Embracer Group, which was once on an endless shopping spree, is now dumping its first-party studios as part of the ongoing business restructuring. This time, the victim was Red Faction and Saints Row developer Volition, not to mention layoffs at Gearbox Publishing.
What happened to Volition?
- On August 31, Volition Games announced that the studio would be shutting down “effective immediately.” Unfortunately, this means an end to the developer’s 30-year history.
- “This past June, Embracer Group announced a restructuring program to strenghten Embracer and maintain its position as a leader in the video game industry,” the statement reads. “As part of that program, they evaluated strategic and operational goals and made the difficult decison to close Volition effective immediately.”
- Founded in 1993 and originally known as Parallax Software, Volition has shipped 18 games, including its debut FPS Descent and space combat sim FreeSpace 2. The studio was best known for the two series, Red Faction and Saints Row.
- In 2000, Volition was acquired by THQ. After the publisher filed for bankruptcy in 2012, Koch Media acquired the studio and its assets for $22.3 million through its Deep Silver division. As a result, Volition ended up under the Embracer Group umbrella.
- Last year, Volition released its last game, Saints Row, which was supposed to reboot the franchise. However, the title received mixed reviews from critics (65/100 on Metacritic) and players (60% positive reviews on Steam).
- Volition revealed that the game attracted over 1 million players across all platforms, but it was also reported that it must sell at least 2 million units to recoup the investments.
- Although Embracer said that Sains Row’s sales were in line with management expectations, the game “left the fanbase partially paralized.” After that, the Swedish holding company decided to transfer Volition from Deep Silver to Gearbox.
Layoffs at Gearbox Publishing
- As reported by Game Developer, several former Gearbox employees have opened up about the job cuts at the company’s publishing division. However, it is unclear how many people have lost their jobs.
- It appears that Gearbox Publishing started preparing for the layoffs about two months ago, although it never announced the decision publicly.
- “Unfortunately, no one saw it coming, but my contract and those of my colleagues who started in June had to be terminated on the last day of our probation month,” translator Allan Jacquemart wrote on LinkedIn, adding that “we were simply victims of the group’s restructuring.”
- Embracer acquired Gearbox Software for $1.38 billion in 2021. The company remained a valuable asset, thanks to its Borderlands franchise, and also published titles from third-party developers.
- Earlier this year, Gearbox Publishing helped Gunfire Games release Remnant II, which was a huge success selling over 1 million units in its first week.
Embracer Group’s restructuring
- In May, Embracer announced that “one major strategic partnership that has been negotiated for seven months will not materialize.” It would have included over $2 billion in contracted development revenue over the next six years.
- It was later revealed that the deal was supposed to be with Savvy Games Group, an investing firm established by Saudi Arabia’s sovereign wealth fund. It previously invested $1 billion in Embracer Group.
- As a result of the collapsed deal, the holding company’s shares plunged nearly 50%, leading to the beginning of the restructuring program that will last until March 2024.
- Embracer described its goal as a way to lower its net debt from $1.53 billion to at least $732 million and generate more profits with less and higher margins in the PC and console markets.
- The program includes divesting some of its studios, freezing/shutting down some games currently in development, and revising the review process for new titles in terms of investment required.
- “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,” Embracer CEO Lars Wingefors said in the latest financial report, adding that the company “will try to provide opportunities for our colleagues to transition onto other projects.”
- Volition is not the only studio that has fallen victim to restructuring. Last month, Embracer shut down Campfire Cabal, which existed for less than a year and never released a single game.