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Embracer Group annonce massive restructuring to reduce costs. Plan include undisclosed amount of layoffs, studios closure, and projects cancellation.

Maxime

Maxime

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Oct 27, 2017
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embracer.com

Open letter by Embracer Group CEO on restructuring program - Embracer Group

Everyone, This morning we announced a restructuring program across the Embracer Group that will make us a leaner, stronger and a more focused, self-sufficient company. I want to share some background and context to this decision – and what it means for us going forward. During the past years...
embracer.com embracer.com
Everyone,

This morning we announced a restructuring program across the Embracer Group that will make us a leaner, stronger and a more focused, self-sufficient company. I want to share some background and context to this decision – and what it means for us going forward.
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The program is divided into different phases until March 2024 with focus on cost savings, capital allocation, efficiency and consolidation. The initial phase, which is initiated immediately, mainly targets cost savings across the group. The next phase, which also starts immediately, will require further analysis to determine specific actions. The last phase will focus on internal consolidation, further resource utilization and more synergies across the Group. The actions for each affected company will be implemented by the new interim COO and CSO in collaboration with each operative group CEO and management teams. Embracer currently engages close to 17,000 people and while that number will be lower by the end of the year, it is too early to give an exact forecast on this.
It is painful to see talented team members leave. Our people are what make up the very fabric of Embracer. I understand and respect that many of you will be worried about your own position and I don't have all the answers to all questions. I want to be clear that the decisions about this program were not taken lightly.
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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.
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Actions will cover, but are not limited to:
  • Matthew Karch appointed interim Chief Operating Officer, and Phil Rogers appointed interim Chief Strategy Officer, to co-lead the program planning and implementation
  • Reduction of general overhead, corporate, publishing and SG&A costs
  • The closing of studios and termination of projects, that have not yet been announced and with low projected returns
  • Creation of a more comprehensive, centralized process for game investment and progress review, while maintaining creative freedom
  • Consolidation of companies and businesses, including review of operative group structures
  • Reduction of investments into external development with greater focus on internal development based on owned or controlled IP
  • Increased external funding of internally developed, large-budget games
  • Renewed focus on the Group's main business areas
  • Implementing a centralized and standardized, more data-driven and precise approach to game forecasting
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Also, remember a few weeks ago: https://www.gamespot.com/articles/e...lion-deal-amid-challenging-year/1100-6514494/
 
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Arn

Arn

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Oct 28, 2017
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This was inevitable when they hoovered up so many studios. Really sad and a reminder that consolidation isn't always good for the people that make games.
 
Carbon

Carbon

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Oct 27, 2017
11,076
Gobble everything up.
Lay everyone off.
Capitalism!
 
Ariakon44

Ariakon44

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Nov 17, 2020
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This sucks but it doesn't feel like a surprise. Their expansion plan has felt unsustainable for a long time. This is yet another reason I am firmly against consolidation, no one company should own so many studios and have the fate of so many employees in their hands
 
pswii60

pswii60

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Oct 27, 2017
26,884
The Milky Way
I always thought this was inevitable. At some point the bubble had to burst. Sad for the teams affected.

It's one thing to keep bringing on more and more investors to fund your acquisitions, but at some point those existing investors are going to demand returns, and new investors are going to be more difficult to find.
 
Temascos

Temascos

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Oct 27, 2017
12,705
All those studio acquisitions coming back to haunt them, they tried to get too much too quickly without a long term plan in mind for each studio. They should have done partnerships first to see how things worked out in the short/medium term before snatching up everything they could.
 
jaekeem

jaekeem

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Oct 27, 2017
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Their whole strategy unfortunately feels like another ZIRP phenomenon. I guess their plan was to get a ton of contract work or sign some huge license deal with another major player like Sony or Microsoft
 
T0kenAussie

T0kenAussie

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Jan 15, 2020
5,284
The bubble was always going to burst but I am surprised they didn't try to do a catalogue play for a subscription service support

And it's not so much a bubble as they borrowed a load of money that eventually needed to be paid back
 
Gavalanche

Gavalanche

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Oct 21, 2021
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Who would have thought that this company that expanded massively over a short period of time is suddenly needing to downsize and consolidate.
 
plow

plow

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Oct 28, 2017
4,685
Have a feeling this will also in some way concern the team that is doing the Gothic Remake. It's been 4 years since the playable Teaser and there is not much shown, sadly... Hopefully everybody will land safe.
 
