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Swedish gaming giant Embracer Group to cut studios

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Jun 13, 2023
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Illustration: Sarah Grillo/Axios

Swedish gaming giant Embracer Group will undergo a restructuring that will likely include a sale or closure of some of its gaming studios, the company announced Tuesday morning.

Why it matters: Embracer Group was one of the most active dealmakers in the gaming space, with more than 20 acquisitions last year alone valued at more than $1 billion, including the IP for "The Lord of the Rings."

Details: The restructuring will be divided into three phases and last through next March.

  • Matthew Karch was named interim chief operating officer and Phil Rogers interim chief strategy officer.
  • The company's headcount of 17,000 employees will be reduced, though no specific number was given.
  • Going forward, Embracer plans to focus heavily on utilizing its "Lord of the Rings" IP; this comes as Amazon is going into its second season of "The Rings of Power" and Warner Bros. Discovery plans a new set of movies.

The big picture: Embracer Group is reeling after a "transformative" partnership that had been negotiated for months fell apart last month, per Axios Gaming's Stephen Totilo.

  • Embracer said the collapse of the mega-deal, the partner of which still has not been revealed, was unexpected. Embracer said it had a verbal commitment in October and described negotiations as "taking far longer than expected."
  • The news immediately plunged Embracer's stock by 40%. Year to date, the stock is down more than 47%.

Catch up fast: Along with the rights to "The Lord of the Rings," Embracer's assets include the characters and studios tied to the Tomb Raider franchise.

  • The company also accepted a $1 billion investment from the Saudi government-funded Savvy Gaming Group last year.
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