In an open letter released this morning, the Embracer Group CEO, Lars Winefors, has announced a restructuring program to decrease overall spending, which will “focus on cost savings, capital allocation, efficiency and consolidation” as Embracer Group “put[s] greater focus on internal IP and increase external funding of large-budget games.” While not outright confirming “we’re saving money this way” the company, the Embracer Group CEO stated that some cost-saving measures the company could take “but not limited to” include studio closures and game cancellations.
“The program presented today will transform us from our heavy-investment mode to a highly cashflow 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 cashflows. The program will lower our net debt significantly,” Embracer Group CEO Lars Winefors said in an open letter.
A lot of company speak that the company’s almost 17,000 employees got in their emails, who are all probably wondering about their questionable future at the company with layoffs on the line; Winefors confirmed that the overall number would be lower by the end of the year. This planned company-wide reshuffling of its deck won’t be quick and easy as Embracer Group’s restructuring is set to be divided into different phases until it concludes in 2024.
No details were given on the unexpected restructuring. Still, one reason could be a contracted $2 billion deal in development revenue for the company that was verbally committed in October 2022, falling through at the last minute, and this is just speculation. What we see in the restructuring could be the fallout of that massive deal. The CEO asks anyone in manager positions “lead and act with compassion, respect, and integrity” as they work to ensure that affected team members receive information on their new employment status first and foremost, as the company must “understand and respect that this is a challenging time for every person impacted.”
“It is painful to see talented team members leave. Our people are what make up the very fabric of Embracer. I understand and respect that many of you will be worried about your position, and I don’t have all the answers to all your questions. I want to be clear that the decisions about this program were not taken lightly,” Winefors adds.
As a part of the Embracer Group’s restructuring, the company is rearranging its leadership roles by adding new Executive Management members to the team in its latest interim COO Matthew Karch and interim CSO Phil Rogers. As a part of the move, Karch will be stepping down from his role as Saber Interactive CEO and Embracer Group board member; meanwhile, on the opposite side, Rogers will remain in his CEO role at Crystal Dynamics/Eidos. The two are set to revise the company restructure as they will work to implement a revised, thorough review process for investments in our ongoing and potential new game development projects.
Some of Embracer Group’s upcoming releases include Remnant 2, Warhammer 40,000 Space Marine 2, Payday 3, Hot Wheels Unleashed 2: Turbocharged, Arizona Sunshine 2, Alone in the Dark, and Homeworld 3. One recent financial success for the company that the company reiterates was Dead Island 2, which “exceeded our management’s already high expectations.”
