Over the past couple of years we’ve written several times about the Embracer Group acquiring studios and IPs. It has been an aggressive expansion and represented the changing tides in an industry who’s growth has been exponential.
Due to some recent shifts and a large hit on their market cap, it’s no surprise that today the Embracer Group has announced a large restructuring.
In an open letter to the organization posted online, Group CEO Lars Wingefors, had the following to say:
During the past years, Embracer invested significantly both in acquisitions and into a strategy of accelerated organic growth. 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.
The specific details include:
- Layoffs of some of the 17,000 employees. The number has not been defined as of yet.
- Closing or divestments of some studios.
- Termination and/or pausing of some on-going projects.
- Decreased spending on overhead and development costs.
- Reduced focus on third-party games with a shift to internal IP.
As always when we have to write about closures and/or layoffs, we wish all of the developers nothing but the best in finding new roles. We will continue to keep you updated as Embracer Group begins to put these plans into motion.
