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Last week, the Embracer Group announced that it was finished with its internal restructuring program. These cost-cutting measures resulted in the loss of about 1,400 jobs, the closure of at least three and as many as seven studios and the cancellation of about 30 games. It sold Gearbox Entertainment and Saber Interactive to Take-Two and Beacon Interactive, respectively, at a loss. How did this happen, and what remains for the company and the industry now?
Embracer Group was once the poster child for the games industry’s pandemic-era spendthrift ways. It either acquired or invested in more companies than most in 2021-2022. These included, in no particular order, Gearbox Software, Crystal Dynamics and Eidos Montreal, Middle-Earth Enterprises, Perfect World Entertainment, Aspyr, Beamdog, 3D Realms, Tripwire Interactive and Dark Horse Media, among others.
Then, in June 2023, Embracer CEO Lars Wingefors published an open letter about Embracer’s restructuring program, which would “transform us from our current heavy-investment-mode to a highly cash-flow generative business.” This program, which has now ended, resulted in the closure of Volition, Campfire Cabal and Free Radical. While it’s unclear which games were canceled as a result of this restructuring, Bloomberg reports that one of them was a new Deus Ex title.
Post-restructuring Embracer
Matthew Karch, Saber’s CEO, said in an interview with Gamesindustry.biz this week that he felt the blame leveled at Embracer Group was unfair. He cited several factors that led to Embracer’s downfall, including the failure of its planned $2 billion investment (allegedly with Savvy Gaming Group), the underperformance of several key titles such as Saints Row and the $3.1 billion purchase of Asmodee.
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“The process that we’ve had to go through to terminate studios has absolutely been … it’s killed us … but I would say Embracer tried harder than anybody to save as many jobs as it could,” said Karch. “We were getting congratulated left and right at GDC about leaving the evil Embracer. But these are the nicest people you’ve ever met.”
Following the restructure, Embracer still has several games in the work, including a new Tomb Raider game and a Lord of the Rings MMO. The Knights of the Old Republic remake has gone with Saber Interactive. Most of Gearbox’s projects have gone with that company, with the exception of the upcoming Hyper Light Breaker.