There is probably no company more emblematic of the workplace chaos that’s gripped the videogame industry than Embracer. After rapidly expanding into a gaming behemoth, the studio went off a cliff in 2023 after the collapse of a planned $2 billion investment deal with Saudi Arabia’s Savvy Games Group. But Matthew Karch, CEO of the newly spun-off Saber Interactive, believes Embracer CEO Lars Wingefors “gets a bad rap” for all the layoffs and studio closures that followed, saying in an interview with GamesIndustry that in reality, “nobody has been guided by more of a sense of fairness and reasonableness.”
Embracer acquired Saber Interactive in 2020, making Karch—formerly the CEO of Saber—a member of its board. In 2023, Karch took over as Embracer’s chief operating officer, and then in 2024 founded a company called Beacon Interactive that acquired most of Saber Interactive from Embracer in March.
“The process that we’ve had to go through to terminate studios has absolutely been… it’s killed us,” Karch said. “I say ‘us’ even though I’m no longer part of the company because I feel like… I mean, I still have shares, I still have close relationships and good friends, and obviously the best wishes that they succeed over there. But I would say Embracer tried harder than anybody to save as many jobs as it could.”
Karch said the failure of the Savvy Games Group deal meant Embracer was forced to make “significant changes,” but also pointed a finger at other commonly-cited factors for layoffs and closures, including rising interest rates that made it more difficult to raise money and “a lack of patience for companies that had investments that were long term into video games.” The growth of Embracer’s debt and decline in its share price, which he blamed in part on people “trying to take advantage of other people’s misery” by short-selling the stock, also made it difficult to raise capital.
Interestingly, Karch said Embracer didn’t really need the Savvy Games Group deal, but “there’s pressures from the market to continually grow and to grow fast, and those market pressures can sometimes impact the way you perceive things and judge them.”
“It is true that when you gather so many assets so quickly, you have to take a deep breath and take stock of what you have,” he said. “And I also think that when the markets are supporting this manic kind of growth and you’re in a situation where you could take advantage of that, it’s hard not to leverage that. It’s hard not to leverage a strong share price to go out and buy assets.”
I’m not a big-time CEO so I can’t speak with authority on the matter but it seems to me that accurately perceiving and judging your company’s disposition, and resisting the urge to go ham with the money trucks when you’re riding high, is literally a CEO’s job. And I don’t see how you can judge Wingefors’ performance as anything more than, well, he blew it: He overplayed his hand, overextended the company, and now other players, including Karch, are picking through the rubble.
Of course, Wingefors doesn’t stand alone in this particular tire fire. Executives throughout the gaming industry acted like the surge driven by the stay-at-home early years of the Covid-19 pandemic was a permanent state of affairs, and that growth—constant, relentless, blood-sucking growth—would continue to drive forward from that new baseline.
It didn’t happen, because of course it didn’t, and the wreckage left in the wake of those faulty assumptions has thrown thousands of lives into turmoil. There’s plenty of blame to go around—Wingefors just takes extra heat because of the scale of Embracer’s downfall and some occasional ill-chosen words about “maximizing shareholder value,” although he seems to have learned to change his tone more recently.
Following the recent sale of Gearbox to Take-Two Interactive, Wingefors announced that Embracer is “ending [its] restructuring program,” and Karch said he’s “bullish” on its future. “I think they’re a great company and I think they’re really, really great people. I just feel badly that the last year has been so stressful—it’s been stressful for me too.”
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