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Gearbox and Crystal Dynamics owner Embracer report 900 layoffs during "one of our strongest quarters for new releases ever"

CEO discusses performance of Remnant 2 and Payday 3

The Embracer group logo in white font on a multi-coloured patterned background
Image credit: Embracer

Everybody's favourite bulk-buyer of studios and licenses Embracer Group have announced that they've laid off 900 people over the last three months, as per restructuring plans revealed this summer - around five percent of their total workforce.

That's despite the company's net sales increasing year-on-year by 13 per cent for the second quarter of 2023 (July to September). In their latest investor earnings report, Embracer say that their PC/Console Games segment in particular has seen a year-on-year decline of five per cent in sales in that period, but that this remains one of the conglomerate's "strongest quarters for new releases ever", buoyed by increased returns from the table-top, mobile and entertainment and services divisions.

According to the report, Embracer's "soft free cash flow" - "free cash flow" essentially describes the amount of money a company can distribute to investors and creditors as dividends and so forth, without breaking itself - is "more or less only driven by an imbalance between investments into ongoing development and completed development within the PC/Console Games segment, which we are now addressing through the implementation of the restructuring program".

Embracer CEO Lars Wingefors commented in the report that "over the past two years, our internally developed games have had [a return-on-investment] over twice as high compared to externally developed games". Even in the wake of Embracer's restructuring, he went on, the company "will still be investing more than the value of our released games, laying the foundation for future organic growth in the PC/Console Games segment".

Wingefors had a bit to say about the fortunes of specific Embracer releases, spanning internal and external development studios and publishers. Apparently, Gunfire and Gearbox's fantasy procedural Gears of roguelike Remnant 2 has done rather well, selling over two million copies. Starbreeze's heist shooter Payday 3 has "seen a mixed reception and performance", which is no surprise given that game's technical issues at launch. Embracer expects it to be a financial success eventually, but "below management expectations".

Wingefors also hailed the "successful release" of Dead Island 2, Risk of Rain Returns, Teardown on console, a new update for Satisfactory, and Remnant 2's Awakened King DLC, though the report doesn't go into detail. There's a lot more in the full thing about the state of affairs across mobile, table-top and Embracer's wider entertainment operations, if you're curious.

Embracer's restructuring has seen the company shutter Saints Row developer Volition and lay off staff at Mythforce developer Beamdog and Star Trek Online developer Cryptic. The company are reportedly on the verge of closing Timesplitters developer Free Radical, and are looking into selling Gearbox. Embracer's earnings report doesn't confirm this latter claim, but does mention that the company are thinking about divestment and that there has been "notable inbound interest" in Embracer's assets.

All this follows a massive acquisition spree over 2019 to 2022 that saw Embracer scooping up studios from all over. Embracer were apparently on the verge of signing an investment deal worth $2 billion with Savvy Games Group early this year; according to Axios, the collapse of that deal is the principle reason for this summer's mammoth job cuts.

Embracer also launched a game preservation archive in 2022, which feels a bit much given that their overall contribution to the industry seems to be buying up vast swathes of it and throwing everything away. Best of luck to all the Embracer staff who have lost their jobs this year.

Update: I've tweaked the headline to make it clearer that Embracer are reporting layoffs that have occurred in the course of the previously announced restructuring process, rather than that they're revealing new layoffs today.

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