Embracer attempting to reset after mass layoffs and studio closures

Embracer’s investment-turned-divestment spree continued today after the Swedish conglomerate agreed to divest Arc Games and Cryptic Studios in a move that is expected to generate net cash proceeds of $30 million.

Arc Games is best known for working on the Remnant franchise, while Cryptic Studios is the developer behind Neverwinter and Star Trek Online. 

Both companies are being purchased by Project Golden Arc, Inc., which is owned and led by members of the Arc Games management team. The deal is being financed by XD Inc, a global developer and publisher listed on the Main Board of the Hong Kong Stock Exchange.

Embracer is set to retain the publishing rights for the Remnant franchise. Those rights will be transferred to THQ Nordic, which already owns the Remnant IP and development studio, Gunfire Games.

It will also retain the rights to online fantasy title, Fellowship, which Arc Games published this year. They will be bundled into the pending Coffee Stain Group spin off, which was announced back in May as part of a plan to split Embracer into three standalone, publicly-listed companies.

Stockholm-based studio Chief Rebel will continue developing Fellowship (currently in early access) with a team of around 35 people.

“This transaction supports our key priorities by strengthening our focus on strategic assets and core IPs in Embracer while improving profitability and free cash flow,” said Embracer CEO, Phil Rogers.

Last year, Embracer ended a period of studio closures, divestments, and layoffs by announcing it would split its business into standalone units: Asmodee, Middle-earth Enterprises & Friends, and Coffee Stain & Friends.

At the time, Embracer said the split will “unleash the full potential of each team and provide them with their own leadership and strategic direction.” 

Earlier this year, after carving out Asmodee and saddling it with debt, the company confirmed plans to spin off Coffee Stain Group and rename its remaining business Fellowship Entertainment (previous working name ‘Middle Earth & Friends’).

Last week, Tomb Raider developer and Embracer subsidiary Crystal Dynamics confirmed its third round of layoffs this year. In August, Demiurge Studios, a co-development team under the Embracer umbrella that worked on 2XKO and Marvel Snap, reportedly laid off at least six staff members.

The news came mere months after Embracer shared insights into its ongoing downsizing efforts. In its 2025 annual report, the company said it reduced its headcount by 1,857 employees in the space of a year—a period that was marked by layoffs and divestments. 

For context, its restructuring program had already cost around 1,400 workers their jobs by the end of 2023.

Discussing how it now intends to move forward, Embracer recently told investors it will pursue “targeted cost initiatives” and deploy AI technology to unlock more value.

“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,” said Embracer boss Phil Rogers in August. “It is paramount that we concentrate on the quality and long-term value of our releases rather than chasing short-term gains.”