Embracer’s Studio Shutdown Spree Forces €600 Million Credit Lifeline
Embracer Group, the Swedish video game and media holding company, has secured a €600 million revolving credit facility, replacing their previous line of credit with better terms, the company announced on July 11, 2024. This move comes after Embracer underwent a major restructuring to make itself a “leaner, stronger, and more focused, self-sufficient company.”
A revolving credit facility, like a credit card, lets you borrow up to a set limit. Embracer Group only needs to pay interest on what they use, and once repaid, they can borrow again within the limit.
The company has been on a massive acquisition spree over the past few years, buying up numerous game development studios and popular IPs, including the rights to both Tomb Raider and Lord of the Rings. However, the company faced challenges when a $2 billion investment deal fell through, leading to significant layoffs and studio closures.
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Embracer’s financial struggles have resulted in the closure of several studios, including Piranha Bytes, the creators of the Gothic, Risen, and Elex franchises. The studio’s closure was attributed to Embracer’s inability to find a buyer or provide additional funding.
The company’s financial difficulties and restructuring efforts have raised concerns about the future of its game development projects and the well-being of its employees. Embracer’s CEO has stated that the company is working to strengthen its financial structure and reduce its financial leverage.
“We have strengthened our financial structure and responsibly reduced our financial leverage,” said Embracer CEO Lars Wingefors in a statement.
The Embracer group’s past actions have drawn criticism from the online gaming community.
Previously, Embracer Studios relied on cheap loans to aggressively acquire studios. This strategy hinged on a risky gamble: that interest rates would never rise and inflation would remain stagnant.
But their gamble didn’t pay off. Now that things have changed economically, Embracer ended up being forced to shut down many of the studios they bought.
