Embracer hits another rough patch as company misses key targets

All eyes in the video game world were on the Embracer Group last week as the publisher released its quarterly results, which included the latest update to the ongoing restructuring plan. After years of acquiring video game studios, Embracer’s funding was pulled, and the company has been in dire straits. According to CEO Lars Wingefors, the company is on track to miss its Q4 debt target.

Embracer ended 2023 with $1.5 billion net debt, and the original plan was to reduce this by almost half to $762.1 million by March 31. With the news that the company is likely going to miss this target, what does that mean for its immediate future?

Wingefors explained that the company still has divestments to make, with a large-scale program in place that can still significantly reduce Embracer’s overall debt. There was no indication as to what parts of the company could be sold off.

Embracer has made big moves in reducing headcount, slashing 8% of total headcount in the second half of 2023. Additional cuts made after January 1 came after the cut-off date for the Q3 report but have also been substantial. Reflecting the reduction in headcount, the company revealed that 179 video games are currently in development, down from 224.

Q3 did end up being profitable for Embracer, bringing in $1.2 billion in sales. Wingefors expects further quarters to also be profitable following the decision to be more selective when it comes to publishing titles, as quality will be the focus over quantity. Notably, the video game division was down 9% from last year, with most sales coming from the back catalog.

That will change moving into 2024, as during Q4, Embracer will be releasing Tomb Raider 1-3 Remastered, South Park: Snow Day, Alone in the Dark, and Homeworld 3.