Embracer Group, the company that has been in the gaming news for a while for its studio closures, is pausing its plans for further expansion. This decision follows a period of reorganization that involved selling important studios and laying off staff. It’s good to hear that they won’t be rebuilding before making sure they’re stable.
During a recent investor call (thanks, RPS), Embracer CEO Lars Wingefors revealed that the company’s restructuring process has been finalized. As part of this process, Gearbox Entertainment, the developer behind Borderlands, has been sold to Take-Two Interactive. Wingefors highlighted that the decision to sell these studios was driven by their “negative cash flow” and aimed at improving Embracer’s profitability.
Embracer’s CEO Wingefors recently mentioned that the company is not planning to pursue new studio acquisitions at the moment. Instead, the focus will be on enhancing the profitability of its current studios by creating better products and promoting collaboration among different development teams within the Embracer Group.
Embracer has been rapidly growing in the games industry in recent years. By early 2023, the company had acquired an impressive 138 studios. These included well-known names like Crystal Dynamics, Eidos Montreal, Volition, Deep Silver, 4A Games, and others.
“Looking to do more [mergers and acquisitions] deals – I think it’s way too early to start talking about restarting the M&A engines again. Now we are in the late phases of the consideration into the future of the group, and that’s our highest focus and priority – how we set up ourselves and structure ourselves, and utilise our assets we have within the group, and have them work together, and how we leverage them better working together, utilising different functions, I think that’s our focus right now, to increase profitability and cashflow generation, by simply making better products and games.”
Lars Wingefors
However, Embracer’s period of change has led to some significant outcomes. The company separated Saber Interactive (including its subsidiaries like 3D Realms and 4A Games) into an independent entity, closed down Free Radical Design (known for the TimeSplitters series), discontinued operations at Saints Row developer Volition, and reduced its total workforce by approximately 8%.
While Embracer has announced a temporary halt to further acquisitions, it’s unclear whether the company will resume its previous strategy in the future. Factors such as market conditions, investor expectations, and the overall gaming industry landscape may influence the company’s decision.
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