Mass layoffs aside, one of the main elements of Embracer Group’s ongoing restructuring program is a review of all games in its pipeline. Chief strategy officer Phil Rogers has detailed the process and the progress the Swedish holding company has made so far.

How Embracer Group decides which of 200+ games in its pipeline get green light as it continues to cut costs

Embracer Group’s pipeline review

Rogers, CEO of Crystal Dynamics, was appointed Embracer’s interim CSO after the restructuring began in June 2023. On November 23, he spoke with about the program and its key milestones.

To decide which in-development games will live up to launch and which will be canceled, Embracer looks at two things:

  • Entertainment values — first and foremost, every game has to be fun to play. It doesn’t have to be a AAA title with a huge budget because, as Rogers says, “bigger games aren’t always fun”;
  • Commercial outcomes — Embracer assees how it can return on investment and whether there is a potential for certain genres (according to Rogers, “it really has got teams to work together to share, to discuss, and that’s helped us then with those decisions when we’ve had to deliver them”).

As Embracer said in its financial report for Q2 ended September 30, it had 201 games in development. This is down 15% from 237 titles in the same period last year. So the review process has already resulted in a pipeline reduction, something Embracer has never done before. As we know, 15 “mainly unannounced projects” were written down across Amplifier, Freemode, Gearbox, Plaion, Saber Interactive, and THQ Nordic.

Here is what Rogers told about the process: “It got a lot of people introduced to one another, people who’ve been working in different parts of the group to actually build up their networks and whatnot and get a lot of communication going. So I think there’s been a lot of positives from that overall programme.”

Embracer Group, which made nearly 90 M&A deals in six years, hopes that the restructuring will help it transform from its “current heavy-investment-mode to a highly cash-flow generative business.”

Mass layoffs are agonising, but necessary

The main goal of the program, which was initatied shortly after the collapse of the $2 billion strategic partnership, is to reduce the company’s net debt to at least SEK 8 billion ($757 million) by March 31, 2024. And Rogers believes that Embracer “at times, we have to change and adapt” to the new market climate.

Of course, the most painful part of the restructuring is job cuts. Since June, the company has already laid off 904 employees, or 5% of its total headcount. This has affected people at subsidiaries like Gearbox Publishing, Crystal Dynamics, Rainbow StudiosBeamdogZen Studios, and Cryptic Studios. In addition, Embracer shut down at least two studios, Volition and Campfire Cabal.

Given that the restructuring is still in its “early stages,” the company says it will lead to further headcount reductions, closures, or buy-outs.

Later in the interview, Rogers acknowledged that the “people cost is significant,” also calling the job cuts an “agonising process.” However, he says it is a necessary thing for Embracer to hit its new goals.

“We have a solid foundation with predictable, profitable, and cash-generative businesses, including a roster of renowned PC/Console franchises that gradually grow stronger,” Rogers concluded. This is in line with CEO Lars Wingefors’ statement that Embracer Group is now focused on “improving the projected return on investment within PC/Console.”

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