Following the fallout from a major $2 billion partnership, Embracer Group announced a new “restructuring plan” to make it a “more focused, self-sufficient company. This would see some game studios closed and some projects canceled. Since then, Embracer has shut down Volition Games, the developer of the Saints Row series. Reports revealed that there are plans to sell Gearbox Entertainment. Last week, there were reports that developer Free Radical Design is at threat of being closed. During their latest earnings report, Embracer Group has provided an update on the company revealing that they let go of 900 employees in its second quarter, announced they have written down 15 projects, and said that further studio closures and buyouts are planned.
“Before we get into the business details of our second quarter, I want to start this conference by saying a personal thank you to the 900 who left Embracer during the second quarter,” Co-Founder and CEO Lars Wingefors said addressing the layoffs.
“As you will hear today, we are determined to transform Embracer into a leaner, stronger company. That said, it’s painful to me that you need to leave the group, and we have been, and are doing, everything we can to preserve jobs without changing what we need to achieve. Our people are what make up the very fabric of Embracer. For me personally, it’s crucial that the programme is carried out with compassion, respect and integrity.”
Chief Financial Officer Müge Bouillion who works for Embracer’s board game company is also serving as the Fiance Workstream Lead on the Group’s restructuring project confirmed that “15 mainly announced projects” have been written down. This is across Amplifier, Freemode. Gearbox, Plaion, Saber Interactive, and THQ Nordic.
Write-downs can be incremental reductions or partial loss of value in accounting terms. Write-offs reduce value to zero.
When asked about Free Radical Design and TimeSplitters following reports of its potential closure, Wingefors said “In general, I can say that there are many situations in workplaces around the world that will possibly lead to a restructuring. Then you have to conduct a union negotiation or take other legal measures to complete something. This discussion cannot occur. That’s my answer.”
It’s possible that Free Radical can remain open if Embracer receives interest from third parties on acquiring the studio but at least 15 people employed at Free Radical have published posts saying that they are looking for work.