The Rise and Fall of Embracer (aka THQ Nordic)

[Dodo1610]

This game has a small but really dedicated cult following and has been patched by its community for years And those same modders are now making the remaster.

 

[Infinitron]

RIP Abu Antar: https://www.reuters.com/technology/...-after-partnership-talks-collapse-2023-05-24/

Tomb Raider games firm Embracer tumbles after partnership talks collapse​

STOCKHOLM, May 24 (Reuters) - Swedish games group Embracer (EMBRACb.ST) on Wednesday said a large planned strategic partnership had fallen through unexpectedly and that it had lowered its profit guidance, sending shares into a tailspin.

The developer, which last year bought several development studios and the intellectual property rights to a number of games including a new Tomb Raider game, said the deal would have "set a new benchmark for the gaming industry".


"Late last night, we were informed that one major strategic partnership that has been negotiated for seven months will not materialize," it said in a statement.

The deal being negotiated included more than $2 billion in contracted development revenue over six years, it said.

"The deal would have enabled a catch-up payment at closing for already capitalized costs for a range of large-budget games, but also notably improved medium-to-long-term profit and cash flow predictability for the duration of the game development projects."


Shares in Embracer were down 40% at 0753 GMT, hitting an all time low, with analysts saying the drop was due to the news of the deal as well as the lowered outlook.

Hit by game delays, weaker demand, and "lacklustre" reception for some new games, Embracer on Wednesday reported a fiscal full-year adjusted operating profit of 915 million crowns ($90.1 million), roughly matching a profit warning issued last week.

It said that on top of the partnership deal falling through, it had had to postpone planned releases of a number of games under development, cutting as a result its adjusted profit forecast for the current year to 7-9 billion crowns, from 10-14 billion seen previously.

Embracer declined to say who the potential partner was.

($1 = 10.1526 Swedish crowns)

 

[vortex]

I just want Deus Ex and Thief. Please embrace me.

 

[Zed Duke of Banville]

A much-needed blow against the Swedish menace.

 

[Elttharion]

I just want Deus Ex and Thief. Please embrace me.

I only want a decent PC port of the first Soul Reaver game.

 

[Dodo1610]

• Matthew Karch appointed interim Chief Operating Officer, and Phil Rogers appointed interim Chief Strategy Officer, to co-lead the program planning and implementation.
• Reduction of general overhead, corporate, publishing, and selling, general, and administrative expenses costs.
• The closing of studios and termination of projects, that have not yet been announced and with low projected returns.
• Creation of a more comprehensive, centralized process for game investment and progress review, while maintaining creative freedom.
• Consolidation of companies and businesses, including review of operative group structures.
• Reduction of investments into external development with greater focus on internal development based on owned or controlled intellectual property.
• Increased external funding of internally developed, large-budget games.
• Renewed focus on the Group’s main business areas.
• Implementing a centralized and standardized, more data-driven and precise approach to game forecasting.

 

[Alienman]

There goes AA games

 

[Spacer's Nugget]

God DAMMIT! I can already see Kingdom Come 2 getting canceled.

 

[Dodo1610]

There goes AA games

Funny enough they immediately confirmed that the new Tomb Raider game is safe

God DAMMIT! I can already see Kingdom Come 2 getting canceled.

KCD was a profitable AAA title of course the sequel is safe.


It's the smaller AA studios that will be closed.

 

[HoboForEternity]

RIP piranha bytes?

 

[BlackAdderBG]

Wow what a shocker, nobody could have seen that coming.

 

[karoliner]

 

[Infinitron]

https://embracer.com/releases/open-letter-by-embracer-group-ceo-on-restructuring-program/

OPEN LETTER BY EMBRACER GROUP CEO ON RESTRUCTURING PROGRAM​

Everyone,

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. I want to share some background and context to this decision – and what it means for us going forward.

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. 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. This, in turn, will give us the freedom to continue to grow and deliver the high-quality experiences our players really value.

The program is divided into different phases until March 2024 with focus on cost savings, capital allocation, efficiency and consolidation. The initial phase, which is initiated immediately, mainly targets cost savings across the group. The next phase, which also starts immediately, will require further analysis to determine specific actions. The last phase will focus on internal consolidation, further resource utilization and more synergies across the Group. The actions for each affected company will be implemented by the new interim COO and CSO in collaboration with each operative group CEO and management teams. 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.

