Embracer Group has announced today that it's embarking upon a restructuring program that will have a major effect throughout the company, with job losses, cancelled games and studio closures expected.
In a statement, Embracer's CEO explained the move will "make us a leaner, stronger and a more focused, self-sufficient company", allowing for the ability to achieve "higher margins in the PC/Console segment over the coming years".
"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."
As a result of the restructure, Embracer says that staff numbers will be affected, but it's too early to give an exact forecast. There will also be cuts to game development, including studio closures and cancelled / postponed games.
"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 potential impact from the program of future game releases will almost entirely be around unannounced projects. All announced significant releases will still be released as planned."
For those who aren't aware, Embracer currently owns a whole host of popular development studios including Gearbox Software, Deep Silver, Flying Wild Hog, Aspyr, and many others.
Crystal Dynamics is part of that list as well, although the company took to Twitter earlier today to reassure fans that the next Tomb Raider won't be affected by the news, nor will the studio's work on Xbox's upcoming Perfect Dark reboot.
If you're interested in reading the full statement, you can check it out on the Embracer Group website.
What are your thoughts about this? Tell us down in the comments below.
Comments 19
Always hate to hear of people losing their job.
If they had closed Crystal Dynamics because their console games are not as profitable as the mobile games...
Sell Aspyr or Crystal Dynamics to MS. Seems like a better fit to me, like BioWare before EA bought them.
Microsoft should buy crystal dynamics
I hope before closing they think about selling some studios. I'd hate to see 4A Games or Warhorse Studio shut down.
@CenturianShark @HKK24 Yes, they seem a good choice considering that they are developing Perfect Dark and that they make brilliant single-player games.
Perhaps buying up half the industry and a butt-ton of mid-tier studios and IP wasn't a smart move after all. Who knew?
Sad news indeed. Hope all the Devs affected by this land on their feet and are ok. Seems to be tough times all round for the tech & software industry job wise with most companies if not cutting jobs at least on a "freeze"
EG seems like a company that spent a whole lot of money they didn't have to buy things they... Probably needed.
No one saw this coming... no one /s
With all due respect Embracer's output hasn't been very good, or even very numerous, considering they
havehad over 131 studios and 16,500+ employees. The odd middling success isn't going to keep that many mouths fed for long.Very sorry for those who are affected.
Very sad times indeed especially when people are losing there jobs
Sadly, I suspect a lot of this was always the plan. Like when a brewery buys another brewery and then shortly afterwards shutters it and starts producing its most well known and profitable beer at another of their sites.
I think Embracer wanted to sell. It didn't happen, they're restructuring, and they'll try again (much like Square shedding Eidos so they can sell to Sony after the ABK stuff ends). The timing of Google exiting gaming and MS getting stuck in CMA hell might have really hurt them.
Oof. One of my most played games, Star Trek Online, was bought by Gearbox (and therefore Embracer) so there's a risk they could be on the chopping block. I'd hate to see it as that game's been going steady for 13+ years now
@SplooshDmg @Jenkinss It reminds me of Square Enix buying studios and IPs they don't need with the bank's money just to sell them and redeem the loans.
Don’t shut them down!!! Find a new owner!!! Sell them for pennies but don’t shut them down!!! 😖
@Banjo- Crystal Dynamics is safe if only because they are under contract with Microsoft working on Perfect Dark.
Translation: "We went on a spending binge we couldn't afford and are drowning in debt, now taking desperate actions to stop hemorrhaging cash and actually generate revenue and will start flipping debt-ridden assets to someone willing to take on the debt exactly like our competitors did and we were too eager to buy it. Also, Avengers under-performed sales expectations."
I mean, there's no one that's been watching their constant buying that couldn't see the mammoth debt absorption as a huge problem. I like Lars, I really do, he's one of the only gaming executives that's actually in gaming because gaming, and not because spreadsheets. But he's gone bankrupt twice before following the exact same pattern on a smaller scale..........
It feels like the gaming scene has been really falling apart lately.
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