Embracer Group Announces Layoffs, Studio Closures, Game Cancellations amid Financial Fallout

By Hope Pisoni | June 13, 2023 | 1:40pm

Video Games News Embracer Group

Embracer Group Announces Layoffs, Studio Closures, Game Cancellations amid Financial Fallout

Gaming mega-conglomerate Embracer Group announced that they would be issuing layoffs, closing studios, cancelling games, and implementing other cost-cutting measures as part of a major corporate restructuring.

Embracer did not clarify who would be affected by the cuts, with CEO Lars Fingefors only stating that significant currently announced games would not be affected, including Remnant 2, Warhammer 40,000 Space Marine 2, Payday 3, Hot Wheels Unleashed 2: Turbocharged, Arizona Sunshine 2, Alone in the Dark, and Homeworld 3. Fingefors declined to state the scale of upcoming layoffs or closures, simply stating that they would be happening.

This announcement comes in the wake of an unknown $2 billion deal for the company falling through last month. The company had apparently staked a lot on the deal’s success, with Wingefors having explained in the latest financial report that the effects of its failure would be severe — and this seems to be what he was talking about.

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Embracer Group has been prioritizing a very large-scale mergers and acquisitions model for the past few years, acquiring 19 different developers last year alone, with them now owning a total of 138 internal studios and a huge lineup of intellectual properties. Some of their more significant properties include Middle-earth Enterprises, granting them exclusive rights to The Lord of the Rings, former Square Enix subsidiaries Crystal Dynamics and Eidos Montreal (known for the reboots of Tomb Raider and Deus Ex), and publishers Gearbox (known for Borderlands and Homeworld) and Coffee Stain (known for Deep Rock Galactic and Goat Simulator). As part of the restructuring, Embracer has stated that they will move away from this approach, focusing on internal development and publishing.

In a press conference following the announcement, executives from Embracer reaffirmed their willingness to cut any projects or studios which they do not find profitable. This could be bad news for games undergoing troubled development, such as Aspyr’s Star Wars: Knights of the Old Republic remake, or studios known for smaller, less lucrative output, such as Little Nightmares developer Tarsier Studios. Additionally, interim COO Matthew Karch singled out The Lord of the Rings as a property the company will focus on in favor of those “less profitable” projects.

“We own Lord of the Rings, and we know we need to be exploiting Lord of the Rings in a very significant fashion and turn that into one of the biggest gaming franchises in the world,” Karch said. “That’s a much better use of resources than some of the other projects that some of our teams have been working on.”

While the targets of the cuts remain largely unclear, we know some studios and projects are safe. Crystal Dynamics confirmed in a Twitter post that their ongoing projects are proceeding with development.

“We want to reassure fans that there will be no impact to our continuing efforts with our partners at The Initiative on Perfect Dark, or our next Tomb Raider title being developed in collaboration with Amazon Games,” the post reads.

Still, the future of the many studios under Embracer’s umbrella seems dire.