It's another difficult day for Embracer Group after posting bad news in their earnings report in May (see "Embracer Earnings"). The company will initiate a restructuring program in an effort to make Embracer leaner and more focused. Embracer has engaged in aggressive investment over the last several years, buying up all sorts of assets. One of their most recent big acquisitions included Middle-earth Enterprises, the IP holders to The Lord of the Rings and The Hobbit novels (see "Acquires Lord of the Rings, Hobbit IP Rights"). The company is now looking to go from a current "heavy-investment-mode" to a "highly cash-flow generative business" over the course of the remainder of the year as well as reduce their net debt.
The restructuring program, led by new interim COO Matthew Karch and interim CSO Phil Rogers, will be rolled out in different phases and last through March 2024. The program will examine various areas of the company for cost savings, look at capital allocation, and assess prospects of consolidation within their structure. This process will include layoffs amongst the 17,000 people working with Embracer, but the CEO did not detail the exact number of layoffs planned at this time.
"It is painful to see talented team members leave," stated Wingefors in regards to the layoffs. "I am asking all our managers to lead and act with compassion, respect, and integrity. Throughout each phase and wherever possible, we will work to ensure that affected team members receive information first. Where we can, we will try to provide opportunities for our colleagues to transition onto other projects."
The restructuring will also result in the closure or sale of some gaming studios. Additionally, some ongoing game development projects may be put on pause or shelved entirely; which could impact future game releases. However, the releases affected will mostly be unannounced projects, and all announced significant releases will go off as originally planned.