In the three years that we have seen this ongoing wave of industry layoffs, the one company that seems to have struck the most emotional chord was Embracer Group. After spending a few years acquiring several smaller studios and ips, Embracer suddenly announced that a big money deal they were hoping would fund the venture did not push through. As a result, they ended up cancelling multiple games and closing several studios.
And so, what should have been cause to celebrate Embracer, became the reason they are one of the most disliked video game publishers today. One particularly egregious move was the closure of Volition Studios. Volition completely fumbled on their Saints Row reboot, but with hindsight being 20/20, that’s no good reason to suddenly shut down a 30 year old studio, perfectly capable of making that money back in time.
Another studio under Embracer whose fate turned out better was Saber Interactive. Saber was fortunate to find investors to buy them from Embracer. That allowed them to spin off into an independent company. They even took some studios and games with them. Coming off of the success of Warhammer 40,000: Space Marine 2, Saber just announced they are working on Warhammer 40,000: Space Marine 3.
Today, Saber Interactive CEO Matthew Karch had some interesting comments to make about Volition and their Saints Row reboot in an interview with GameFile. To paraphrase from GamesRadar’s coverage of said interview:
“They were so expensive for what they were. They didn’t know what they were building. They didn’t have any real direction. It couldn’t last. And so, who’s going to fund them for the next game after that disaster?
It would be nice in an ideal world for everyone to have a job. But games with nine-figure budgets are making eight figures in revenue and that’s dooming a lot of developers.
The days of throwing money at games other than maybe the GTAs of the world is over. It’s over. This business needs to mature. If it doesn’t, the whole business is in trouble. Unfortunately, that means layoffs.”
Karch’s comments today line up with his surprising defense of Embracer’s CEO, Lars Wingefors, weeks after they finalized Saber’s exit from Embracer Group. As Karch argued, Wingefors wasn’t gobbling up IP out of greed, and he had a real desire to make the kinds of games gamers wanted to play. To quote Karch once again from before:
“But when the market shifted, the market lost patience. And when the market lost patience, hard decisions had to be made because there was just no way to sustain everything that was going on.”
Perhaps this perspective is a little bit easier to see now, seeing how other layoffs and studio closures have played out. In the very obvious case of Concord, one would argue that Sony should not have bought the IP or its studio in the first place. A smaller live service game that didn’t work out would not have been as big a scandal, nor it would have led to that many more layoffs.
Subsequently, Sony had layoffs at Insomniac, and Microsoft had layoffs at the Call of Duty studios, even though both were huge money makers for their respective companies. Sony & Microsoft understand that those moves would lead to lower morale in their staff, whether you believe they sincerely feel bad for their employees or not. Of course, they would avoid having those layoffs if they could.
It’s clear that what Karch is saying lines up with what is even common knowledge among gamers. Video games have been becoming more expensive to make, but they aren’t making as much money back to justify those costs. Even as video games are bigger than Hollywood, the industry needs to keep an eye out for sustainable business practices. We don’t know if everyone will start to become as much of a spendthrift as Nintendo, but Nintendo’s example does stand out for averting hubris and finding reasonable pathways to become an enduring success.
