Global Courant
Swedish gaming company Embracer Group, which owns the intellectual property catalog and worldwide rights to motion pictures, video games, board games, merchandising, theme parks and stage productions relating to the literary works of The Lord of the Rings trilogy and The Hobbit by JRR Tolkien , has appointed an interim chief operating officer and is planning cost cuts, including layoffs and the sale or closure of some gaming studios, as part of a restructuring.
Matthew Karch was named interim chief operating officer, and Phil Rogers interim chief strategy officer, the company said on Tuesday. They will co-lead the planning and implementation of a “comprehensive restructuring program,” also unveiled on Tuesday. The firm did not immediately detail a figure for the number of layoffs, but said its headcount of currently 17,000 will be cut down.
Other cost-cutting actions will include closing down or selling some gaming studios and “the termination or pausing of some ongoing game development projects,” Embracer said. The changes will also include “decreased spending on non-development costs, such as overhead and other operating expenses.” The company also plans to reduce third-party publishing and “put greater focus on internal IP and increase external funding of large-budget games,” management noted.
“This morning we announced a restructuring program across the Embracer Group that will make us a leaner, stronger and a more focused, self-sufficient company,” Embracer Group CEO Lars Wingefors
said in an open letter. “During the past years, Embracer invested significantly both in acquisitions and in a strategy of accelerated organic growth. We have acquired some of the world’s leading entertainment IP and we have invested in one of the largest pipelines of games across the industry. The program presented today will transform us from our current heavy investment mode to a highly cash-flow generative business this year.”
He added about the cost reduction program: “It will enable us to meet the worsening economy and market reality as a strong company and it will fundamentally change our prioritization of growth with raised capital towards optimization and growth based on our own cash flows. The program will lower our net debt significantly. After completion of this program, we will generate growth in profitability with less business risk and with higher margins in the PC/console segment over the coming years.”
