Report: Embracer layoffs impact staff at MX vs ATV developer Rainbow Studios

Embracer Group's ongoing restructuring efforts have seemingly resulted in layoffs at MX vs ATV Legends developer Rainbow Studios.

Linkedin posts from multiple former Rainbow employees indicate the Phoenix-based studio has been downsized as Embracer attempts to steady the ship after declaring its M&A era is officially over.

Back in June, the free-spending Swedish conglomerate announced it would be making an unknown number of layoffs, shuttering studios, and scrapping a number of projects in order to become a "highly cash-flow generative business."

It seems a number of Rainbow Studios employees across a variety of disciplines have been impacted by that decision. Writing on Linkedin, former Rainbow QA analyst Austin Herrington said the studio has "been affected by the Embracer Group restructuring," resulting in them being laid off.

"This is a profoundly sad moment for the industry, and for me personally as I leave a studio I love," they wrote. "While I had hoped to stay at Rainbow for much longer, I’m proud of the studio and of everything we accomplished. Nobody wanted this to happen, and I can’t say enough about how well we were treated on our way out."

Other posts corroborated the news, with former Rainbow lead technical artist Thomas Tobin, artist Molly Cuddihy, and level designer Zac Bogner all explaining they were laid off by Embracer.

During an investor Q&A in August, Embracer CEO Lars Wingefors confirmed studios closures and layoffs were ongoing, and said the company was taking action behind closed doors as it attempts to hit a net debt target of SEK 8 billion by the end of the fiscal year.

As a result, studios such as Campfire Cabal and Volition have already been shuttered, while there were also reports of layoffs at Gearbox Publishing.

Discussing the company's roadmap during that Q&A, Wingefors said Embracer must reduce capital expenditure and prioritize within its portfolio before targeting "more focused investments into our highest-ROI titles" to drive growth and profitability.

Game Developer has reached out to Embracer for more information on the layoffs and the future of Rainbow Studios.

Update (09/11/2023): An Embracer spokesperson has told Game Developer the company won't comment on the status of specific studios affected by its restructuring program, but said the ongoing process will focus on "cost savings, capital allocation and operational and financial efficiency measures."

"Part of those initiatives could be the closing of studios, downsizing, and termination of projects with low projected returns. Each process will be managed locally on operative group level with focus on informing affected employees first, and on group level we will not comment on specific studios at this point in time," they added.

They said Embracer will continue to update the market via its quarterly reports or "otherwise as required by applicable legalisation." The company's next quarterly report will be published on November 16. The restructuring program will last until the end of the current fiscal year in March 2024.