In a sign that its years-long buying spree might be over, Embracer announces a massive restructuring programme.
There’s been an abrupt change of fortunes at Embracer. The company, which has spent the past few years vacuuming up dozens of firms like Crystal Dynamics, Asmodee, Dark Horse and Middle-earth Enterprises, has just announced a huge restructuring programme that will see projects cancelled and costs reduced across the board.
“Today we announce a comprehensive restructuring program that will enable us to realize untapped potential in Embracer Group and better optimize the use of our resources,” said Embracer CEO and co-founder Lars Wingefors in a statement. “Across the group, we are now initiating multiple actions to strengthen our cash flow generation and leverage our portfolio of IPs to become a stronger company and setting out on a stable future to build even greater games to the benefit of gamers and fans across the globe.”
The long list of cost-cutting measures includes the closure of studios and the cancellation of unannounced projects with “low projected returns”. The company has yet to name which studios will be affected.
There will also be a “consolidation of companies and businesses” and a reduction in investment into external development, with more focus on internal projects. In addition, the company will seek “increased external funding of internally developed, large-budget games”.
Embracer recently announced a deal with Amazon Games to produce a Lord of the Rings MMO game.
Of note, Embracer says there will be a “renewed focus on the Group’s main business areas”. Embracer has bought companies in various different fields over the years, including board game maker Asmodee and comics company Dark Horse, so this raises the question of whether Embracer will seek to divest itself of those firms to focus on its core business of making games. Time will tell.
Matthew Karch, head of Saber Interactive, and Phil Rogers, head of Crystal Dynamics, have been appointed to oversee the restructuring programme as interim chief operating officer and interim chief strategy officer, respectively. The aim is to reduce the company’s debt to below SEK 10 billion by the end of the current financial year. At the end of March, Embracer’s debt stood at over SEK 15.5 billion.
The restructuring programme comes in the wake of Embracer’s reveal in May that a huge deal worth $2 billion fell through the night before it was due to be announced. Embracer’s share price has plummeted since the news was revealed, going from more than SEK 41 the night before the announcement to only around SEK 25 in the past few days.
