Embracer Group Restructuring Plans Will Lead To Layoffs And Game Cancellations

Late last month, Embracer Group, the massive video game holding company that owns Gearbox Entertainment and stock prices plummet by as much as 40% and its earning forecast take a dive when a 2-billion-dollar partnership deal fell through.

In response, the company has announced a major restructuring and consolidation which they confirmed will require them to lay off an unknown number of their roughly 17,000-strong workforce. The restructuring will be overseen by the company’s new interim Chief Operating Officer Matthew Karch and its new interim Chief Strategy Officer Phil Rogers.

Embracer CEO described the move as a transformative step to shift the company’s focus from heavy investments to generating high cash flows. The ultimate goal is to prioritize optimization and growth based on internal cashflows and significantly reduce net debt.

“The actions will include, but not be limited to, closing or divestments of some studios and the termination or pausing of some ongoing game development projects,” reads the press release. “It will also include decreased spending on non-development costs such as overhead and other operating expenses. We will reduce third party publishing and put greater focus on internal IP and increase external funding of large-budget games.”

With 130 studios under its umbrella, including Cryptic, which oversees several successful MMORPGs, it is unclear at this time how these specific studios will be affected. The company also has roughly 200 games in development which will likely also be affected by the restructuring, although it’s still too early to say how.

“The potential impact from the program of future game releases will almost entirely be around unannounced projects. All announced significant releases will still be released as planned,” assured the company.

Cryptic’s MMOs seem to be doing well so they’ll probably be less affected by the layoffs. Embracer also recently partnered with Amazon on a new Lord of the Rings MMO which will likely also come out relatively unscathed. We’ll be sure to let you know if Embracer says otherwise.