Today, the Embracer Group announced a company-wide restructuring program that will take place over the remainder of the fiscal year (due to close in March 2024).
Its main goal is reducing overhead costs by at least 10% on a yearly basis and considerably decreasing the company’s net debt. That should bring the company in a position to grow in profitability, increase margins, and reduce risks.
Unfortunately, that will come at a high cost for some internal studios and their employees. The aforementioned goals will be reached by closing or divesting some of the studios and pausing or canceling select game projects. Embracer Group CEO Lars Wingefors said this will mostly affect unannounced projects, of which the company had a lot (there were 200 games in the pipeline as of the last earnings call, many of them still unannounced).
The restructuring program also includes the consolidation of Embracer Group’s companies and businesses, including a review of the twelve operating groups (Amplifier Game Invest, Asmodee, CDE Entertainment, Coffee Stain Holding, Dark Horse Media, DECA Games, Easybrain, Embracer Freemode, Gearbox Entertainment, Plaion, Saber Interactive, and THQ Nordic).
Additionally, a greater focus will be placed on internal development based on owned intellectual properties, while external development will go on the back burner. The Embracer Group also counts on increasing the external development of internally developed triple-A games, likely hinting at potential deals with platform holders. A centralized progress to green light game investment and check on their progress will be created.
To implement all these changes, Matthew Karch has been appointed interim Chief Operating Officer (COO). Karch was a board member of Embracer Group and the CEO of the Saber Interactive operating group, but he’s resigning from the latter right away and will resign from the former at the next annual general meeting. Phil Rogers, CEO of the Crystal Dynamics-Eidos operating group, has also been appointed interim Chief Strategy Officer (CSO), a new position. Rogers will continue to lead CDE in addition to his new job.
Over the years, the Embracer Group swallowed plenty of studios and companies, including Crystal Dynamics and Eidos from Square Enix and Middle-earth Enterprises. It would be easy to say now that they bit off more than they could chew. However, a big factor in the restructuring program was likely the $2 billion transformative deal that fell through a few weeks ago and subsequently caused Embracer Group stock to crash.
Speaking of Crystal Dynamics, the studio already put out a statement to reassure fans of their projects (the next Tomb Raider, published by Amazon Games, and the Perfect Dark reboot made in collaboration with The Initiative) that they would not be affected by the restructuring program.
No affected company has been named today by the Embracer Group, but we’ll probably learn soon enough which ones will be closed or divested.
