Restructuring and Layoffs
Embracer Group AB THQQF has recently undergone a significant restructuring impacting its workforce.
Impact: The Swedish video game and media holding company has reduced 8% of its global workforce, equivalent to 1,387 employees since June.
The reduction comprised 904 job cuts in the second quarter and an additional 483 in the third. Moreover, the company canceled 29 unannounced games during this period, as per reports from IGN.
In response, CEO Lars Wingefors noted, “In a group-wide effort, our companies and studios have had to make difficult decisions, particularly on having to part ways with team members.”
He further emphasized, “The reductions are managed locally on the operative group level with a focus on informing affected employees first, and then carried out with compassion, respect, and integrity towards those affected.”
Divestment and Financial Outlook
Embracer is also in the process of selling parts of its business, potentially including Gearbox, which it acquired in 2021.
Wingefors disclosed that “processes are in mature stages,” and cautioned that layoffs at Embracer’s studios may occur before any sale is completed. He added, “Certain companies might initiate restructuring before any divestment is announced.”
Controversially prioritizing shareholder value, Wingefors stated, “Our overruling principle is to always maximize shareholder value in any given situation.”
Financially, Embracer may not meet its target of reducing net debt by the end of the fiscal year but anticipates significant reductions post-March 2024 through divestments.
Industry Dynamics and Challenges
Embracer’s financial challenges stem from the collapse of a $2 billion deal and criticism for past cuts, such as the closure of Volition, creator of Saints Row. Notable acquisitions in Embracer’s history include Darksiders, Red Faction, and the BioMutant IP.
Recent developments include the cancellation of a new Deus Ex game and layoffs at various studios, including Eidos Montreal and Black Forest Games. Despite underperforming titles, recent releases like Deep Rock Galactic: Survivor and Tomb Raider 1-3 Remastered have shown promising sales.