Eidos-Montreal Cuts 12 Jobs as Gaming Studio Faces Industry Downturn

Eidos-Montreal, the acclaimed video game development studio behind titles like Deus Ex and Tomb Raider, laid off 12 employees on December 2, 2025. The workforce reduction comes as the gaming industry continues to grapple with market pressures and shifting consumer spending patterns. The studio confirmed that additional layoffs are planned as part of a broader restructuring effort to align operations with current market conditions.

Context of the Decision

The Eidos-Montreal layoffs reflect the ongoing challenges facing the gaming industry in 2025. The studio's parent company, Embracer Group, has been implementing cost-cutting measures across its portfolio of gaming properties following a period of aggressive expansion. The decision to reduce staff comes after several high-profile game releases underperformed commercially, forcing studios to reassess their development pipelines and operational costs.

Industry analysts point to declining consumer spending on premium games and increased competition from mobile and free-to-play titles as key factors driving these workforce reductions. The gaming sector has seen a significant correction from the pandemic-era boom, when studios expanded rapidly to meet surging demand from homebound consumers.

Impact on Operations

The layoffs primarily affected support functions and non-essential development roles at Eidos-Montreal's headquarters. While the studio has not disclosed specific departments impacted, sources indicate that quality assurance, marketing support, and administrative positions bore the brunt of the reductions. The core development teams working on active projects remain largely intact to ensure minimal disruption to ongoing game production.

Eidos-Montreal employs approximately 500 people across its Montreal facilities, making this round of layoffs a relatively small percentage of the total workforce. However, the announcement of planned additional cuts has created uncertainty among remaining staff about the studio's long-term stability and project commitments.

The studio's current projects, including unannounced titles in development, are expected to continue on schedule despite the workforce reduction. Management emphasized that the layoffs were designed to streamline operations without compromising the quality of upcoming releases.

Company Financial Background

Eidos-Montreal operates under Embracer Group, the Swedish gaming conglomerate that acquired the studio as part of its $300 million purchase of several Square Enix Western studios in 2022. Embracer has been under financial pressure following the collapse of a major partnership deal worth $2 billion in 2023, forcing the company to implement widespread cost-cutting measures across its subsidiaries.

The studio has historically been profitable, with successful franchises generating steady revenue streams. However, the changing economics of game development, including rising production costs and longer development cycles, have pressured margins across the industry. Eidos-Montreal's most recent releases have performed below internal expectations, contributing to the decision to reduce operational expenses.

Embracer Group's stock has declined significantly over the past year as investors lose confidence in the company's ability to manage its extensive portfolio of gaming properties effectively. The company has announced plans to divest several studios and focus resources on its most promising franchises.

Industry Outlook

The gaming industry has experienced widespread layoffs throughout 2025, with major publishers and independent studios alike reducing their workforces. Companies like Electronic Arts, Activision Blizzard, and Ubisoft have all announced significant job cuts as the sector adjusts to post-pandemic market realities.

The shift toward live-service games and the growing importance of mobile gaming have disrupted traditional development models. Studios specializing in single-player, narrative-driven experiences like Eidos-Montreal face particular challenges in adapting to these market trends while maintaining their creative identity.

Industry experts predict continued consolidation and workforce reductions through 2026 as companies focus on profitability over growth. The rise of artificial intelligence tools in game development may also reduce demand for certain specialized roles, further pressuring employment in the sector.

Conclusion

The Eidos-Montreal layoffs represent another chapter in the gaming industry's ongoing adjustment to new market realities. While the immediate impact appears manageable, the promise of additional cuts signals deeper structural challenges facing the studio and its parent company. The studio's ability to navigate these turbulent times while maintaining its reputation for high-quality game development will be crucial for its long-term survival in an increasingly competitive marketplace.