2023 continues to be a tumultuous year for Embracer Group. After buying studios left and right from 2021 until the start of 2023, their rapid growth plan came to a screeching halt after a game deal with a Saudi-backed game development firm, Savvy Games, valued at $2 billion, fell apart. The failure of the deal left Embracer to face a $1.5 billion debt crisis, which they responded to by laying off approximately 900 employees over the past three months. For context, since June, here's what Embracer's restructuring has entailed:

• The complete closure of Volition Games (Impacting ~230 employees)
• The complete closure of Campfire Cabal
• Laying off 26 employees at Beamdog weeks after the studio released Mythforce
• Laying off 18 employees at Cryptic Studios (~14% of the workforce maintain Star Trek Online and Neverwinter)
• Laying off 10 employees at Crystal Dynamics
• Laying off 35 employees at Digic
• Laying off 32 employees at Zen Studios and Pinball FX team
• Undisclosed number of layoffs at Gearbox

However, if a recent GamesIndustry.biz interview with Embracer's CEO of Crystal Dynamics and Eidos and Interim Chief Strategy Officer, Phil Rogers is to be believed, then more studio closures, game cancellations, and layoffs are coming in the future. In the interview Rogers described the company's restructuring process as an "agonizing process" but also reiterated "we know it's a necessary thing for us to hit our new and needed goals. So overall, good progress and we push on." More worryingly, when asked if he expected more cuts and closures he stated:

We report to the quarter, and we're mindful that the operative groups are making changes. Some of that makes the news, and some of it doesn't. We don't comment on that, but we will report on it as we get to those quarterly measurement dates, so the next time will be in February.

We have announced that we expect more restructuring and some more cancellations, potentially some more closures or management buyouts. That's the balance we've got to take internally... Because, as we say, the people cost is significant, and it's significant to us and we have to handle that always with that respect and integrity.

We're in line with our targets on how we bring the debt down, with [operating expenses] savings and the targets for our capital expenditure, which is basically our games pipeline. And obviously we're going to readjust that games pipeline down to the run rate we talk about is SEK 5 billion ($478.4 million) going into next fiscal year. Those adjustments are very, very clear and well understood targets for us. So I think we're making good progress against that.

In terms of those "management buyouts," it has already been reported that Embracer might be in the process of shopping Gearbox, a studio they bought for $1.3 billion. Likewise, Game Informer reported that Embracer is reportedly nearing a sale of or closure of Free Radical Design and the reformed TimeSplitters team.

All of these efforts have assisted Embracer in reducing its looming debt from $1.5 billion to $1.4 billion. Nonetheless, the company remains confident that it can meet its target to reduce this amount to a $750 million net debt before the end of the fiscal year. As absurd as that might sound, Variety reported on November 15th, 2023 that Embracer saw a jump in net sales by 13% during Q2 2023. This was thanks to Middle-Earth Enterprises' Q2 2023 sales jumping by 76% or ~$130 million even though Embracer's console and PC games investments saw a 5% decline. Embracer's investments in tabletop and board gaming through its ownership of Asmodee also appears to be another saving grace as it saw overalls sales increase by 25% during Q2 2023.

UPDATE (11/29/2023)

So... the news coming out related to Embracer just keeps getting worse. Here's a summary of what has happened since I first published this thread:

• Egil Strunke, Embracer's COO and number-two person, has resigned and immediately started a new game company.
• Layoffs totaling 50 personnel are now confirmed for Fishlabs.
• Embracer confirmed that the resurrected Timesplitters team and studio faces closure before Christmas.
• PC Gamer is reporting Embracer's CEO and entire Board of Directors 'discharged' itself from all liability for the 2022/2023 financial year in September.

Direct Quote:

Embracer CEO Lars Wingefors and the company's board of directors were formally "discharged from liability for the financial year 2022/2023" during the company's annual general meeting in September.

Looking at the math it seems like Embracer would be in okay shape if it just hadn't bought Gearbox. And wouldn't have to close studios either!

I'd like to note that even if Embracer survives this massive crisis it was entirely of their own making and caused a lot of damages to their investors, a lot of well respected game studios, and most importantly their employees.

Imagine losing your job because some numbskull bet everything on a deal with Saudi Arabia. And yet that numbskull still has his job despite losing enormous amounts of money on obviously risky or stupid ideas.

Laying off people isn't long term beneficial to your company unless you're actually restructuring. Saying "we're going to continue making the same things just with fewer employees" means those things will probably come out worse and do worse in the market. Well managed employees create benefits for the company. That's why they're employed in the first place.

Even if they dig themselves out of this current debt hole I don't understand their core business model. They're a large publisher without core franchises and that has always been inherently unstable. There's a reason that the big publishers who have survived have all gravitated towards a core IP model where Activision relies on COD and Blizzard stuff, EA relies on its sports games, Ubisoft relies on Clancy, Far Cry, and Assassin's Creed, and Square has gone all in on Final Fantasy. Capcom has Street Fighter, Resident Evil, and Monster Hunter, Namco has Tekken and the Fromsoft games etc...

