Embracer revealed this morning that it will shift from “heavy-investment-mode” to become “a highly cash-flow generative business this year”, putting an end to a years-long acquisition spree which included the €2.75bn takeover of Asmodee in 2021.
The move comes three weeks after Embracer released a solid set of annual results that included $1.22bn of sales for Asmodee – comparable to the $1.25bn for Embracer’s video games segment, which includes franchises such as Tomb Raider, Borderlands, Metro Exodus and Dead Island.
But Embracer co-founder and CEO Lars Wingefors indicated not all was well during the release of those results, saying, “It has been a challenging year, adversely impacted by game delays, weaker consumer demand and lackluster reception for certain notable releases.”
Part of Embracer’s restructuring plan involves closing studios and terminating unannounced projects “with low projected returns”, as well as consolidating its subsidiaries and reviewing its operating group structures.
Matthew Karch has resigned as CEO of Embracer subsidairy Sabre Interactive to take on the role of interim COO at Embracer, and will co-lead the restructuring with Crystal Dynamics – Eidos CEO Phil Rogers, who has been named Embracer’s chief strategy officer.
Karch said in a press conference this morning that areas of Embracer’s PC and console games section where performance has been lagging provided the “lowest hanging fruit” to make changes, but Wingefors followed that comment up by making it clear that all areas of the group were being looked at, especially in terms of cutting operational expenditure.
An open letter from Wingefors released this morning said, ” During the past years, Embracer invested significantly both in acquisitions and into a strategy of accelerated organic growth.
“We have acquired some of the world’s leading entertainment IP and we have invested into 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.
” 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 cashflows.”
He continued, “Embracer currently engages close to 17,000 people and while that number will be lower by the end of the year, it is too early to give an exact forecast on this.
“It is painful to see talented team members leave. Our people are what make up the very fabric of Embracer.
“I understand and respect that many of you will be worried about your own position and I don’t have all the answers to all questions. I want to be clear that the decisions about this program were not taken lightly.”
Wingefors went on to say, “There is significant untapped potential in Embracer which we will work together to unleash. We need to better leverage our scale, the quality of our portfolio and our capabilities.
“Our commitment to our transmedia strategy remains intact. That strategy alone has great potential to deliver substantial value across the group over the coming years.”
Asmodee distributes trading card games such as Pokemon, Magic, Yu-Gi-Oh!, as well as publishing board games under 22 subsidiaries including Catan Studio, Days of Wonder, Fantasy Flight Games, Lookout Games and Z-Men Games.
Its biggest IPs include Ticket to Ride, Catan, Splendor, 7 Wonders, Azul, Exploding Kittens, Dobble/Spot It! and Star Wars: Legion.