The gaming industry has been no stranger to periodic rounds of layoffs, often resulting from unsustainable spending. The latest company caught in this cycle is Swedish conglomerate Thunderful Group AB, which owns game developer Jumpship and various teams working on the popular SteamWorld games. Thunderful recently announced that it will be laying off approximately 20 percent of its staff as part of a restructuring program aimed at addressing over-investments made in recent years.
The primary goal of Thunderful Group’s restructuring program is to reduce costs and refocus its efforts on areas that offer the best growth and profitability prospects. This includes evaluating the divestment of non-strategic assets. The company acknowledges that the need for such changes arose from over-investments that have proven to be unsustainable in the current market climate. The new management team and board of directors have identified the importance of restructuring and concentrating on strategic assets with long-term potential.
To achieve its objectives, Thunderful Group aims to achieve annual cost reductions of 90 to 100 million SEK (up to $7.5 million). The company plans to allocate 30 to 40 million SEK (up to $3 million) for the restructuring process, with the impact expected to be noticeable in the second half of 2024. The company’s CEO, Martin Walfisz, who took on the role in late 2023, further emphasized the necessity of these measures to ensure the viability and strength of the group. While acknowledging the difficulty of letting go of talented colleagues and partners, Walfisz believes that these changes will ultimately make Thunderful a stronger player in the market.
Thunderful Group AB, formerly known as Thunderful AB, was founded in December 2017. In December 2019, the company merged with Bergsala Holding, leading to significant growth and expansion opportunities. Over the years, Thunderful Group has acquired various game development studios, including Guru Games, Coatsink, Station Interactive, Headup Games, To The Sky, Stage Clear Studios, Early Morning Studio, and Jumpship. At the time of Jumpship’s acquisition in November 2022, Thunderful Group had approximately 480 employees.
The admission of over-investment by Thunderful Group reflects a broader trend among major industry players during 2023. Companies like Epic and Twitch have also acknowledged being overly optimistic in their planning, driven by an artificial boom due to stay-at-home lockdown restrictions. However, the consequences for these executives have been minimal, with few facing substantial material repercussions for their mistakes.
While Thunderful Group’s layoffs are indeed significant, they pale in comparison to the restructuring efforts of another Swedish conglomerate, Embracer. Last summer, Embracer laid off over 900 individuals as part of its ongoing restructuring process. The gaming industry as a whole faces ongoing challenges, and companies must make difficult decisions to adapt and survive.
Thunderful’s decision to undertake layoffs and restructuring is a response to the unsustainable over-investments made in recent years. The company seeks to lower costs and refocus its efforts on areas with better long-term growth and profitability prospects. This move aims to strengthen Thunderful’s position in the market, ensuring its viability for the future. As the gaming industry continues to evolve, companies must remain agile and make necessary adjustments to navigate challenging market conditions successfully.
Leave a Reply