Tomb Raider, Lord of the Rings owner Embracer to close studios, cancel games

The Swedish gaming conglomerate Embracer Group will be undergoing a major restructuring. This will force the company to shut down multiple studios, and cancel several titles. It comes just weeks after the news that an unexpected $2 billion income deal had fallen through.

The CEO Lars Wingefors made the announcement in an open note, a webcast for investors and a press release published on Tuesday. The restructure, he said, is divided into three phases. It is anticipated to last until March 2024. These phases are not clear, but they will be under the guise that cost-savings and debt consolidation is being done to bring down the total amount of debt to below 10 billion Swedish Kronas, or $930 millions.

Matthew Karch, the now former Saber Interactive CEO and current interim chief operating officer, said, however, that the first phase of cost-saving will be “immediate and noticeable.” This means that an unknown number of Embracer Group’s 17,000 staff will be laid off as part of the process. Wingefors, nor Embracer Group has provided any details on when they will be closing or laying off employees. Polygon has contacted the publisher to get more details.

“Embracer currently engages close to 17,000 people and while that number will be lower by the end of the year, it is too early to give an exact forecast on this,” Wingefors said in the letter. Karch said the studios to be closed are “underperforming,” or not creating games “up to our standard.” Embracer Group said that the impacted projects have “not yet been announced” and have “low projected returns” on investment.

Embracer Group has the licenses to Lord of the Rings and Tomb Raider. It acquired Tomb Raider in 2022 when it purchased Eidos from Square Enix, Crystal Dynamics from Square Enix, and Square Enix Montreal. In that year, Embracer Group purchased the licensing rights for The Lord of the Rings The following are some examples of how to get started: The HobbitMiddle-earth Enterprises, the rights-holder Middle-earth acquired. Embracer has announced five Lord of the Rings titles that are in development.

The implication of the news release is that any announced game is “safe” from the restructuring plan — or, at least, will not be canceled. Karch, in the webcast, added a caveat, saying that the games canceled have “for the most part” not been announced.

The announcement will be made in the following order: Crystal Dynamics put out a statement on TwitterIt has confirmed that the upcoming Tomb Raider video game and The Perfect Dark The restructuring will have an impact on the workforce.

“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,” Karch said. “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.”

Embracer Group’s two big acquisitions are not alone; the publisher also owns Saints Row publisher Deep Silver, and has spent the last few years consolidating the video game industry by buying up studios. Embracer Group, since 2020 has bought or established well over fifty game studios. It’s part of a larger trend of seismic acquisitions and consolidation in a span of a few years that saw Grand Theft Auto publisher Two-Two Interactive buying mobile giant Zynga, Microsoft’s planned acquisition of Activision Blizzard for a staggering $68.9 billion, and Sony’s buyout of Destiny 2 developer Bungie. Embracer Group expanded its portfolio to include comics and board games by purchasing Dark Horse Comics as well Asmodee.

It appears, however, that Embracer Group’s rampant buying spree may have happened too fast — and now it’s struggling to keep up with the responsibility and cost of its purchases. Embracer Group had a $2 billion mystery partnership planned to help bail it out, on top of its $1 billion investment from Saudi Arabia’s investment fund, that fell through at the last minute. Embracer Group was forced to reduce its projected earnings to between $655 and $840 million as a result of this news.

In its recent earnings report in May, Embracer Group said the previous financial year was “challenging” due to “lackluster reception” to “notable releases” and game delays, despite net sales being up 121% at roughly $3.5 billion.