Swedish gaming giant Embracer Group announced a major restructuring effort that will result in multiple game cancellations and studio closures. This development likely spells the end of the company's massive acquisition spree that has been going on for several years and saw Embracer Group acquire the IP rights to Lord of the Rings, Tomb Raider, and Deus Ex, among many other iconic franchises.
After spending in excess of $8 billion on acquisitions, Embracer Group signaled it's in the market for more game companies back in April 2022. Yet it has already begun undergoing massive cost-cutting efforts by that time, which eventually saw it shutter and partially absorb a number of studios, including Onoma, formerly known as Square Enix Montreal.
Those cuts are now set to ramp up, with Embracer Group CEO Lars Wingefors announcing a major restructuring effort geared toward improving the company's overall sustainability. A June 13 open letter from Wingefors attributed the changes to a "worsening" global economy, which prompted the Swedish conglomerate to revamp its entire strategy and transition from its acquisition-driven approach to a "highly cash-flow generative business" before the year's end. As a result, Embracer is now actively assessing its existing operations with the intention of closing some studios and either pausing or outright canceling a number of its ongoing game development projects.
The extent of these cuts remains to be seen, not least because Wingefors openly admitted the company is still in the process of determining the scope of its newly started restructuring. While it was preparing for its latest acquisition spree two years ago, Embracer Group had 150 games in development, a number that has likely increased with the dozens of studio purchases it has since completed.
Wingefors also revealed that game cancelations and studio closures aren't the only measures that the conglomerate is presently exploring. And while he didn't elaborate on the matter any further, that remark could possibly spell bad news for some of the company's less profit-driven projects like the Embracer Group games archive dedicated to preserving gaming history, which only opened its doors in mid-2022.
This development also possibly threatens the futures of some relatively young Embracer subsidiaries which have been spun off with great ambitions in recent years. One of them is Alkimia Interactive, a Barcelona, Spain-based studio established in 2020 with the goal of producing the Gothic remake. That same year saw Embracer found Ashborne Games and Nine Rocks Games, with the company opening three more studios in 2021, most of which are yet to deliver a game.