- With Embracer splitting into three separate entities, let’s look at what happened
- Why are some studios getting a vociferous reaction just for being part of Embracer?
- And what does it say about how people are going to view companies like them
So here we are, many months down the line and it seems that Embracer Group, that great big boogeyman of gaming, is going the way of the dodo. Splitting into three separate groups, the original Embracer is set to functionally cease to be, as all three of these will be listed as separate entities on stock exchanges, although they’re set to intermingle.
Yet, for those hoping this might signal an end to Embracer’s megalomaniacal ambitions and a return to some form of sanity for the companies under them, unfortunately for many they aren’t done putting many of them on blast.
You only need to look at a thread on Twitter by industry insider Wario64 announcing these changes to see a wide spectrum of mainly negative assessments towards Embracer and these new groups. Particularly the names ‘& friends’ does sound indescribably twee, doesn’t it?
So for many developers, Embracer, which promised to be a massive corporate supergroup channelling untold amounts of cash into gamedev, has now become the proverbial albatross around their neck. Aside from layoffs, cuts and more, it seems as if merely being associated with them is going to reputation-shredding for many companies.
The warning signs
Despite what you might think, Embracer really wasn’t the darling of business. Many analysts, commentators and others in the industry were actively sceptical if not sounding the alarm directly about Embracer’s business practices. The idea that you could turn a profit while making massive acquisitions, even then, seemed like a long shot at best.
It’s not a bad strategy. After all, if you acquire the best and most successful companies it’s like throwing mud at a wall, something’s got to stick. The problem was that acquisitions were all Embracer did or seemed to be doing. And no matter how great a developer is, you can’t have them instantly double sales overnight, or more pertinently you can’t have them develop a great, best-selling product overnight.
Again, cut away the PR speech and many were rightfully confused. But, most assumed they must have known what they were doing. After all, you don’t throw about that kind of money without some kind of an ironclad plan for turning a profit.
Was there a plan?
Now, for a peek behind the curtain, it’s important to remember acquisitions are controversial even in the gamedev industry. Pull back the curtain of PR and it’s obvious many are rightfully sceptical of whether or not they’ll fall into the hands of a ‘good’ company that’ll let them do what they did before, just with greater resources, or someone intent on squeezing them dry.
Embracer seemed to be the former, intending to form a ‘supergroup’ where the sheer weight of all their companies would inevitably turn a profit. And then last year happened.
With one failed deal, Embracer basically started to implode under its own weight overnight. Essentially, the company had an in-writing-only deal for $2bn on the table, something that’d provide a much-needed cash injection for their game development side of things.
Unfortunately, quite literally at the eleventh hour that deal fell apart, and CEO Lars Wingefor had to stand in front of investors and admit as much. For people who are only really in it for the money, it’s basically as bad as telling them a tidal wave is about to hit. So naturally, panic ensues.
Cut to the case
We don’t need to go over the nitty-gritty of what happened next. Layoffs were implemented across nearly all of Embracer’s owned studios, companies were sold off and quite quickly the company became either a laughing stock or attracted the kind of venom usually reserved for war criminals and celebrity talk show hosts.
And now, we’ve seen Embracer split into three separate groups; Asmodee Group, Coffee Stain & Friends, and Middle-Earth Enterprises & Friends. Effectively ending the dream of a corporate supergroup in favour of really what they were before – groups focused on a clear niche and objective.
Stained names
But perhaps the most telling thing about this whole debacle is that actual good companies caught up in Embracer’s grasp are now catching strays as a result of the news. Coffee Stain, a company that publishes titles such as Goat Simulator -okay stay with me -but also fantastic games like Deep Rock Galactic, Songs of Conquest, Valheim and Satisfactory, is now getting both barrels from many players.
While we can definitely argue about behind-the-scenes practices and whether or not any publisher can be ethical when caught up with as monolithic a corporation as Embracer, it’s hardly fair to tar every studio under them with the same brush. For many employees and developers, they have as little say in whether their company gets acquired and what the parent group does as they do in whether they face the sack.
Put simply, it feels unfair to suddenly go after the individual parts when it’s Embracer as a whole that’s arguably the problem. Or was, in this case. I don’t think it’s crazy to say that you can’t call a publisher that brought us some really amazing games ‘bad’ or ‘terrible’ by any stretch of the imagination.
But then, Embracer’s name isn’t just mud, it’s actively toxic at this point, at least in terms of public discourse. Not entirely undeserved, but as we noted it does seem to be spreading to other companies who didn’t have any say in Embracer’s business decisions.
The ones that got away
Case in point, Saber Interactive. Saber made a split from Embracer in a pretty big way post-restructuring plan, and got plenty of cheering from the sidelines as a result. But even then the CEO of Saber Interactive Matthew Karch insisted that it wasn’t an acrimonious split. Even somewhat martyring Lars Wingefor in the process.
Now, we can dig into the idea that Embracer was, “as small-town and homegrown of a large organisation as you’re ever going to see,” some other time. Point being, Karch didn’t really seem to change his opinion on Embracer, he merely saw the writing on the wall and the signs of a sinking ship.
So then it can seem a little uneven that Saber gets kudos for making a split whereas other companies unwilling or unable to part from Embracer still get saddled with the same sorry reputation as their parent company.
It all falls apart
This is one of the clear takeaways. Right now Embracer is basically the watchword for either ‘gross incompetence’ or ‘corporate conniving’ to many players, and it’s not entirely unearned. Embracer itself wasn’t a developer, or even a publisher, it was a holding company; and right now its legacy is that of a spectacular failure, massive layoffs and a frankly ignoble end.
And while Lars Wingefor eats humble pie, the fact he’s staying on is sure to baffle many. Yes, dethroning a CEO is not an easy thing and for many the idea of leaving the ship rudderless is more frightening than keeping them on. But the message for many is “Different name, same game.” Although we wouldn’t be surprised if Embracer’s ‘acquire, acquire, acquire’ strategy is now permanently shelved.
Embracer touched on virtually every part of the gaming industry, from PC, to console and mobile. So for many the company has become a focal point for anger about corporate interference and mismanagement, from an impressively diverse array of viewpoints. All of them seem to agree Embracer’s own mismanagement was the cause, and that the layoffs and restructuring as a result were all completely avoidable.
What does this all mean?
Now, ultimately this piece isn’t suggesting that there will be much of a material effect on Embracer or its new form by people getting angry, righteous as that anger may or may not be. Right now the corporation is effectively defunct and has trimmed the ‘fat’ (in this case, many talented devs and employees) to try and stay afloat, so harsh words are probably the least of their concerns.
But it does indicate that all of this has effectively done very little for most of the companies under them except saddle them with a lot of layoffs and an equally rotten association with Embracer. As we said, many have little say in what happens unless they make a full split from Embracer like Saber Interactive did, and we’re not privy to all the behind-the-scenes negotiations that led to them being able to part ways.
More importantly, is anyone actually going to learn a lesson from this? Survey says, probably not.
