To simplify, each project has to earn its right to exist, which means we will increase our efforts to put quality first even further, and make sure we create unique positive player experiences.Embracer Group is now being more selective in which games it approves for development as titles like Saints Row miss sales targets.
Saints Row apparently was a sales bomb and it's possible the game has yet to turn a profit. Embracer's latest Q3 earnings report outlines the situation in detail, and from what we can tell, it looks like the development costs of certain games are exceeding the earnings from these specific titles. This has led to a drop in profitability for the PC and console gaming segment as certain games like Saints Row delivered lower-than-expected return on investment (ROI).
Now Embracer Group is tightening its belt and is carefully weighing which games it chooses to greenlight. Saints Row in particular was hit with low review scores and is the most controversial game in the beloved series due to numerous glitches and bugs at launch. Back in September 2022, Embracer CEO Lars Wingefors said that the new Saints Row reboot would "make money" but it wasn't "very likely" to achieve high ROI. Even still, Embracer is not willing to close out Volition or put the Saints Row franchise on ice.
Here's the quote from Embracer's Q3 report:
The profitability in PC/Console in Q3 is also impacted by the amortization of game development costs for titles released with a lower ROI in Q1 and Q2, including the Saints Row reboot. It is a fact that certain operative groups in our PC/Console Games segment have underperformed our expectations this year, largely driven by a sub-par ROI for its new game releases.
Rather than a structural shift, we believe it is mainly an effect of mixed reception for several releases, combined with a more normalized market and softer consumer purchasing power this year. Our core business is making a healthy risk-adjusted profit on games.
We have therefore increased management focus and efforts to optimize investments and efficiency across the group even further.
To simplify, each project has to earn its right to exist, which means we will increase our efforts to put quality first even further, and make sure we create unique positive player experiences.