Embracer has Gearbox, which it's trying to unload, Tomb Raider, a series performing so well that Square unloaded it to Embracer, and then what? Mostly a bunch of mid tier stuff. And large mid tier publishers don't survive in the industry. That's part of why people were so excited about the Embracer saga in the first place, because they were bringing that back, and now we find out that there was no cunning plan behind the whole thing and they're predictably scrambling to stay afloat.

While keeping the same captain at the wheel. Perfect.

When people ask, "how rich do you want to be?" my answer is always: rich enough to completely fucking ruin the lives of hundreds of people while suffering no ill effects myself. Fuck a yacht, give me that can-only-fail-upwards money, baby!

I wonder how much of the Middle-Earth Enterprises was due to the best and most profitable Lord of the Rings game released this year: Lord of the Rings: Heroes of Middle-Earth, a mobile gacha game.

VGC is reporting that Embracer laid off 50 or so people from Fishlabs, a German developer that made CHORVS. They also worked on Switch ports for games like Saint’s Row (2022), as well as the Xbox port of Valheim. Yet another mess Embracer created through their stupid actions.

It really is a terrible indictment of this industry that one capital organization could waltz in and wreck up the place so badly. This is the worst year for developers ever, to the point that it has vastly outweighed the quality of what was produced. 2023 should be remembered as a dogshit year for gaming and the origin point for the ripples that will hit 2024 and beyond. At least some places have unionized, but that’s only a small buffer against this ugly, ugly trend.

I think we’ve moved past “the CEO should be fired” and into “the CEO should be fired into the sun”. Total lack of personal accountability and just abysmal leadership skills.

Bonkers, isn't it?

Like after a certain line: you CAN'T go broke. The country's system won't let you.

Yup. It's not just Embracer or the games industry either. It's tons of other industries. The current trends in business seem completely disconnected from reality in an extremely harmful way. What used to be extremely bad risky gambles that would get people fired are now seen as the right way to do business because the people taking these gambles never see the consequences when things go wrong. No matter how badly these people screw up, they don't feel it personally. It's an exception when someone gets fired over it, not the rule.

The worst is the tech industry, where a bunch of the biggest companies essentially gambled on assuming that the obviously temporary growth boom they saw during the pandemic in 2020 would sustain so they massively overhired to the tune of thousands of people each. When the pandemic restrictions eased and things somewhat went back to normal that growth disappeared so those companies ended up firing tens of thousands of people because their gamble failed, their revenue didn't keep growing, and the shareholders demanded blood. Tens of thousands of people's lives were thrown into disarray because of this. Not only that but these same companies pushed hard the last 5+ years for people to get educated in tech-adjacent fields. Now those people just finishing school have to compete for the same jobs with thousands of others who were laid off and have way more experience, so they're struggling too. All of this because some executives stupidly gambled a temporary boom was not going to be temporary.

I am still trying to wrap my head around spending 1.3 billion on Gearbox.

Magic.

They took "Always bet on Duke" a little too literally.

Just look at those savings!

The news about Fishlabs is now confirmed and it sounds like the resurrected Timesplitters team is doomed.

And when it comes to accountability....

@zombiepie: Well at least all these teams they bought and subsequently shuttered were given a fair chance to produce their best work and get it out to market. At least all the money that was spent assembling and purchasing these teams wasn't a complete waste.

I was going to post something about Epic's latest debacle but at this point it's just all depressingly predictable.

@zombiepie: This “discharged from liability” topper makes the entire thing beyond parody at this point. Imagine how stupid you have to be to get fired as a CEO these days. The bar is basically John Riccitiello, and he’s still employed through April of next year (presumably making his full CEO salary).

On this topic, I do plan on posting the final Hottest Mess poll early next week. Unity laid off another 265 people, because these two shitheel corporations just cannot resist a race to the absolute bottom.

Insane. Just... where do all those people land?

Just found out the devs of Insurgency Sandstorm were all fired :(.

At the very least they are a proven and successful team, so hopefully they decide to regroup and maybe stay independent this time.

@cikame: The problem with "decide to regroup" is that someone needs to fund it. You need office space (or at least a strong WFH IT architecture), software licenses, and all the administrative functions like HR/Payroll/vendor management that likely got folded into the main company after they were embraced.

Some teams have managed it, either by finding another host company or scraping together the money to put all that stuff back in place, but it's incredibly disruptive unless those functions were maintained and the company just gets spun back off as independent.

And you'll always lose some members who find new jobs or who can't afford to take a flyer on a new and inherently unstable thing.

I'm not saying you don't know this I'm just saying that the sheer irresponsibility with other people's lives is absolutely enraging.

More or less the Embracer management team decided to go to the casino and gamble on credit, and now that they lost and the bill is due they're handing it to the employees and saying "you pay for it with your jobs, even though you didn't do anything wrong."

Bye bye Free Radical. Timesplitters is a franchise that really can't catch a break.

This sucks.