Just three weeks ago, Embracer Group – the megacorp that owns gobs of properties, including Gearbox, which governs Cryptic and a bunch of MMORPGs we care about – admitted that a vital partnership worth $2B US had fallen through for reasons unrelated to Embracer itself, causing its earnings forecast and stock value to plummet over cashflow concerns in spite of the fact that the company still expected growth over the next two years. And today, the company has announced a C-suite shuffle and major restructure and consolidation of the company that will ultimately result in an unknown number of layoffs across the 17K-person workforce.
CEO Lars Wingefors characterizes this as a program to “transform [the company] from [its] current heavy-investment-mode to a highly cash-flow generative business,” “fundamentally change [its] prioritization of growth with raised capital towards optimization and growth based on our own cashflows,” and “lower [its] net debt significantly.”
“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. 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. […] 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.”
It’s worth noting here that Embracer has – had? – 130 studios, and the Cryptic MMOs were apparently doing well, so there’s no specific reason to think they’ll be impacted yet. Likewise, Embracer’s studios apparently had 200 games in development, so it’s not clear how many exactly will be axed and what will happen to those teams. Finally, Embracer is currently engaged with Amazon Games in a partnership over the new Lord of the Rings MMO; again, we have no explicit reason to think it’s affected. We’ll update if we learn otherwise.