I’ve been a part of the gaming industry for quite some time now both as a gamer and as a journalist, and there are always people that I’m happy to point out are “fools” because of things that they do. And yes, I do call out Nintendo from time to time because they have made huge mistakes in the past (See: The Wii U). But when it comes to The Embracer Group, they are another level of foolishness that makes you wonder if the gaming industry can survive with people like them around.
I say that because The Embracer Group’s CEO, Lars Wingefors, recently did an earnings call (as noted by GameIndustry.biz) with investors and made it clear that the 1400+ layoffs that the group has done so far were basically “best for business,” and that “everyone needs to get through it” in the industry:
“More or less all companies are [going] through a restructuring program. There is less investments made from the industry into content. I think the underlying consumer market is solid and is still growing, but the underlying changes – there’s a lot of underlying changes made to the industry. I think looking at the 8% reduction in workforce [at Embracer], there is obviously – I don’t know the number for the whole industry, but I think it’s something that everyone needs to get through.”
First off, NO, not everyone in the industry is going through layoffs, and that shouldn’t be used as a crutch to justify laying off over 1400+ people (and he also noted more were coming). Second, on the “investments” side, you might recall that a few years back, The Embracer Group went full-tilt trying to buy up companies to have a bigger stake in the gaming industry…then some of their games didn’t do well, and then they lost a two billion dollar deal which caused them to “restructure” things and thus did the layoffs. But did they take the blame for what happened? Or did Lars take responsibility for helping lead to so many lost jobs? Nope!
“So it’s kind of, okay, we had that strategy back then. Now, we need to adjust that, because the cost of capital has increased. So it’s just the overinvestment into content that is not supported by the cash flow from the operations or external capital. You can debate. You can debate the speed we went to build organic growth, but the ambition was obviously to aggressively organically grow the company. Now, we need to adjust for that and that’s basically the core of the issue that we are addressing here.”
This is insulting because I previously worked at one of the companies that got shut down thanks to this group, and there were good people there who lost their jobs due to them. And that’s the problem with companies like Embracer Group, Tencent, and more; they see this as just “money opportunities” and don’t take the time and effort to cultivate the companies they’ve bought. As a result, more layoffs from there are likely to happen for some time.