I am asking all our managers to lead and act with compassion, respect, and integrity. Throughout each phase and wherever possible, we will work to ensure that affected team members receive information first. Where we can, we will try to provide opportunities for our colleagues to transition onto other projects. It’s important to note that while we are removing roles in some companies, we will continue to hire in others. We know, understand and respect that this is a challenging time for every person impacted. For me communication and transparency are key, but it’s also an increasingly difficult challenge in matters such as this program

The reality is that the quicker we act, the sooner we emerge as a stronger company.

The actions will include, but not be limited to, closing or divestments of some studios and the termination or pausing of some ongoing game development projects. It will also include decreased spending on non-development costs such as overhead and other operating expenses. We will reduce third party publishing and put greater focus on internal IP and increase external funding of large-budget games.

Our new Executive Management team members, Matthew Karch and Phil Rogers, will work to implement a revised, thorough review process for investments in our ongoing and potential new game development projects. They will also take the lead on further consolidation of operations, including review of the operative group structure. We will have an increased focus on accountability across the group, ensuring performance is in line with or exceeding current targets.

The potential impact from the program of future game releases will almost entirely be around unannounced projects. All announced significant releases will still be released as planned.

I want to thank all of our industry partners that reached out in the past weeks and expressed their respect for Embracer and their desire to do more business with us, whether big, small, or transformative, on our journey forward. As one of the largest content providers in the industry, this is the everyday business we should continue to increase. I see this as an acknowledgment of how important our people, games and IPs are for the wider gaming ecosystem.

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. Ultimately, this will empower our entrepreneurs and creators to continue to deliver outstanding and memorable experiences to gamers and fans across the globe. I’m confident in our team’s ability to achieve results and maintain our position as a worldwide leader in the gaming industry.

I’m proud of what we have built over the past years, and we should acknowledge that we are heading into a solid year with many amazing releases such as Remnant 2, Warhammer 40,000 Space Marine 2, Payday 3, Hot Wheels Unleashed 2: Turbocharged, Arizona Sunshine 2, Alone in the Dark, Homeworld 3, and many many others. Our financial year started with one of our greatest successes so far, Dead Island 2, which exceeded our management’s already high expectations.

Embracer was founded on the values of trust, a long-term mindset, and a desire to embrace different perspectives. As difficult as some of the decisions we will take over the coming weeks and months will be, we are doing this because we are confident that we will emerge a stronger, more efficient company setting out on a stable future to build even greater value across our many studios and fantastic portfolio of IPs.

Thank you all,

Lars Wingefors
Group CEO Embracer Group

This is going to be an epic shitshow. Interesting decision to announce it right after the major summer showcases...

 

[Cat Headed Eagle]

And yet Microsoft buying Activision is the real issue somehow

 

[-M-]

I know one piece of dead weight that they should have cut years ago:

Saber Clown Tim Willits. i.e. the reason id was able to be gobbled up by Bethesda.

 

[Lyre Mors]

Been seriously considering buying Jagged Alliance 3. Wonder if it's even worth it now?

 

[lycanwarrior]

Been seriously considering buying Jagged Alliance 3. Wonder if it's even worth it now?

Shouldn't be an issue as it isn't going to be cancelled or anything.

 

[Infinitron]

The studio making Jagged Alliance 3 isn't actually owned by Embracer.

I'd be more worried about the Logic Artists successor studio, Campfire Cabal. They haven't announced anything yet...easier to kill.

 

[Lyre Mors]

Shouldn't be an issue as it isn't going to be cancelled or anything.

Yeah, my reasoning for buying games from a publisher supported studio often times is to show that there's interest and money to be made from them. So while I know the game won't be cancelled, if the studio was going to get canned directly afterwards regardless, it wouldn't be worth the investment.

 

[deuxhero]

Remember that during the Obama recession companies used the downturn as an excuse to fire poor preformers without having to worry about lawsuits.

 

[flyingjohn]

The firings and restructuring are normal.
Their MO is gobbling up everything and then cutting off the underperformers to actually be profitable. They probably weren't hoping to start layoff this year but the one of their bigger deals(billion+ value) failed.

Once they actually make some hits, they will go to another buying spree and this will repeat again.

 

[Cat Headed Eagle]

Exactly, it's just a trick of the "invisible hand". It just works (tm).

 

[Azalin]

Well they can nuke Volition and all the people behind Soy's Row to cut costs and get rid of dead weight

 

[J1M]

TLDR: "We borrowed too much money and interest rates went up."

The rest is spin. A "worsening economy" is positive for game sales because they are an economical substitute for other entertainment.

 

[ropetight]

It seems that they counted on the 2 billion investment after the IP buyout fever, but it didn't happen.

Embracer Group Stock Drops 40% After $2 Billion Mystery Deal Self-Destructs
https://archive.ph/gpgnZ