Embracer announces restructuring program, studio closures expected

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Embracer has announced a restructuring program, which will lead to studio closures.

The "comprehensive" program, CEO Lars Wingefors said, is to "better optimise the use of [Embracer's] resources."

As part of the restructuring, the company intends to take "operational and financial measures to increase cash conversion, improve efficiency and reduce capex," in order to reach a financial net debt under SEK 10 billion (roughly $930 million) by the end of the financial year 2023/2024.

Embracer also plans to reduce overhead costs by at least 10% or SEK 800 million ($75 million) per year.

While the company didn't provide further details on that aspect, it did say that its restructuring actions will include "the closing of studios and termination of projects, that have not yet been announced and with low projected returns."

In an open letter, Wingefors said: "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."

The company will reduce investment into external development to focus "on internal development based on owned or controlled IP," while also seeing "increased external funding of internally developed, large-budget games."

Consolidation is also listed as part of the actions, as is the "creation of a more comprehensive, centralised process for game investment and progress review, while maintaining creative freedom."

As of March 31, 2023, Embracer's net debt amounted to SEK 15.6 billion ($1.45 billion)

While the program is effective immediately, Embracer said it will be fully implemented by October 1, 2023 and be divided into