Embracer Moves Forward After Collapse of $2 Billion Deal

Embracer Group is looking to put the failed $2 billion partnership behind them, with CEO Lars Wingefors stating that the deal is now in the past and the company has taken matters into its own hands. During the company's latest earnings call, Wingefors was questioned by investors about the potential collaboration with an unnamed partner that was initially announced in May. At the time, Wingefors expressed that the partnership would have set a new standard for the industry but ultimately fell through due to external factors. Although the identity of the partner was not disclosed, it was recently reported that Savvy Games Group, owned by Saudi Arabia's Public Investment Fund, was the company that backed out of the deal. Wingefors declined to comment on the partner's identity, citing legal reasons, but suggested that Embracer and the mysterious partner may explore a similar deal in the future. He emphasized that the reason for the partnership's collapse was not due to the terms or pipeline of games, but rather because the partner was not ready to move forward at the time. Wingefors believes that such a strategic partnership is still valid and expressed his enthusiasm for the proposal, highlighting Embracer's broad pipeline of games, including well-known IPs and licensed IPs. However, he acknowledged that the deal is now history and the company has moved on, taking control of its own destiny. In the wake of the deal's collapse, Embracer announced a cost-cutting restructuring program, which will result in an unknown number of studio closures and layoffs. The company's current net debt stands at SEK 16.8 billion, with the goal of reducing it to SEK 8 billion by the end of the financial year on March 31, 2024. So far, Campfire Cabal is the only studio known to be affected by the restructuring. Wingefors reported that Embracer is making good progress on the program, working to find new partners for games that will be dropped and new homes for certain studios. With 215 games currently in development, only 62 of which have been announced, Wingefors noted that most of the titles that will be cut are further out in the development slate, but it is too early to determine the exact number. Despite the layoffs, Embracer is still hiring, but only when necessary to bring in new talent for specific investments or businesses.