projects.
Well you mostly just bought out studios and let them do whatever they wanted half the time, which is why we got the crap that was Saints Row, even to a point where you let that studio call it's customers toxic and the like, no matter the valid criticism.
If anyone is going to be laid off, it may as well be whatever's left of Violation.
Also, keep tabs on whatever your studios are doing. Not every game needs to fit one single design, or be a live service filled with MT's, or writers that want to hijack a game to make it about them or a generation (looking at SR in particular here).
Buying devs and companies left right and center and then fcken closing em,
What a bunch of twats what's the point of buying em off if you don't know what to do with em.
I called it. Embracer Group is already well on its way to being a subject of future "what went wrong?" articles. Tomb Raider is going to be up for sale yet again, soon enough.
They had a general lack of big hits in recent years.
Hope the impact to the employees is minimal.
