Embracer to Close Studios, Cancel Games, and Lay Off Staff After $2 Billion Deal Falls Through

Embracer Group has announced plans to close studios, cancel games, and lay staff off just weeks after a $2 billion contract deal fell through.

In an open letter to the company’s 17,000 staff, CEO Lars Wingefors said Embracer will decrease spending across the board, reduce third-party publishing, and “put greater focus on internal IP and increase external funding of large-budget games”.

“This morning we announced a restructuring program across the Embracer Group that will make us a leaner, stronger and a more focused, self-sufficient company,” Wingefors said.

Embracer is known as a massive games holding company that's gobbled up developers, publishers, and properties over the last decade.

"It is painful to see talented team members leave. Our people are what make up the very fabric of Embracer."

Its empire includes companies such as THQ Nordic, Plaion, Saber Interactive, Gearbox, Middle-earth Enterprises, Dark Horse Media, Coffee Stain, Crystal Dynamics, Eidos-Montreal, Asmodee, Amplifier, Deep Silver, and many others.

Embracer games set to release in the next year include Remnant 2, Warhammer 40,000 Space Marine 2, Payday 3, Hot Wheels Unleashed 2: Turbocharged, Arizona Sunshine 2, Alone in the Dark, Homeworld 3, and more.

In December, Amazon Games signed a deal with Embracer-owned Crystal Dynamics to support the development of and publish the next mainline Tomb Raider game being made in Unreal Engine 5.

Embracer recently released Dead Island 2, which Wingefors called “one of our greatest successes so far”. Last year's Saints Row fared less well, however.

Embracer is also behind the troubled Star Wars: Knights of the Old Republic remake, which is currently in the hands of Aspyr.

Wingefors hit the headlines last month when a mystery $2 billion deal fell through unexpectedly at the last minute.

According to Embracer, it had a "verbal commitment" for a major deal made in October 2022 which would have included "more than $2 billion in contracted development revenue over a period of six years”.

The partnership supposedly involved "many of the highest rated global advisories onboard with several hundred people engaged on both sides" and final paperwork was even finalised the night before the company's latest financial report was due out.

The day after, in a video call announcing the company’s financial report, a visibility shaken Wingefors struggled to explain the catastrophic impact the collapse of the deal would have on the company. Now, we are seeing that impact.

“Embracer currently engages close to 17,000 people and while that number will be lower by the end of the year, it is too early to give an exact forecast on this,” Wingefors said.

“It is painful to see talented team members leave. Our people are what make up the very fabric of Embracer. I understand and respect that many of you will be worried about your own position and I don’t have all the answers to all questions. I want to be clear that the decisions about this program were not taken lightly.”

"I want to be clear that the decisions about this program were not taken lightly."

Wingefors said Embracer will try to transition those affected to other projects internally, stressing “that while we are removing roles in some companies, we will continue to hire in others”.

“We know, understand and respect that this is a challenging time for every person impacted. For me communication and transparency are key, but it’s also an increasingly difficult challenge in matters such as this program.

“The reality is that the quicker we act, the sooner we emerge as a stronger company.”

Embracer will now start a “thorough review process” for investments in new game development projects. Wingefors warned the company will have an “increased focus on accountability” across the group, “ensuring performance is in line with or exceeding current targets.”

The potential impact from this process will almost entirely be around unannounced projects, Wingefors said, which means all announced “significant” releases will still be released as planned.

“As difficult as some of the decisions we will take over the coming weeks and months will be, we are doing this because we are confident that we will emerge a stronger, more efficient company setting out on a stable future to build even greater value across our many studios and fantastic portfolio of IPs,” Wingefors concluded.

Wesley is the UK News Editor for IGN. Find him on Twitter at @wyp100. You can reach Wesley at wesley_yinpoole@ign.com or confidentially at wyp100@proton.me.