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In New Cutting Cost Plan, Embracer Group Looks To Cancel Projects And Close Studios

One of the largest companies in the industry Embracer Group is starting to feel the pressure of its mass acquisition campaign. For years, the firm has continued to hand out deals to join the growing conglomerate which includes THQ Nordic, Plaion, Gearbox, Saber Interactive, and Dark Horse Comics. Its largest arrangement yet has to be the $300 million acquisition from Square Enix for Crystal Dynamics & Eidos-Montreal with its bundled IPs.

Of course, the firm has promised that plans for new games and even remakes/reboots are part of its planbook later on from the deal. However, uncertainty to maintain the overhead costs is putting Embracer Group into a tight situation. Previously, the conglomerate revealed a new restructuring plan which would affect staffing in its jurisdiction.

Now according to the latest financial earnings report, Embracer Group is now searching for more avenues to alleviate the stress of the situation. And that includes canceling ongoing projects and even studios being shuttered as well.

We are making good progress on the restructuring program. We are tracking towards the targets, including reducing capex by at least SEK 2.9 billion and overhead costs by at least SEK 0.8 billion by FY 2024/25, as well as reaching a financial net debt below SEK 8 billion by the end of this financial year.

Initial actions have been taken on closure and other initiatives to reduce the number of projects and studios and overhead savings initiatives have been defined in co-ordination with the Operative Groups. In addition, we have set a high priority on increasing external funding of certain larger projects and potential divestment opportunities.

With a series of initial actions now taken, we expect further savings after the completion of a global review of the existing pipeline, which is currently ongoing. This review will guide our capital allocation to optimize return on investment.

“The purpose of the program is to operate with efficiency across the group and to reduce business risk in the short-term. This, in turn, will enable us to continue to grow and to deliver high-quality products in the longterm. A painful consequence of the program is that a number of talented and passionate team members have left us, or will be leaving us before the end of the financial year.

The document continues reading: “We understand and respect that this is a challenging time for everyone impacted. Where we can, we will try to provide opportunities for our colleagues to transition onto other projects. Throughout the program, we are working to ensure that everyone affected receives information first.”

One of Embracer Group/Plaion’s most-anticipated projects is an upcoming Timesplitters title. Previously, developer Free Radical Design was welcomed to then-Deep Silver and it was later confirmed a new entry in the series is underway. You can read the full report by heading here.

What is your response to the potential killed IPs/studios under Embracer Group?

Source: Embracer Group

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