Chris Kerr, Senior Editor, News, GameDeveloper.comAugust 14, 20253 Min ReadLogo via Embracer Group / Kingdom Come Deliverance screenshot via Warhorse StudiosEmbracer Group—which is in the process of splitting into three standalone companies following an era of mass layoffs, project cancellations, and divestments—has confirmed it will explore "targeted cost initiatives" and look to streamline processes with the help of AI technology during what CEO Phil Rogers described as a "transition year" for the Swedish conglomerate.Addressing investors in the company's latest fiscal report, Rogers said Embracer's performance during the first quarter of the current financial year was "quiet" and said the company must now focus on "operational and strategic execution" to position itself for long-term growth.Consolidated net sales decreased by 31 percent to SEK 3,355 million ($350.5 million) during Q1. Breaking that total down by operating segment, PC/Console Games decreased by 38 percent to SEK 1,641 million; Mobile Games decreased by 63 percent to SEK 520 million; and Entertainment & Services increased by 41 percent to SEK 1,193 million."As we move forward, we are taking a conservative approach for this current year, reflecting a measured view on the timing and performance of our PC/Console release schedule in addition to potential continued softness in our catalog following Q1," said Rogers, who officially stepped up as CEO on August 1, 2025, to allow outgoing chief exec Lars Wingefors to take on the mantle of executive chair. Related:"This year is a transition period as we lay the foundations of Fellowship Entertainment and focus on building a business led by key IP and empowered teams, in a structure enabling focus and operational discipline. It is paramount that we concentrate on the quality and long-term value of our releases rather than chasing short-term gains."What does that mean for Embracer employees? According to Rogers, the company will implement "targeted cost initiatives" relating to underperforming business. Those initiatives could potentially result in more divestments. Game Developer has reached out to Embracer to clarify whether those plans could potentially include layoffs.Embracer CEO believes AI will become an "increasingly supportive force"Rogers claims Embracer is facing a "pivotal moment" and must double down on its biggest franchises. He explained the company has increased capital allocation to its core IPs, which include The Lord of the Rings, Tomb Raider, Kingdom Come Deliverance, Metro, Dead Island, Darksiders, and Remnant. He believes those franchises represent "one of the most exciting IP portfolios in the industry" but said Embracer must now "sharpen" its focus. The company currently has nine triple-A titles slated for release, excluding projects being financed by external partners. Related:"As previously noted, one or a couple of these games will most likely slip into FY 2028/29, but we do see a clear increase in release cadence as compared to our average of just over 1 AAA game per year in the past five years," said Rogers, discussing that release slate. "We expect the increased released pipeline in combination with lower fixed costs will notably improve free cashflow FY 2026/27 onwards."As Embracer prepares to evolve into Fellowship Entertainment, Rogers said the company must significantly rewire its business to create a "powerhouse unit" within its PC and console division. According to Rogers, leveraging AI technologies will be  integral part of that process. His predecessor had already suggested that ignoring AI tools could lead to it being "outrun" by its competitors. "This comes through smarter collaboration, increased streamlining, shared services and with AI as an increasingly supportive force," Rogers continued. "These factors will be key to unlocking value and expanding margins." As the table below shows, Embracer has already significantly reduced its workforce following a number of layoffs and key divestments. Related:Its entire workforce totaled 7,228 people (including 5,452 game developers) as of June 2025. That a notable decrease on the 13,712 workers (and 10,713 game developers) it employed at the end of June 2024. The company currently has 116 video games in development—down on the 127 projects it had in the pipeline this time last year, but actually up on the 108 titles it showcased in March.Read more about:Embracer GroupGenerative AI, Machine Learning, & LLMsTop StoriesAbout the AuthorChris KerrSenior Editor, News, GameDeveloper.comGame Developer news editor Chris Kerr is an award-winning journalist and reporter with over a decade of experience in the game industry. His byline has appeared in notable print and digital publications including Edge, Stuff, Wireframe, International Business Times, and PocketGamer.biz. Throughout his career, Chris has covered major industry events including GDC, PAX Australia, Gamescom, Paris Games Week, and Develop Brighton. He has featured on the judging panel at The Develop Star Awards on multiple occasions and appeared on BBC Radio 5 Live to discuss breaking news.See more from Chris KerrDaily news, dev blogs, and stories from Game Developer straight to your inboxStay UpdatedYou May Also Like

I'll level with you. I'm keeping this intro brief because I'm currently plonked in the middle of a Manchester cafe that presumably doesn't realize the words 'air' and 'conditioning' can be combined to create a majestic climate control device. Fear not, dear reader, it's only a heatwave.This will be my final Patch Notes for a couple of weeks. I'll be jetting off to Cologne next Tuesday for my annual pilgrimage to Gamescom in pursuit of industry insights, decadent hummus (if you know you know), and perhaps even a bit of juicy gossip.  