Layoffs have been one of the defining events of the games industry this year, with thousands of jobs being cut across dozens of companies, all attempting to slash costs as the rapid economic growth of the pandemic years comes screeching to a halt. No company is more emblematic of both these extremes than Embracer Group. In the last few years, Embracer has embarked upon a frenzied spending spree, snapping up studios like Gearbox, Crystal Dynamics Eidos Montreal, and many more, all apparently to stack the decks in a deal with an unknown partner worth at least $2 billion.
But that deal fell through, saddling Embracer with $1.5 billion in debt. Immediately, Embracer began a ruthless effort to start climbing out of the red. The company laid off 904 people between July and the end of September, which included closing Volition, the developer of Saints Row. An unspecified number have also been laid off since, and those won't be the last either.
In the midst of all this, Embracer's interim chief strategy officer Phil Rogers has spoken to Gamesindustry.biz about the company's attempts to reduce its debt, and the resulting restructuring program. Safe to say, it makes for interesting reading.
On the debt itself, which Embracer has reduced from $1.5bn to $1.4bn, Rogers says Embracer feels "like we're on track against our targets that we've set out." He specifies the plan is to "readjust that games pipeline down to the run rate" of "SEK 5 billion ($478.4million)" going into next fiscal year. In addition to reducing the debt, Rogers says Embracer is asking itself broader questions about how to "transform ourselves into a leaner, stronger, more focused and—critically—cash self-sufficient company".
As for the people who have lost their jobs and livelihoods as a consequence of all this, Rogers says that it's been "an agonising process", but that "we know it's a necessary thing for us to hit our new and needed goals. So overall, good progress and we push on," adding that restructuring is "how we win."
To say the least, it's eyebrow-raising seeing someone refer to laying off hundreds of people as "good progress". But the interview also provides some insight into the inner workings of Embracer. The group currently has over 200 games in development across the studios that it owns, and it recently conducted a review to assess which of these projects should continue, and which might feasibly be cut.
To do this Rogers says they look at "entertainment values". Foremost among these is that the game has to be "fun to play", which isn't exactly the most incisive observation. But Rogers also states that he's "never a big fan of the 'fewer, bigger, better' approach" preferring to spread the risk across more smaller titles. This might seem odd coming from a company that spent six years buying studios that make exactly those kinds of games. But it's worth noting Rogers only joined Embracer last year, and his prior experience is in making smaller games like Lara Croft and the Temple of Osiris. That may make his perspective more valuable at a company like Embracer, certainly more than simply asking, "Is game gud?"
Meanwhile, Embracer has also been reassessing its broader plan of rapidly acquiring studios and IPs, which it apparently did to establish itself at the forefront of the industry. "We've taken on a lot, but it's in that pursuit to change and evolve and grow, and now we're just in that different climate." This reassessment is ongoing. When asked by gamesindustry.biz what 'winning' looks like to Embracer, Rogers says "These are all questions we are going to come back to and address in full. We are very focussed right now on the restructuring."
You can read the full interview here.
