The former CEO of Embracer has stated that the spin-off of Fellowship Entertainment represents the "most effective long-term solution"

Lars Wingefors, the former CEO of Embracer Group, has expressed that spinning off Fellowship Entertainment is viewed as the optimal solution for the long term. Now serving as the board chair after vacating the CEO position in June, Wingefors communicated his thoughts through an open letter to shareholders, coinciding with the announcement of the spin-off.

Fellowship Entertainment is set to concentrate on managing a roster of intellectual properties, including Kingdom Come: Deliverance, Tomb Raider, and Lord of the Rings. Embracer intends to enhance operational efficiency by refining its structure, exercising strict control over costs, and strategically allocating capital.

Wingefors noted the primary objective of the spin-off is to intensify management focus and fully leverage the potential of these IPs, their respective communities, and top-tier game developers. He mentioned that similar to the approach taken with Asmodee and Coffee Stain, which were spun off in April 2024, Fellowship Entertainment is expected to flourish as an independent entity.

Expressing confidence in the assets held by Fellowship Entertainment, Wingefors stated they are significantly undervalued and emphasized his responsibility as a major shareholder to enable these assets to reach their full potential. He predicted that the company could achieve industry-leading profitability and robust organic growth above the sector's average.

He assured that overall corporate expenses are not anticipated to rise as a result of the spin-off. The aim is to maintain a streamlined and efficient overhead across all groups. The separation is aimed for 2027, aligning with Fellowship Entertainment's solid product lineup from that year forward.

Addressing the broader context of job reductions across the industry, Wingefors mentioned that Embracer has made considerable efforts to retain as many employees as feasible during challenging periods while balancing the imperative of sustain a profitable business.

This time frame included a nine-month restructuring phase following the breakdown of a $2 billion partnership, reportedly with Saudi Arabia's Savvy Games Group, in 2023. The restructuring affected over 1,400 staff members and led to the closures of studios such as Volition Games, Free Radical Design, Campfire Cabal, and Piranha Bytes.

Additionally, Embracer sold off Saber Interactive, Gearbox, Arc Games, and Cryptic Studios. Eidos-Montreal recently experienced significant changes, including 124 job cuts and the departure of studio head David Anfossi.

Reflecting on the substantial adjustments made in 2023, Wingefors asserted that they opted against a drastic reduction in headcount typical of US corporate strategies, instead giving numerous studios and IPs a chance to demonstrate their potential.

He mentioned the company is still adapting to the industry’s post-pandemic reality in pursuit of creating value, with production cycles launched before or during the pandemic now concluding.

Reiterating previous points, Wingefors emphasized this period as a unique opportunity to shape Embracer's future. Lessons learned over the past decade will be instrumental as they establish a foundation for the next ten years, influencing both the existing and future companies.