I'll be taking a much needed vacation when I return, so the next couple of editions will be penned by another member of our talented Game Developer team. Who exactly? No spoilers yet (mainly because we haven't decided).Oho. You almost got me rambling. Nobody needs that today—least of all you. In fact, I suspect what you really need is a concentrated dose of NEWS, and as luck would have it we have just the thing...Embracer will deploy 'targeted cost initiatives' and AI tech to unlock more valuevia Game Developer // You might not realise it from the headline, but layoff connoisseur Embracer Group recently switched out its CEO, Lars Wingefors, for a new chief executive in Crystal Dynamics veteran Phil Rogers. Alas, it seems the apple hasn't fallen far from the tree. Rogers this week told investors that Embracer will deploy 'targeted cost initiatives' in relation to underperforming business. He confirmed that could mean additional divestments are in the offing. Will we also see layoffs? Who knows, but Embracer has been rather trigger happy in that regard previously. Rogers also explained that Embracer is keen to use AI technology to streamline its processes and support its teams. I'm sure they'll be thrilled.Related:Stripe Says Support Team Reps Were ‘Totally Wrong’ About LGBTQ Content Banvia Aftermath // Payment service provider Stripe has denied it is prohibiting the sale of LGBTQ+ content, including video game and media on platforms like Itch. The company spoke to Aftermath about the situation after its support team reportedly told anti-censorship campaigners that it won't be processing payments related to LGBTQ+ content. Stripe apologised for the conduction and claimed those employees were "mistaken." The full story is well worth a read, and comes after both Itch and Steam began heavily moderating the sale of adult content, reportedly at the behest of payment providers.Valve explain why using PayPal for Steam purchases isn't currently an option in a whole bunch of countriesRelated:via RockPaperShotgun // In related news, Valve recently told RPS that PayPal support for Steam has evaporated in some regions due to concerns over the type of content being sold on the platform. Valve previously confirmed that one of PayPal's acquiring banks axed support in some regions in early July, impacting consumers attempting to make Steam purchases via PayPal in currencies other than EUR, CAD, GBP, JPY, AUD and USD. On its support page, Valve said it is "uncertain" when the situation will be remedied. It then told RPS the withdrawal is "regarding content on Steam, related to what we’ve previously commented on surrounding Mastercard."Blizzard's Story and Franchise Development team has unionizedvia Game Developer // Another week, another union. We could get used to this. Blizzard's Story and Franchise Development (SFD) is the latest Microsoft-owned team to unionise in tandem with Communications Workers of America (CWA). SFD is the World of Warcraft maker's in-house cinematic, animation, and narrative department—and became the first union of its kind to form n North America. Parent company Microsoft has already recognised the union, whose members will join CWA Local 9510 in Orange County, Calif.  One member of the SFD organising committee said the unionised workers intend to preserve what makes Blizzard special. Related:Video games have a serious crediting problem, but unions can helpvia Game Developer // Speaking of unions, freelance reporter Nicole Carpenter this week laid out how the power of collective acton could enable the video game industry to address a longstanding miscrediting issue. It's not uncommon for developers (both in-house and external) to be omitted or improperly credited on projects they've worked on. It's a deeply harmful practice that can stall careers and create uncertainty as to who is actually making the games we play, but what is the solution? According to some people, unions might just hold the answer.'We would be in development for 30 years:' Krafton reiterates that Unknown Worlds founders 'abandoned' Subnautica 2via Game Developer // In what must be one of the game industry's most outrageous legal tit-for-tats, Krafton has responded to the lawsuit levelled against it by Unknown Worlds' former executive team with a series of claims that paint former studio leaders Charlie Cleveland, Max McGuire, and Ted Gill as cash-grabbing truants. The South Korean publisher once again insisted that all three downed tools as soon as it purchased Unknown Worlds and placed their own "monetary interests" over those of the development team and Subnautica 2 itself. We've done our best to summarise the scathing rebuttal, and we expect this saga is far from over. 'Microsoft has no place being accomplice of a genocide:' Arkane union workers demand Xbox maker sever ties with Israelvia Game Developer // A group of unionized Arkane Studios workers in France this week published an open letter to leaders at Xbox and Microsoft to lend their support to the Palestinian-led BDS movement and demand their parent company sever ties with Israel. The move follows extensive reporting that indicates Microsoft cloud and AI technology is being used by the Israeli regime to monitor Palestinians and even plan military action. Union workers at Arkane, known for producing titles like Dishonored and Deathloop, accused Microsoft of being an "accomplice" to genocide. "Microsoft has failed both its teams & its customers by being actively complicit of the invasion and war crimes happening in Gaza," they wrote in the open letter. Microsoft has yet to respond to our request for comment, but has previously denied that its products have been used to "target or harm people" in Gaza. Bandai Namco is still working on new in-house game engine, update revealsvia Automation Media // Tekken and Ace Combat maker Bandai Namco is still working hard to create a new in-house game engine capable of supporting large-scale projects and open worlds. You might not even be aware this project was even in motion, and that's because it's been around three years since the Japanese company last spoke about the initiative. This week, however, the company posted a series of photographs on X to reveal it has been training employees how to use the mystery engine. It's hard to glean much from the snaps, although we can see what appears to be an ecstatic snowman in one shot. 10/10. No notes.PUBG is finally bidding farewell to last-generation consoles via Krafton // Pour one out for PUBG: Battlegrounds players who've yet to make the leap to current-generation hardware. This week, Krafton announced it will be ending support for the battle royale shooter on PlayStation 4 and Xbox One in November. The company said the shift will take place on November 13, 2025, and described it as a "necessary step toward aligning PUBG Console with current-gen consoles" and providing player with "more stable gameplay." Remarkably, the news comes around five years after both the PlayStation 5 and Xbox Series X | S hit shelves, which shows just how blurred the lines between console generations have become in the current era. Even so, Krafton said the news is weighing heavily on the team and has requested a modicum of understanding during this trying time