Embracer founder and executive chair Lars Wingefors, the main architect behind the company's infamous $2b disaster from 2023 that resulted in thousands of lost jobs, canceled games, and shuttered studios, says the restructuring has been about giving a select number of developers and IP the chance to "prove themselves."
It's irresponsible and unfair to pin the industry's ongoing layoff crisis on any one company, but Wingefors is right to point out in a recent open letter to shareholders that "we have become closely associated with industry layoffs." According to a report published by marketing firm Udonis, Embracer laid off 7,800 employees, canceled more than 80 games, and shut down dozens of studios in the two-year period between 2023 and 2025 following the collapse of its deal with the reportedly Saudi-backed Savvy Games. Some Embracer-owned entities, like Deus Ex studio Eidos Montreal, are still being impacted by that fallout as recently as March 2026.
Regardless, Embracer's wait-and-see approach to downsizing is an intentional alternative to the usual one-and-done mass layoffs all of the other big companies have been doing, says Wingefors.
"Looking back at the large adjustment we made in 2023, we decided not to do a hard 'US Corporate style' headcount reduction, but to give a number of studios and IPs the chance to prove themselves," he tells shareholders. "We have been and are still adjusting to a new industry post-pandemic to drive value. We are now finally past the largest cycle of productions started prior to or during the pandemic."
I don't have to point out, but will anyway, that the games industry has been in a period of unprecedented restructuring since just after the Covid boom in 2020, and it's hard to think of a major game developer or publisher that hasn't been in the news for related reasons multiple times in recent years. That said, Embracer's $2b debacle and its ensuing fallout stand out as some of the grimmest examples of the turmoil that will one day define this period of the video game industry.
On the bright side, as Wingefors says, "we are seeing great business for PC/Console games based on proven IPs or licenses, especially large, great single-player experiences," adding that Embracer's data shows big interest in "high-quality games" like Kingdom Come: Deliverance 2, which "has already reached a ROI of 3.2x just 14 months post-release, with great continued momentum for the future."
