The announcement of a new wave of layoffs at Eidos Montreal, accompanied by confirmation of the cancellation of projects that had been expected for years, such as a reboot of Legacy of Kain, is not just another sad piece of news in the cycle of crises in the games industry. This episode acts as a serious symptom of a deep malaise that goes far beyond cost-cutting or corporate restructuring. It exposes a dangerous combination of questionable management, astronomical investments with no clear return and a palpable disconnect between the studios and their audiences. As hundreds of millions of dollars evaporate in “zombie” projects and talented teams are dispersed, the inevitable question arises: are we witnessing a necessary realignment or the withering of an era for major studios? The situation of Eidos, now reduced to a support role for other developers, serves as an urgent case study on the risks of extreme consolidation, loss of creative identity and failure to manage both talent and capital.
This “ghost studio” scenario, where a developer with its own legacy like Eidos Montreal – responsible for iconic franchises and acclaimed titles like Marvel’s Guardians of the Galaxy – is relegated to co-development roles, raises fundamental questions about the Embracer group‘s business model. The mass acquisition of studios, followed by a relentless search for synergies and cuts, is proving to be a high-risk strategy. The cancellation of the Legacy of Kain reboot (codename P16) shortly after the purchase is not an isolated incident; it’s a pattern. Projects are started, consume years of work and resources, and are abruptly halted by corporate decisions far removed from the reality of development. The result is a double waste: financial and creative. The costs are never recovered and the team’s motivation is undermined. An insider’s account to Insider Gaming of an internal project that started in 2019, into which hundreds of millions of dollars have already been injected with no prospect of a return, sounds less like a bold investment and more like the description of a “walking corpse” – a project that continues because to stop would mean taking a colossal loss immediately.
However, to reduce the crisis solely to bad corporate decisions or economic cycles is to simplify a multifaceted problem. The narrative emerging from parts of the community and some commentators, as reflected at the end of the transcribed video, points to another axis of conflict: the so-called “culture war” within gaming. Critics charge that the obsession with diversity, equity and inclusion (DEI) agendas to the detriment of catering to the “traditional target audience” is alienating players and draining creativity. This view, however, is dangerously reductionist and ignores commercial and critical successes that have embraced diversity. The central problem for Eidos Montreal and other studios in a similar situation seems to be much more a crisis of creative direction and project management than an ideological one. When leadership fails to define a clear vision, greenlight projects with a realistic scope and manage deadlines and budgets, the result is cancellation – regardless of the composition of the team.
The most worrying outcome is the fate of the professionals. The forced migration of a creative studio to an outsourcing model for projects like Grounded 2 and Fable represents a loss of creative sovereignty. In-house knowledge, development culture and expertise in narrative and design are underutilized. The rejected request to work on Hideo Kojima’s Overdose project, due to the requirement to move to Japan, illustrates the limits of this model and the human strain involved. Mass layoffs are not just numbers on a report; they are careers interrupted, families impacted and an exodus of talent that weakens the entire ecosystem. The industry loses institutional memory and diversity of creative thinking, becoming more homogeneous and risk-averse – the opposite of what it needs to innovate.
Looking beyond the specific case of Eidos Montreal, the current situation in the industry points to a structural crossroads. The AAA business model, with budgets that often exceed hundreds of millions of dollars, is showing clear signs of exhaustion. The math is relentless: for a $300 million game to be profitable, it needs to sell not just well, but exceptionally well – somewhere between 12 and 15 million copies at a premium price. This level of expectation creates an aversion to creative risk, where only ultra-consolidated franchises and apparent sure things get the green light. Niche projects or reboots of cult IPs like Legacy of Kain become unviable in this calculation, not for lack of an audience, but because their potential return doesn’t fit the scale required to justify the inflated production costs.
This financial pressure partly explains the fatal attraction of conglomerates like Embracer Group. The promise was stability and resources, but the reality for many acquired studios has been to become pieces on a corporate board, subject to strategic cuts whenever the holding company needs to improve its short-term financial indicators. The cancellation of “seven to eight” projects at Eidos Montreal in recent years is no accident; it is the symptom of an aggressive and often ill-considered portfolio strategy, where projects are started without a clear route to completion or commercialization. The result is a vicious cycle: money is burned on prototypes and revisions, team morale plummets, uncertainty reigns and, finally, the most experienced talents seek opportunities at smaller or independent studios where their work has a visible impact.
In this context, polarization and the “woke culture” scapegoat narrative are a dangerous distraction. While discussions about representation and creative decision-making are valid and complex, to attribute the failure of entire studios to “activists” is to ignore the accounting and managerial evidence. The root problem is the disconnect between resource allocation and creative management. As quoted in the analysis, “there is a lack of direction and the people in charge were not addressing the audience that wanted to buy their games”. This statement goes to the heart of the matter: it’s about identity and communication. A studio that doesn’t know who it’s making its game for, or that constantly changes direction to chase market trends, is bound to fail. The solution, therefore, does not necessarily lie in ideological purification, but in transparent governance, realistic scopes and an authentic reconnection with the player communities.
The future for studios like Eidos Montreal is uncertain. The path of becoming a service studio may guarantee operational survival in the short term, but at the cost of its soul and its ability to one day shine again with IPs of its own. The hope, paradoxically, may lie in the very size and complexity of the Embracer group. With significant debts and pressure from shareholders, the sale of studios or idle IPs (such as Legacy of Kain itself) is not an unthinkable scenario. This could open the door to acquisitions by more focused publishers or even employee-led buyouts, models that have shown success in reinvigorating dormant franchises.
The final lesson is bitter but clear: the era of infinite growth through acquisitions and uncontrolled mega-productions is reaching its limit. The resilience of the industry will increasingly depend on agile studios with controlled budgets and a direct relationship with their audience. The Eidos Montreal case isn’t just a blip on the radar; it’s a warning sign for everyone. The question that remains is how many historic studios will need to be dismantled before the industry as a whole rethinks its model.
