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"Our overruling principle is to always maximize shareholder value in any given situation."

Chris Kerr, News Editor

February 15, 2024

3 Min Read
The Embracer logo on a stylised background
Logo via Embracer

Embracer has reaffirmed its unrelenting commitment to "maximizing shareholder value" after laying off almost 1,400 workers in six months.

The company provided an update on its sweeping restructuring program in its fiscal report for the third quarter ended December 31, 2023, and revealed it laid off another 483 employees during the last quarter.

That means the Swedish conglomerate has made precisely 1,387 layoffs throughout Q2 (904 job cuts) and Q3 (485 job cuts), equating to 8 percent of its total headcount.

Although the company said the restructuring program is making "good progress," it feels it's unlikely to achieve its target of bringing net debt below SEK 8 billion ($761.6 million) by the end of the current fiscal year.

To boost its chances of hitting that goal, Embracer intends to pursue "certain divestment processes" that could "significantly reduce net debt." That means studio sales could be on the horizon, with Embracer claiming some negotiations are reaching "mature stages."

Discussing those job cuts and potential divestments, Embracer reassured onlookers that its "overruling principle is to always maximize shareholder value in any given situation."

It added that "certain companies might initiate restructuring before any divestment is announced," so it sounds like studios under the Embracer umbrella might be told to downsize before being sold off.

Glancing briefly at the company's financials, Embracer generated record Q3 net sales of SEK 12.1 billion ($1.15 billion), a year-on-year increase of 4 percent, and said net income (adjusted EBIT) totaled SEK 2.2 billion ($209.4 million).

Embracer CEO claims restructuring program is creating a "strong foundation for the future"

Embracer Group spent years splurging on huge mergers and acquisitions to become one of the biggest players in the game industry. 

The company owns major studios and publishers like Gearbox Entertainment, Freemode, Eidos Montreal, THQ Nordic, and Coffee Stain, but in June 2023 said it needed to transition out of its "current heavy-investment-mode" to become a "highly cash-flow generative business." 

That meant implementing a sweeping restructuring plan that has resulted in mass layoffs, studio closures, downsizing, and game cancellations. Now, almost nine months later, Embracer CEO Lars Wingefors claims the program is creating a "leaner, stronger" company.

"With the actions that we are now taking, we are creating a strong foundation for the future, with an improved financial profile, and a more streamlined structure, while leveraging the potential of our diversified portfolio," he said.

"We have great assets and IPs and we aim to demonstrate the earnings power of those assets over time. I would like to send my thanks to all our shareholders, employees and customers for contributing to the continued prosperity and success of Embracer Group."

Wingefors indicated Embracer will be more "selective" about how it does business moving forward to maximize its return on investment (ROI), and explained the company has shuttered many studios whose projects weren't doubling or tripling Embracer's investment.

"Our concrete restructuring actions-to-date are also expected to have a positive effect on our return on investment. As of Q3, we have a weighted average ROI of around 2.2x across all our historical game releases," added Wingefors.

"For the games from studios that we have now closed down, combined with third-party publishing games where we have no ownership in the development studio, the ROI is around 1.0x. Meanwhile, for all other games, the ROI is around 3.2x. While we will still do third-party publishing in the future, we will be considerably more selective.

"Our future games portfolio will be more focused around established, owned IPs and studios which we are confident will generate better predictability as well as increased ROI and profitability going forward."

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About the Author(s)

Chris Kerr

News Editor, GameDeveloper.com

Game Developer news editor Chris Kerr is an award-winning journalist and reporter with over a decade of experience in the game industry. His byline has appeared in notable print and digital publications including Edge, Stuff, Wireframe, International Business Times, and PocketGamer.biz. Throughout his career, Chris has covered major industry events including GDC, PAX Australia, Gamescom, Paris Games Week, and Develop Brighton. He has featured on the judging panel at The Develop Star Awards on multiple occasions and appeared on BBC Radio 5 Live to discuss breaking news.

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