Q

Anonymous asked:

Obviously Embracer did not buy studios with the hope that they would shut them down. What did they see that made them think it wouldn't go this way? What were they wrong about?

A

Embracer, much like all the other tech companies, was riding high on the early pandemic rush. Player counts were jumping, earnings were high, everybody was stuck inside and wanted to play video games. They expected that the good times would continue to roll on, so they started buying up studios at a premium in order to capitalize on it. I remember those times very well - I got a ton of recruiters sending me emails and cold calls constantly during that time. The job hunting process was also accelerated - when I finally put myself on the job market, I got more than one offer right after the initial interview. At the time, lots of studios were flush with cash and looking to hire, so they were rushing through the hiring process.

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Unfortunately, the good times did not last. When the numbers started trending back towards pre-pandemic values, the publishers’ massive investments ended up not translating to the kind of earnings they had banked on. Remember that game studios drain money over time - we workers don’t work for free. If the money coming in from sales isn’t enough to offset the money going out to pay the workers, the company’s days are numbered unless they do something to either increase income or decrease expenses. Since the publishers weren’t able to increase income, they needed to decrease expenses - closing studios and laying people off.

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Many publishers are following a similar playbook - layoffs and cost cutting - due to overspending during the pandemic and needing to fix their numbers now that the situation has changed. EA announced layoffs, Activision-Blizzard announced layoffs, CD Projekt RED announced layoffs, Niantic announced layoffs, and so on and so forth. Embracer bet bigger than many others by buying up those studios, so they took a bigger loss when the numbers didn’t pan out.

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Sep. 5 2023
#the business of video games #financial things #revenue targets #game production costs
51 notes

Notes

  1. mikahorror reblogged this from askagamedev
  2. wolfgabe reblogged this from askagamedev and added:
    TLDR just another victim of the pandemic tech bubble bursting.
  3. ekansbot reblogged this from felassan
  4. felassan reblogged this from askagamedev
  5. stupid-mr-fox reblogged this from askagamedev
  6. greatwyrmgold reblogged this from askagamedev
  7. runonthewater reblogged this from askagamedev
  8. supercomputer276 reblogged this from askagamedev
  9. ondonasand reblogged this from askagamedev and added:
    This really feels to me like Homer Simpson investing heavily in Pumpkins in September and holding until January.
  10. dylthulhu reblogged this from askagamedev
  11. linzi-7 reblogged this from askagamedev
  12. alchemistmaycry reblogged this from askagamedev
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  16. askagamedev posted this
    Obviously Embracer did not buy studios with the hope that they would shut them down. What did they see that made them...