Embracer Undergoes Restructuring: Human Cost is Significant but Necessary

The gaming industry has experienced a tumultuous year, with thousands of job losses resulting from company restructuring and downsizing following the pandemic-induced growth surge. Embracer Group's ongoing restructuring is a prime example, with the company having acquired nearly 90 businesses since 2017, including Zen Studios, Gearbox, and Crystal Dynamics. The industry has been closely watching Embracer, waiting to see if its aggressive M&A strategy will ultimately lead to its downfall. The restructuring program, aimed at reducing the company's $1.5 billion net debt, began in June, and Embracer has made significant progress, with debt reduced to $1.4 billion and on track to reach $757 million by March 2024. The human cost of this process has been substantial, with 904 people laid off between July and September, and more redundancies expected. Phil Rogers, Embracer's interim chief strategy officer, acknowledges the significance of the human cost but emphasizes that it is necessary for the company's long-term goals. Embracer is focused on becoming a leaner, stronger, and more cash-self-sufficient company, with a solid foundation of predictable, profitable, and cash-generative businesses. The company is reassessing its global pipeline, which includes over 200 games in development, and is prioritizing entertainment value, commercial outcomes, and genre potential when deciding which games to continue. Rogers recognizes the challenges of the current gaming climate, where having a hit outside the AAA space is increasingly difficult, but remains confident in Embracer's ability to adapt and evolve. With a strong foundation and a focus on working together, Embracer is poised to navigate the current restructuring and emerge stronger in the long term.