The Hollywood Reporter
Swedish gaming company Embracer Group, which owns the intellectual property catalog and worldwide rights to motion pictures, video games, board games, merchandising, theme parks and stage productions relating to the literary works of The Lord of the Rings trilogy and The Hobbit by J.R.R. Tolkien, has appointed an interim chief operating officer and is planning cost cuts, including layoffs and the sale or closure of some gaming studio, as part of a restructuring.
Matthew Karch was named interim chief operating officer (COO), and Phil Rogers interim chief strategy officer, the company said on Tuesday. They will co-lead the planning and implementation of a “comprehensive restructuring program,” also unveiled on Tuesday. The firm didn’t immediately detail a figure for the number of layoffs, but said its headcount of currently 17,000 will be cut down.
Other cost-cutting actions will include closing down or selling some gaming studios and “the termination or pausing of some ongoing game development projects,” Embracer said. The changes will also include “decreased spending on non-development costs, such as overhead and other operating expenses.” The company also plans to reduce third-party publishing and “put greater focus on internal IP and increase external funding of large-budget games,” management noted.
New interim COO Karch is currently a board member of Embracer, but will resign from this position at the firm’s annual meeting in September. He has also resigned as CEO of the firm’s U.S. gaming publisher Saber Interactive effective immediately. Rogers will remain in his role as CEO of Embracer’s game developer Crystal Dynamics – Eidos in addition to his new interim role.
“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,” Embracer CEO Lars Wingefors said in an open letter. “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.”
He added about the cost reduction program: “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 cash flows. 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.”
Source: Hollywood Reporter
