Embracer Group burst into the video game industry with the intention of becoming the largest company in the European sector. However, some of its investments haven't yielded as fruitful results, and this year an unexpected event occurred that challenged its short and medium-term plans. While the results remain favorable considering the context, the company is persistent in its cost-saving efforts, which translates to cancellations and closures.
Embracer Announces Plans to Cancel Games and Shut Down Studios to Save Money
During the presentation of the financial report for the first quarter of the current fiscal year, Embracer Group confirmed growth and profits in its divisions related to console and PC gaming, board games, and entertainment. However, this wasn't the case for mobile games, where it experienced a decline compared to the same period in 2022. Nevertheless, these accomplishments haven't been enough, as recent controversy has impacted projections. At this juncture, the European giant is seeking to reduce costs, although it didn't disclose which projects and studios will be affected by this inevitable fate.
From the investor Q&A this morning, hours after CEO Lars Wingefors apparently learned the deal had fallen through
— Stephen Totilo (@stephentotilo) May 24, 2023
Earlier, he says it's a hard time for him to be bullish, talked about what happens when you're doing a deal with people you trust
Pretty raw reaction here: pic.twitter.com/oAeMMYACyd
Regarding this matter, Lars Wingefors, CEO of Embracer, stated (via TweakTown): "Initial actions have been taken towards closures and other initiatives have been defined to reduce the number of projects and studios for general expense savings in coordination with the Operational Groups. With a series of initial actions now taken, we anticipate more savings after the completion of an ongoing comprehensive review of the existing portfolio. This review will guide our capital allocation to optimize return on investment. The purpose of the program is to operate efficiently across the group and reduce short-term business risk."
In case you're not aware, during the financial report that concluded the previous fiscal year, Embracer Group publicly revealed that a major deal worth $2 billion fell through at the last moment, and this news led to a drop in its stock price. At that time, it was noted that the deal would have changed the industry, but it was also acknowledged that the agreement was only verbal. Recently, reports unveiled the protagonist of this story, which is Savvy Games Group, a company funded by the Saudi Arabian government.
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