Embracer Group's reported 2023 Saudi deal collapse is still wreaking havoc in 2024

Embracer Group's reported 2023 Saudi deal collapse is still wreaking havoc in 2024
Images via Embracer Group

Written by 

Dani Cross

Published 

30th Jan 2024 10:32

If you’ve been paying attention to the state of the video game industry in recent months, you’ll know it’s currently being ravaged by job losses and studio closures.

Whether it’s 1900 jobs cut at Microsoft, losses across various departments at Riot Games or the studio closures courtesy of Embracer Group, every week has brought a new wave of tragic layoffs. The reasons for many of these layoffs aren’t entirely set in stone. Some blame over-hiring during the COVID-19 pandemic, while others have games that simply haven’t sold as much as publishers were hoping for.

But Embracer Group is a different story, and the reasons for its failures are far more frustrating.

Quick Acquisitions

The main characters in Borderlands 3, a game owned by Embracer Group after buying Gearbox.
Click to enlarge

Looking at Embracer’s list of acquisitions fills me with terror. It’s an immense line-up of companies, many of which created well-known IPs and beloved franchises, full of skilled, passionate developers. Under Embracer Group, these people are all under threat.

Since 2017, Embracer has been scooping up companies at a rapid rate. These companies include Gearbox Software, Koch Media, Coffee Stain Holding, Saber Interactive and even assets of Square Enix like Crystal Dynamics. Many companies listed here have numerous studios under their belt, and franchises ranging from Borderlands to Tomb Raider.

Interestingly, no acquisitions have been made since the beginning of January 2023 when Gearbox acquired Captured Dimensions, a 3D scanning company. Embracer’s constant growth came to a complete standstill when, as reported by Axios, it was forced to stop acquiring companies after a $2 billion deal with the Saudi Arabia-backed Savvy Games Group fell through.

Concerns about the ethics of such a partnership aside, this failed deal ultimately stopped the company in its tracks. Shortly after the failed deal, Embracer announced it was “restructuring” in June 2023. Then came a rapid string of layoffs and studio closures.

Skilled workers were cast aside, and studios with projects in the works were shuttered. Volition (Saints Row) and Free Radical Design (Timesplitters) were both shut down, despite the latter not having released its highly-anticipated reboot yet. Layoffs impacted employees at Gearbox, Crystal Dynamics, BeamDog, New World Interactive and more, all so Embracer could claw back some semblance of revenue in the wake of its failed deal with Savvy. 

Layoffs in 2024

Gameplay from Tiny Tina's Wonderlands, which Lost Boys Interactive helped develop before suffering layoffs.
Click to enlarge

The layoffs are still ongoing, with the Gearbox-owned Lost Boys Interactive and Embracer-owned Black Forest Games and Eidos Montreal suffering the most recent losses at the time of writing. The former grew its staff size to over 400 under Embracer, only to quickly lose some of those employees as a result of its owner’s management failures. It would not be surprising to see further layoffs throughout 2024 - it seems there's almost no end in sight.

We still don’t know why Embracer’s deal with Savvy backfired. Management must have been confident things would work out after absorbing companies like Kirby at an all-you-can-eat buffet. All we know is that it failed, and a vast portion of the gaming industry has been torn apart. 

Many of these employees may never return to the industry as they find work elsewhere. Gaming companies currently hiring will not be able to support everyone looking for work, and positions will be much more competitive. When these employees leave the industry they take their skills, knowledge and creativity with them.

These people have no control over this moment in their lives. It was never up to them, or the quality of the product they helped to put out into the world. These things are irrelevant to CEOs faced with money troubles. There has been no confirmation of Embracer’s management taking any kind of pay cut. 

Once described as the “best kept secret in gaming”, Embracer Group has proven itself to be something vastly different - a reaper knocking down the doors of beloved studios and cutting through them without remorse. We can only hope those in charge realise how much chaos has been caused, but the damage has already been done and there’s little that can be done to fix the losses suffered by its studios.

Dani is a Guides Writer for GGRecon. She graduated from university with a degree in Broadcast Journalism, then worked as a freelance writer before joining the GGRecon team as a full-time writer in 2023. In her opinion, the best game of all time is Elden Ring – but her favourite is Halo: Reach, a game that created lifelong friendships and somehow started her down the path to a career in media. She’s also way too invested in Pokemon cards, and a big fan of guinea pigs, cats and other cute creatures.

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