Embracer Group has been in a lot of trouble since the past year, when it began a restructuring program in June 2023 that saw several job cuts and studio closures. The company said that this program would make it a leaner, stronger, and more self-sufficient company.
And if that wasn’t enough, the company has now announced that the restructuring program is in its final stretch and will be completed by March 2024, but it has warned that more job cuts could be coming as it looks to sell off assets and that its main priority is “always” the shareholders.
Embracer Group Warns of More Job Cuts Despite Already Laying Off Staff in Masses
Embracer Group revealed in its Q3 2023 earnings results on February 15, 2024, that it could sell more assets as part of the restructuring program as it has “few larger structured divestment processes ongoing” and this could help strengthen its “balance sheet and reduce capex.” The company stated that the discussions on this are in “mature” stages.
It’s said in the report that some companies might initiate restructuring, which could result in further job cuts before sales are made. The report further reads that Embracer Group’s “overruling principle is to always maximize shareholder value in any given situation.” It also said that despite the layoffs, it is unlikely to hit its target of “below SEK 8 billion in net debt,” but the divestments could help.
Embracer Group also revealed that sales in the PC/Console games segment have seen a decline of 9%, but the performance of popular IPs and franchises is stable. It was also reported that many of the games released in the third quarter did not do well, but a range of new games indicate “higher activity.”
The company had a workforce of nearly 17,000 staff, and it is now significantly low after the layoffs. The company revealed in the earnings results that it laid off 8% of its global workforce as part of the program. The company has also canceled 29 announced games that were in the works and shut down several studios.
Popular Studios Have Been Shut as Part of Embracer Group’s Restructuring Program
Embracer Group had 132 internal game development studios and was working with 50 external ones as of December 2023. The company shut down major game studios that were part of its portfolio to cut costs. The now-closed studios include popular Saints Row franchise developer Volition, which was closed in August 2023.
TimeSplitters maker Free Radical Design was also shut down in December 2023 and all the members were laid off. Borderlands developer Gearbox is also said to have been put up for sale, and reports suggest that Embracer Group has gotten interest from several parties looking to buy the development studio.
The main reason behind Embracer Group’s troubles is reported to have begun with the unexpected failure of a $2 billion deal with Saudi Arabia’s government-backed Savvy Games Group. Another big reason could be the company’s spree of acquiring studios and developers in the last few years.
What are your thoughts about Embracer Group and the massive layoffs? Let us know in the comments below.