OfficerRob

OfficerRob

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Oct 25, 2017
26,190
The Embracer bubble was always going to burst, shame that so many are going to lose their jobs as a result.
 
SoneaB

SoneaB

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Oct 18, 2020
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UK
I want to know who started this mantra of trimming the fat/becoming leaner/firing all the people that do the work that makes you money to make a company 'stronger' came from. Then I want to kick them in the nuts.
 
Adulfzen

Adulfzen

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Oct 29, 2017
3,655
Kinda weird how history seems to repeat itself and capitalism is a deeply flawed system, but no surely it'll just be an issue with Embracer and won't magically affect other companies going on acquisition sprees.
 
vixolus

vixolus

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Sep 22, 2020
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nikasun :D said:
The biggest reason for this is the cancelled 2 billion deal, right?
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Yea but i think mostly because they reported that as kinda like actual money in their finances rather than "tbd" as it was only a letter of intent basically. When it fell apart it crumbled their stock and other things
 
Benzychenz

Benzychenz

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Nov 1, 2017
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Did they forget when they were buying those thousand studios that they weren't just a one off payment and they had to keep paying their new employees wages?
 
Bishop89

Bishop89

What Are Ya' Selling?
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Oct 25, 2017
35,902
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it was inevitable. Feel sorry for the staff.

Also
7p61es.jpg
 
Chase1ne

Chase1ne

Member
Oct 12, 2020
50
Never saw that coming... who'd have thought swallowing up so many devs, and studios and having massive operating costs would have been unsustainable. Hopefully the people affected find their feet quickly.
 
Mikch85

Mikch85

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May 12, 2018
3,690
They bought IPs, they don't give a fuck about people and studios. I wish them an Infogrames and for these studios to get a better home.
 
ListeningGarden

ListeningGarden

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Oct 25, 2017
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no-shit-total-recall.gif


heart goes out to the dev teams who got pulled into this mess and everyone who is going to be looking for work because we just let big money shuffle companies and talents around
 
dudu0609

dudu0609

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Oct 27, 2017
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I just hope CD and Eidos will be not affected.
Of course, also for others.
 
VeePs

VeePs

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Oct 25, 2017
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Dirt McGirt said:
MS got rid of 10k people just 3 months ago.
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Most of the industry had layoffs.

Companies hired heavily during the pandemic, and are now laying folks off. Doesn't make it right or wrong.

But Microsoft buying Activision Blizzard is not going to lead to massive firings at Activision Blizzard unless CoD massively bombs - which was what the prior discussion was about. And given the amount of resources each CoD games require, it might make more sense to retool a studio who doesn't hit sale expectations into a CoD support studio or Blizzard Support Studio - which is what happened to Toys for Bob and Vicarious Visions.
 
T0kenAussie

T0kenAussie

Banned
Jan 15, 2020
5,284
Dirt McGirt said:
MS got rid of 10k people just 3 months ago.
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After hiring like 220k during the pandemic years

The money that went into tech during the pandemic has dried up and this was bound to happen in ms case

But the embracer one is more they got a heap of seed funding to grow and make a business model and failed to do so
 
modiz

modiz

Member
Oct 8, 2018
18,187
Like ive said in the previous thread about their 2 Billion deal falling through, their bubble is rupturing. A publisher of a hundred studios, big or small, makes no sense.
 
nikasun :D

nikasun :D

Member
Oct 30, 2017
3,187
vixolus said:
Yea but i think mostly because they reported that as kinda like actual money in their finances rather than "tbd" as it was only a letter of intent basically. When it fell apart it crumbled their stock and other things
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Yeah, but are the "it was obvious" posts because they just saw the expansion and did not know about the 2b deal? Because after the 2b deal was cancelled, it was obvious, but before that, I think there was a good chance that the expansion would work.
 
Fat4all

Fat4all

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Oct 25, 2017
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tried to expand too much too fast, and the employees are the ones who will suffer
 
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