Embracer Group Interim Chief Operations Officer Matthew Karch detailed the company will be focusing on exploiting The Lord of the Rings franchise going forward after the company announced a restructuring plan and significant layoffs.

The Lord of the Rings: Rise To War (2021), NetEase Games

Embracer Group CEO Lars Wingefors announced the restructuring and layoffs in an open letter earlier this week claiming this new path will make the company a “leaner, stronger and more focused, self-sufficient company.”

He added, the restructure will take the company from their “current heavy-investment-mode to a highly cash-flow generative business this year.” It is also supposed to enable them “to meet the worsening economy and market reality as a strong company and it will fundamentally change our prioritization of growth with raised capital towards optimization and growth based on our own cashflows.”

Orcs howl in The Lord of the Rings: Return to Moria (2023), North Beach Games

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This restructure includes layoffs with Wingefors noting, “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.”

He added, “It is painful to see talented team members leave. Our people are what make up the very fabric of Embracer. I understand and respect that many of you will be worried about your own position and I don’t have all the answers to all questions.”

The Lord of the Rings: Gollum (2023), Daedalic

While the company is making cuts, Wingefors also detailed, “It’s important to note that while we are removing roles in some companies, we will continue to hire in others. We know, understand and respect that this is a challenging time for every person impacted. For me communication and transparency are key, but it’s also an increasingly difficult challenge in matters such as this program.”

Not only will they be making cuts, but entire studios are on the chopping block with Wingefors outlining, “The actions will include, but not be limited to, closing or divestments of some studios and the termination or pausing of some ongoing game development projects.”

He continued, “It will also include decreased spending on non-development costs such as overhead and other operating expenses. We will reduce third party publishing and put greater focus on internal IP and increase external funding of large-budget games.”

The Lord of the Rings: Return to Moria (2023), North Beach Games

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The layoffs come as part of the first of a three phase plan to restructure the company. This first phase was described as Wingefors as one that “mainly targets cost savings across the group.” He noted this phase went into effect today. The second phase also went into effect immediately, but it’s unclear what it entails other than that it requires “further analysis to determine specific actions.”

The third phase also appears that it will include layoffs as he notes it will “focus on internal consolidation, further resource utilization and more synergies across the Group.”

The Lord of the Rings: Rise To War (2021), NetEase Games

During the company’s press conference, Karch stated, “I’ve been with the company for many years and I’ve seen vast ways in which I think we can improve that I consider to be low-hanging fruit. I’m excited to get these plans implemented and to show some really rapid and visible result.”

“And for that purpose we are initiating multiple actions that are going to strengthen our cash flow generation and that will leverage our portfolio of IP, which I consider to be some of the best in the world to create a stronger company,” he relayed.

Karch would then go over the three phases that Wingefors went over in the letter reiterating that as part of the cost savings plan they will be shutting down studios and ending development on unannounced projects. He also detailed they plan to weed out redundancies and will be implementing a more data-driven outlook to forecast how well their games will perform.

The Lord of the Rings: Return to Moria (2023), North Beach Games

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During the Q&A portion of the press conference, Karch answered a question about the potential growth opportunities for the company amid the restructuring. He answered in part, “With some more centralization, and I’m obviously not implying we are moving from one model to another, but we are going to incorporate elements of consolidation and centralization into certain aspect of our business.”

“We are going to have a much better picture of the teams that are coming available. And we are going to have much better data to support product selection and to create product which is going to ultimately achieve better results than some of our past products have. And so I have a high degree of confidence that this entire process is going to easily translate into better product selection that is more profitable and that gives us a better opportunity for growth in the future.”

The Lord of the Rings: Gollum (2023), Daedalic

He then touched on The Lord of the Rings, “And that helps to leverage the IP that we own within our organization. I mean we own The Lord of the Rings. We know we need to be exploiting Lord of the Rings in a very significant fashion and turning it into one of the biggest gaming franchises in the world. And that’s obviously something that we are going to 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.”

“Working together we have those opportunities and we are super excited to put that to work relatively quickly,” he concluded.

The Witch-king and a Nazgûl (Ringwraith) attack an elf via The Lord of the Rings: Heroes of Middle-earth (2023), EA

The Witch-king and a Nazgûl (Ringwraith) attack an elf via The Lord of the Rings: Heroes of Middle-earth (2023), EA

What do you make of Karch’s comments and Embracer Group’s plans to exploit The Lord of the Rings?

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    John F. Trent
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    John is the Editor-in-Chief here at Bounding Into Comics. He is a massive Washington Capitals fan, lover of history, and likes to dabble in economics and philosophy.