Embracer lay offs are in service of shareholders, says CEO

Embracer Group, a Swedish video game holding company, announced in a prepared statement that they will be continuing with restructuring which has resulted in over 1300 layoffs since June, with more likely.

In the statement, Lars Wingefors, CEO of the company behind studios that created the Borderlands, Metro, Saints Row series, stated: “Our overruling principle is to always maximize shareholder value in any given situation.”  While it’s true that publicly traded companies are expected to maximize shareholder profit, it’s rare for such transparency and statements are usually more couched.

“As part of the restructuring program, Embracer still has a few larger structured divestment processes ongoing that could strengthen our balance sheet and further reduce [capital expenditure],” Wingefors said. “Processes are in mature stages.”

The CEO continued, stating “Certain companies might initiate restructuring before any divestment is announced,” suggesting that further layoffs could be coming. He added, “The reductions are managed locally on the operative group level with a focus on informing affected employees first, and then carried out with compassion, respect and integrity towards those affected.”

What’s next for Embracer Group?

Embracer’s massive restructuring started in June 2023 when it announced plans to reduce its net debt to SEK 8 billion before March 31. Wingefors stated “Certain divestments could significantly reduce net debt post March 31, 2024” adding further weight to speculation that layoffs and restructuring will continue for the foreseeable future.

In aid further reducing debt, they also intend to be more “selective” with acquisitions and investments in the future. Throughout the pandemic, Embracer acquired many studios (Including THQ Nordic, Koch Media, and Gearbox, who are now rumored to be for sale) that are now facing shutdowns and game cancellations as the Group struggles to maintain momentum.

“While we will still do third-party publishing in the future, we will be considerably more selective,” Wingefors said. “Our future games portfolio will be more focused around established, owned IPs and studios which we are confident will generate better predictability as well as increased [return on investment] and profitability going forward.”

As has been oft-repeated of late, this is part of an on-going trend of layoffs in the gaming and tech industries, with staff and fans left reeling amid seemingly relentless rounds of cuts.

Featured image: Borderlands