Steamworld Build developer Thunderful Group announced a restructuring program today, January 17, 2024, that will lead to a 20% cut in headcount. The group said the restructuring was necessary “for strengthened long-term competitiveness”.
The Swedish video game holding company headquartered in Gothenburg is made up of about 30 subsidiaries including three publishers and seven development studios. Thunderful Group blamed the restructuring on “over-investments made in the last few years”.
“These investments have proven unsustainable given the current industry climate, which has resulted in the Group being particularly affected by challenging market conditions,” read the statement posted on the company’s website.
The statement further explained that the new management team, together with the board of directors have decided to refocus the Thunderful Group’s efforts on strategic assets that have the best long-term prospects. Consequently, the Group will “review investments and adapt its cost structure” to cut down its annual cost and improve cash flow.
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Thunderful Group wants to achieve a cost reduction of 90 to 110 MSEK (approx. $8.6 – $10.5 million) annually and boost cash flow by a similar amount. The Group believes the impact of the cost savings will start to manifest in the second half of this year.
“The restructuring program, which is expected to affect approximately 20% of the workforce, is estimated to incur one-off expenses of 30 – 40 MSEK (approx. $2.9 to $3.8 million) in the first half of the year, and is subject to negotiations with relevant trade unions and other counterparts.”
Thunderful Group held a live webcast to discuss the restructuring today at 15:30 CET. The Group is believed to have around 500 employees meaning that about 100 employees are expected to leave the company in the first half of this year.
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“Since I joined as CEO in the fall of 2023, we have evaluated the current business and the future position of Thunderful,” said CEO Martin Walfisz. “To ensure and strengthen the viability of the Group, we have found no alternative other than to reduce costs and focus the business on areas with the best future growth and profitability prospects. It has been difficult to make these decisions, and it saddens me that we will have to say goodbye to many skilled colleagues and partners. Nevertheless, I am convinced that this is a necessary direction for Thunderful and that these changes will make the company a stronger player in the market.”
It is unclear if Thunderful Group restructuring will affect the game development arm
Thunderful Group consists of three arms namely Thunderful Development, Thunderful Publishing, and Thunderful Investment. Thunderful Development has a game portfolio with 24 game titles that have collectively sold over 15 million copies.
Thunderful Publishing is in charge of publishing titles that were jointly developed with Western game studios. It also has Rising Star Games which has the primary role of publishing Japanese games in the West.
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The last arm of the company, Thunderful Investment was created in 2021 after the acquisition of Robot Teddy. The investment arm of the company plans to launch two investment funds: “one focused on game development and vertical slices, and the other for those who seek support for their VR-projects”.
It is not yet clear if the 20% cut in headcount will affect all the arms equally or if the cut will be made in only one of the arms. Also, we don’t know yet how the restructuring will affect the investment arm of the business—which was blamed for the restructuring in the first place.
Massive video game layoffs started in 2023 with several companies announcing restructuring and layoffs including Embracer Group, a fellow Swedish company. The layoffs have not slowed down this year. Several companies have already announced layoffs this year including Embracer-owned Lost Boys Interactive and Unity.
