Embracer have laid off 8% of their global workforce since their “restructuring” began

Embracer have released their interim financial results for Q3, October-December 2023, in which they share details of the conglomerate’s on-going efforts to “restructure” and reduce their massive debts, to the tune of hundreds of layoffs over the past year.

Amid the talk of revenues, profits and losses, we learn that Embracer have laid off 8% of their global workforce since announcing their restructuring program in June 2023. According to the report, Embracer’s total headcount has fallen from 16,243 in the period October-December 2022 to 15,218 in the period October-December 2023. The number of Embracer studio game projects in development, meanwhile, has fallen from 224 to 179.

In comments following the figures, Embracer’s CEO Lars Wingefors described Q3, October-December 2023 as “a stable quarter” and commented that Embracer are “tracking well” towards targets laid out in their June 2023 restructuring program announcement. Embracer are now approaching “the final stretch of the program, which is focused on both possible divestments, and consolidation.” In other words, more studio reductions and closures might be in the offing.

“As part of the restructuring program, Embracer still has a few larger structured divestment processes ongoing that could strengthen our balance sheet and further reduce [capital expenditure],” Wingefors noted. “Processes are in mature stages.”

It’s possible that “restructuring” measures might happen before they’re announced. “Certain companies might initiate restructuring before any divestment is announced,” the CEO continued. “Our overruling principle is to always maximize shareholder value in any given situation.” Embracer are “unlikely to reach the restructuring program target of below SEK 8 billion in net debt by March 31,” Wingefors added; in other words, it will spill over into Embracer’s next fiscal year. A little more specifically, Wingefors said that “while we have seen solid delivery across three out of our four segments throughout the year, there is room for further improvements of our financial performance, primarily within PC/Console.”

Wingefors added that “the reductions are managed locally on the operative group level with a focus on informing affected employees first, and then carried out with compassion, respect and integrity towards those affected.” I’m not sure the Free Radical and New World Interactive staff who got laid off in the run-up to Christmas last year would agree.

Embracer’s financial woes follow a spree of studio and license acquisitions over the course of the pandemic. In the earning results, Wingefors also offered thoughts on how Embracer will be more “selective” with their investments in future. Apparently, all the layoffs and closures have been really educational.

“Importantly, the structure and content of an updated group-wide capital allocation process is in production,” he said. “Knowledge gained through the cross-functional and cross-operative group restructuring project forms the base. Business leaders from different areas of the organization are contributing with their vast experience and knowledge, which coupled with a clear and simple game investment greenlighting model lays the foundation for increased future cash flow return on investment.

“While we will still do third-party publishing in the future, we will be considerably more selective,” Wingefors went on. “Our future games portfolio will be more focused around established, owned IPs and studios which we are confident will generate better predictability as well as increased [return on investment] and profitability going forward.”

As you are weary of hearing, Embracer’s layoffs and closures form part of a wider pattern of games industry mass layoffs across 2023 and 2024. According to one unofficial tracker of layoffs that have been made public, the industry has chopped around 6000 jobs in 2024 so far.