Between April and December 2023, the Embracer Group's total workforce was reduced by 1,383 people, from 16,601 to 15,218, representing 8% of the total workforce. Counting only developers, the workforce was reduced by 1,205 people, from 11,426 to 10,221. Since last spring, 16 studios have been closed or sold and 29 unannounced games have been canceled, notably through Plaion, THQ Nordic And Gearbox. 179 games are still in development. Please note, this data stops at December 31, 2023. However, Embracer is not finished with its economic measures and workforce reductions were still implemented at the beginning of 2024. Let us cite Eidos Montréal, which lost 97 people at the end January as part of the cancellation of a Deus Ex game in preparation for two years, according to information from Jason Schreier. And it's not over, because the restructuring now plans to extend to the next fiscal year, Embracer having not managed to sufficiently reduce its debt in time.
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Between priority for shareholders and compassion for licensees
“As part of the restructuring program, Embracer still has some larger structured divestment processes that could strengthen our balance sheet and further reduce capital expenditures. The processes are at an advanced stage. Some companies could begin restructuring before any divestment is announced. Our fundamental principle is to always maximize shareholder value, whatever the situation. We are unlikely to achieve the restructuring program's target of net debt below SEK 8 billion (€709 million) by March 31. Certain divestments could significantly reduce net debt after March 31, 2024“, explains CEO Lars Wingefors.
“As a collective effort, our companies and studios have had to make difficult decisions, including parting ways with team members. In total, we have reduced our global workforce by 8% since the start of the program. Reductions are managed locally at the operational group level, with an emphasis on informing affected employees first and then showing compassion, respect and integrity for those affected.“
“Although we will continue to publish games for third parties in the future, we will be much more selective. Our future games portfolio will be more focused on established, owned intellectual properties and studios, which we believe will allow for greater predictability and increased ROI and profitability in the future.“
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Billionaire turnover but losses
Regarding the results for the last quarter of 2023, video games (consoles, PC, mobile) represent a little less than half of Embracer's total turnover, namely 445 million euros out of 1 billion euros. The rest is shared between the board games of its subsidiary Asmodee (392 million euros) and the entertainment & services segment which is mainly represented by Dark Horse and Middle-earth Enterprises (230 million euros). In the console and PC segment alone, Embracer still held 263 licenses and 9,755 employees across 96 studios as of December 31, 2023.
“The performance of our strongest franchises on consoles and PC is stable. Generally speaking, we are seeing consumers being more selective and investment levels in platform content being reduced. Hot Wheels Unleashed 2: Turbocharged was well received by critics and gamers, but performed slightly below management's expectations, likely in part due to a crowded release window. Risk of Rain Returns exceeded management's expectations, while Arizona Sunshine slightly underperformed. The Wild Card Football game was also launched during the quarter, but its revenue contribution was limited and its performance was below management's expectations“, we can read. In the back-catalogue, the top 10 contributors at the moment are Remnant 2, Dead Island 2, Chivalry 2, Deep Rock Galactic, Payday 3, Goat Simulator 3, Star Trek Online, Wreckfest, Risk of Rain 2 and SnowRunner.
Notable releases in the first quarter of 2024 (and therefore the final fiscal quarter for Embracer) include Alone in the Dark, Outcast: A New Beginning, South Park: Snow Day, Expeditions: A MudRunner Game, Tomb Raider I-III Remastered, Deep Rock Galactic: Survivor and Lightyear Frontier. Long-awaited, Homeworld 3 (May 2024) and Warhammer 40,000: Space Marine 2 (second half of 2024) have slipped to the next fiscal year.