Complete Disaster For Embracer Group

Embracer Group suffers a massive setback as the company announces vast layoffs. In a move that surprises no one, the famous game publisher announced they would cut back aggressively on video game content to save money. Embracer Group is a huge staple within the gaming community. Under their umbrella, they have massive studios such as Crystal Dynamics, Gearbox, and Eidos-Montreal. All these studios are responsible for some of the biggest IPs across the gaming space. Sadly, none of these titles is enough to save Embracer from announcing that they will be laying off thousands of people.

Over the last few years, the company has released many massive titles. Dead Island 2 was released recently to much internet acclaim. Despite positive reviews, the game failed to appeal to the masses, selling only 2 million units. Unfortunately for Embracer, this was not the only game that failed to appeal to gamers. Due to this, the CEO of the publisher addressed his 17000 employees and announced that mass layoffs would be taking place to mitigate complete disaster. This news comes only a month after Embracer lost out on a massive $2 billion deal.

They will close many studios and cancel many games as part of their cuts. Embracer insists that these cuts will lead the company in a more positive direction. In a statement, they said, “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,” All of this does have many people concerned over the future of many classic IPs that is in the works. With these mass cutbacks, it is unclear what games will survive.

Embracer Group has been Failing For A Long Time Now.

People have long been unhappy with many of the titles Embracer has been releasing for a long time. All of this came to a boiling point last year with the reboot of Saints Row. The publisher relied heavily on this game to succeed, investing over $100 million into production for it to flop completely. It was clear from the start that they had no idea what they were doing. The rebooted Saints Row shared nothing except for the namesake with their iconic predecessors. Firstly, people hated the lead protagonists. Nothing about them suggested that they were worthy of being Saints.

Some of the dialogs were so bad it felt like it was generated by chatGPT. Furthermore, the overall story did not help their case either. You would hope the gameplay could save them, but this was false. All you got was repetitive driving missions. The game failed to impress both reviewers and players alike. Due to this underwhelming performance, Embracer Group Lost almost $50 million. This, however, did not discourage them from further investing $162.7 million into PC and console gaming.

Despite its losses, the company was still determined to grow further. They opened up many new studios in the hopes of further expanding. Knowing what we know now, this was a very poor decision. Opening up studios blindly without a clear plan is never a good business move. Gaming is one of the most lucrative entertainment endeavors out there. It is clear that Embracer is trying to get its slice of this. Their plan revolves around throwing as much money into the industry and hoping people will stick around.

Can Tomb Raider Save Embracer Group

When Square Enix announced their intent to sell some studios, Emracer Group acted quickly. In 2022, they officially took ownership of Crystal Dynamics, and with it, they received massive IPs. The biggest franchise they got out of the deal was Tomb Raider. Laura Craft is a hugely popular title; the sales speak for themselves. Since its inception, they have sold over 95 million copies. Due to this popularity, Embracer will be looking to gain as much money out of this title as they possibly can. However, they seem not to trust their development abilities regarding this series.

Despite buying Crystal Dynamics, they want to outsource their most significant export. Instead of allowing Crystal Dynamics to continue with the franchise, they want to rent out the rights for Tomb Raider to Amazon, who is also looking to break into the video game space. It is rumored that this deal will be worth $600 million. Considering that they bought the rights for $250 million, this is a massive return on investment for them. At this point, it is unclear whether this deal will go through.

We do, however, know that Embracer will be pushing forward with Tomb Raider, regardless of whether they lease out the writers to another studio. The company did confirm that despite layoffs, their plans for the next Tomb Raider will continue. The rebooted Tomb Raider Trilogy that started in 2013 sold almost 50 million copies alone. This means that there is plenty of incentive to continue further with the series. The rebooted trilogy is some of the best games I have ever played. As a massive action-adventure fan, I hope this series can continue and be pushed in an existing new direction, regardless of where it ends up.

What is Next For Embracer Group

Embracer Group still has plenty of room to recover from this. They are still a massive player in the space and own some of the biggest IPs in the world. One of those IPs is Lord Of The Rings. They got the exclusive Lord Of The Rings rights when they licensed Shadow of Mordor. However, since acquiring the exclusive rights, they have not done much with the IP. They have been licensing it out to a few developers, but overall, they have not capitalized on it as they should have. This is something that Embracer is aware of.

They said, “We know we need to be exploiting Lord of the Rings in a very significant fashion, and turn that into one of the biggest gaming franchises in the world.” “And that’s obviously something that we’re going to do be doing. That’s a much better use of resources than some of the other projects that some of our teams have been working on.” Based on this statement, it is clear what direction they are leaning towards. They will be cutting back on quantity and trying to focus on quality. The gaming space is more competitive than ever before.

You can no longer afford it. Keep pushing out titles. Game development is expensive, and you need to ensure that you focus on the correct projects. This is a hard lesson that Embracer needed to learn. They thought they could buy hundreds of IPs and become profitable that way. Sadly, this is not how gaining works. If you look at any large game publisher, you will notice that they have only a handful of IPs that make up most of their revenue.

Conclusion

Activision Blizzard is massive, but most of its money comes from Call of Duty and World of Warcraft. Bethesda is massive, but most of its money is from Elder Scrolls and Fall Out. EA is an enormous company with the rights to many classic IPs, but most of its capital comes from Fifa. If Embracer wants to be sustainable long term, it will have to stop buying any studio that is up for sale and focus on a few big IPs that will bring in massive profits for the long term.