On February 13, Swedish games developer Embracer reported that its third-quarter operating profit fell below market expectations due to increased user acquisition costs in mobile games and underperformance in box office results.
Embracer, along with other gaming companies, initially benefited from the surge in demand for video games during COVID-19 lockdowns but has faced challenges such as declining demand, development setbacks, and mixed reception of some recent releases.
In a bid to cut costs and manage debt, Embracer has initiated restructuring efforts by selling off some of its studios and is transitioning into three separate publicly traded entities.
With over a hundred studios worldwide, Embracer is renowned for popular game franchises like Tomb Raider, The Lord of the Rings, and Kingdom Come: Deliverance.
CEO Lars Wingefors acknowledged industry challenges, stating, "Delays are always part of the industry... we will give games more time if needed." For instance, the release of 'Kingdom Come: Deliverance II' was delayed to improve the player experience.
Embracer reported an 11% drop in adjusted operating profit to 1.18 billion Swedish crowns in the quarter ending in December, missing analysts' forecast of 1.73 billion crowns. The PC/Console games segment revenue decreased by 23% year-on-year.
Looking ahead, Embracer disclosed it has 10 AAA games in development for the next three financial years, with eight from internal studios and two from external developers.