As part of its previously disclosed restructuring initiative, Embracer Group, one of the largest video game and entertainment firms in the world, confirmed that it has canceled 29 unexpected titles and laid off roughly 1,400 workers in the last six months. According to VGC, Embracer reported that from July to December, the number of gaming projects it was working on decreased from 153 to 124. An 8% reduction in headcount, or 1,387 positions, was made. 264 game developers work at outside studios, 871 game developers work at internal studios, and 252 internal employees work on game projects but are not developers.
By the end of December 2023, Embracer had 132 internal gaming studios, down from 139. Embracer reported that it is now collaborating with 50 external studios, down from 59. Embracer’s reorganization strategy is almost finished, according to CEO Lars Wingefors, although he cautioned that there are still “a few larger structure divestment processes ongoing.” Embracer said,
“In a group-wide effort, our companies and studios have had to make difficult decisions, particularly on having to part ways with team members. In total, we have reduced our global headcount by 8% of the workforce since the start of the program.”
Wingefors continued, stating that Embracer’s goal as a publicly listed business is to “always maximize shareholder value in any given situation,” even if it means postponing releases, shutting down production facilities, and firing employees. Embracer made these dramatic concessions partly as a result of a significant transaction falling through at the last minute, which turned out to be an agreement with Savvy Games in Saudi Arabia. When individuals questioned Saudi Arabia’s stance on human rights, Embracer earlier accepted $1 billion from the country and justified their choice.
Embracer’s Lord of the Rings Investment Pays Off
Among the most well-known actions have been the purported cancelation of a Deus Ex game and the shutdown of Volition, the Saints Row studio, and Free Radical, the company that developed TimeSplitters. Additionally, Embracer has eliminated positions at a number of companies, including Beamdog, Gearbox, and Crystal Dynamics. As many of you may remember, Embracer went on a spending binge before this, to the point that it became somewhat of a meme.
The video game business is not just hurting Embracer and its studios; Microsoft recently laid off 1,900 employees from its gaming division, and Riot, the company behind League of Legends, laid off hundreds more. These layoffs represent just a small portion of the gaming industry’s 2024 layoffs.
During the October–December quarter, Embracer’s video game division turned a profit. The company attributed its financial gain to Lord of the Rings license arrangements that performed better than anticipated. Embracer specifically targeted the Lord of the Rings video game, Magic: The Gathering, the Lord of the Rings set, and the Lord of the Rings movie box office. The upcoming Lord of the Rings movie, War of the Rohirrim, will be released in theaters in December. The Lord of the Rings rights were purchased by Embracer in 2023 for $395 million, a far lower amount than some industry observers had anticipated they might get.
