- Embracer Group has announced a new restructuring program to reduce its losses and running costs. The program also brings a lot of layoffs, project cancelations, and studio closures.
- The new strategy is divided into three phases that will stay in effect until March 2024. Many employees out of 17,000 will be fired due to the program, but exact number has not been shared.
- The company will reduce the number of third-party projects and focus on internal IPs. Only the unannounced games are prone to cancelations, and the rest will release as usual.
- Many titles like Remnant 2, PAYDAY 3, Alone in the Dark, and the sort have not been affected. Crystal Dynamics has also stated that Perfect Dark and Tomb Raider titles are in the clear.
Embracer Group, the video game and holdings company known for owning big studios like Deep Silver and THQ Nordic, has recently revealed its plans to downsize the majority of the company. The new restructuring program seeks to reduce the running costs and losses of the large conglomerate. Regardless, the program will reportedly take many contentious steps, such as laying off staff and closing studios, to achieve the final result.
The CEO Lars Wingefors has detailed the huge program in a new press release on the official website, focusing on “cost savings, capital allocation, efficiency and consolidation.” The press release also talks about the various outcomes of the program, such as employee layoffs, game cancelations or suspensions, and the closure of many of its studios. The program is divided into several phases that will stay in effect until March 2024.
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.”
The initial phase has already gone into effect, targeting cost savings across the group. The second phase will also start immediately, as it requires further analysis before making specific choices. The last phase will focus on “internal consolidation, further resource utilization and more synergies across the Group.” The current 17,000 workers running the gears of Embracer Group will be lowered to an unknown amount by the last phase.
We will reduce third party publishing and put greater focus on internal IP and increase external funding of large-budget games.”
It is worth noting that all the planned game releases will still launch, and only the unannounced projects will suffer the consequences of the restructuring program. The number of layoffs or the exact studios that will be closed remains unclear, but Tomb Raider and Perfect Dark developers have reassured the fans that it will not bear any negative effects on Twitter. Crystal Dynamics has cleared that its upcoming projects are still in the clear.
— Crystal Dynamics (@CrystalDynamics) June 13, 2023
Moreover, many other announced entries, such as Warhammer 40k: Space Marine 2, PAYDAY 3, and Alone in the Dark, are smooth sailing toward eventual releases. Embracer Group CEO is reportedly excited about this year due to the upcoming games, and he is looking forward to growing the company by following the new strategy. Lars also commented on the huge success of Dead Island 2, calling it one of its “greatest successes so far.”
While the exact reason behind the new program is unknown, the $2 billion partnership failure to close last month is rumored to be a primary culprit to help Embracer Group’s falling capital. The partnership failure caused its stock prices to plummet entirely. Another possibility could be the holding company’s bundle of acquisitions in the last few years, eventually expanding itself more than it could control.
Regardless, the new restructuring program could help the company recover by cutting off some studios, laying off employees, and canceling unannounced projects. Embracer Group also plans to release up to 31 games, with 19 AAA entries scheduled to arrive before the year 2026. However, the new restructuring program may cause the initial schemes to fall through due to project cancelations.
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