Embracer Group has revealed a restructuring program aimed at transforming the organization into a leaner and more focused entity. The company’s CEO, Lars Wingefors, expressed the need for this strategic decision and shed light on its implications in an open letter.
Over the years, Embracer Group has made significant investments in both acquisitions and organic growth, acquiring renowned entertainment intellectual properties (IP) and developing an extensive game pipeline. However, in response to the evolving economic and market conditions, the company plans to shift from heavy investments to becoming a highly cash-flow generative business.
This program, set to be implemented in different phases until March 2024, will focus on cost savings, capital allocation, efficiency, and consolidation. The initial phase, already underway, primarily aims to reduce costs across the group. The subsequent phase will require further analysis to determine specific actions, while the final phase will concentrate on internal consolidation, optimized resource utilization, and increased synergies among Embracer Group companies.
Embracer Group currently employs approximately 17,000 individuals, and while the restructuring program will lead to a reduction in the workforce, the exact forecast is yet to be determined. The company recognizes the impact this will have on its talented team members and emphasizes the importance of compassion, respect, and integrity during this challenging period.
Communication and transparency will be key throughout the program, with affected team members being the first to receive information. Embracer Group will also strive to provide opportunities for affected colleagues to transition to other projects. It’s important to note that while certain roles will be eliminated in some companies, Embracer Group will continue to hire in others.
To achieve its goals, the program will involve various actions, including closing or divesting certain studios, terminating or pausing ongoing game development projects, reducing non-development costs such as overhead and operating expenses, and shifting focus to internal intellectual properties while increasing external funding for large-budget games.
The newly appointed Executive Management team members, Matthew Karch and Phil Rogers, will lead the implementation of a revised review process for investments in ongoing and potential new game development projects. They will also oversee the consolidation of operations, including a review of the operative group structure, with an emphasis on accountability and meeting or surpassing performance targets.
While the program’s potential impact on future game releases primarily affects unannounced projects, all significant releases that have already been announced will proceed as planned.
Despite the challenges ahead, Embracer Group remains optimistic about its future. The company’s CEO, Lars Wingefors, expresses confidence in the team’s ability to achieve remarkable results and maintain its position as a worldwide gaming industry leader.