Embracer: Human cost of restructure is "significant" but "necessary"

23.11.2023 - 09:49 / gamesindustry.biz / Phil Rogers

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To say it's been a rough year for the games industry's workforce is putting it mildly; thousands of jobs have been lost as companies restructure and downsize following rapid growth during the onset of the pandemic.

Perhaps this is most prominently demonstrated by the ongoing restructure of Embracer Group, where expansion was not limited to the last few years. Since 2017, the company has acquired almost 90 businesses, ranging from smaller developers like Zen Studios, to AAA studios such as Gearbox and Crystal Dynamics, to non-games firms like tabletop leader Asmodee, comics publisher Dark Horse Media, and even Lord of the Rings owner Middle-Earth Enterprises.

The industry has been watching Embracer carefully, waiting to see if its Jenga tower of M&A purchases will eventually topple – and that moment seemed to arrive earlier this year after the group announced a deal expected to be worth at least $2 billion had collapsed due to the last-minute withdrawal of its unknown partner.

The restructuring program, along with plans to reduce the company's net debt of $1.5 billion, began in June and Embracer gave its first significant progress update alongside its financial results last week. That debt had been reduced to $1.4 billion, with the group saying it was on track to bring it down to $757 million by the end of the fiscal year in March 2024.

The human cost of this reduction has been steep. 904 people were laid off between July 1 and September 30, with more dismissed since due to redundancies at three more of its studios across October and November. And there's more to come.

In the wake of the results, we speak with Embracer's Phil Rogers, interim chief strategy officer and CEO of the operating group that includes Crystal Dynamics and the other Western studios previously owned by Square Enix, where Rogers worked until last year's acquisition.

Rogers points to the status of the overall restructure, reiterating the financial reports' perspective that Embracer is "making good progress."

"I think these sort of reporting dates are good times to stand up and sort of say, you know, how do we feel we're doing against it? We feel good," he tells GamesIndustry.biz. "We feel like we're on track against our targets that we've set out. So we feel very positive about that.

"We're in line with our targets on how we bring the debt down, with [operating expenses] savings and the targets for our capital expenditure, which is basically our games pipeline. And obviously we're going to readjust that games pipeline down to the run rate we talk about is SEK 5 billion ($478.4 million) going into next fiscal year. Those adjustments are very, very