Gaming journalist Tom Henderson has cleared up confusion surrounding the recent layoffs at Eidos Montreal, revealing details about the studio’s current project pipeline and what led to staff reductions in December 2025. According to Henderson’s clarification posted on December 8, the layoffs are primarily connected to Project P11, an internal game entering its beta phase and targeting a 2026 launch, along with the cancellation of a Lord of the Rings research and development initiative known as Project P22.
This marks the second round of layoffs at Eidos Montreal in 2025, following an earlier cut of 75 employees in March. The studio, known for Deus Ex: Human Revolution, Shadow of the Tomb Raider, and Marvel’s Guardians of the Galaxy, has been struggling under parent company Embracer Group’s ongoing restructuring efforts that have impacted multiple studios across the organization.
What is Project P11
Project P11 is Eidos Montreal’s next internal game, reportedly an ambitious open-world action-adventure title being developed by the same team that created Shadow of the Tomb Raider. According to Henderson’s earlier reporting on December 5, 2025, the game has been in development since 2019 and is scheduled for release next year. The project represents the eleventh numbered project in Eidos Montreal’s development history, hence the P11 designation.
Henderson explained that the recent layoffs are typical of game development cycles where staff reductions occur as a project moves from full production into beta testing and final polish phases. Different skill sets are needed during beta compared to earlier development stages, leading studios to reduce headcount in certain departments while maintaining core teams to finish the game.
The Tomb Raider Team’s Next Adventure
While specific details about P11 remain scarce, Henderson confirmed it’s being made by veterans from the Tomb Raider team at Eidos Montreal. This has naturally led to speculation that the game could be a spiritual successor with similar third-person action-adventure mechanics, exploration, and puzzle-solving elements that defined the rebooted Tomb Raider trilogy.
The fact that development started in 2019 means the team has spent approximately six years on this project, which aligns with typical AAA development cycles for ambitious open-world games. A 2026 launch would give the studio time for proper beta testing and polishing following the layoffs associated with transitioning development phases.
The Cancelled Lord of the Rings Game
Henderson revealed that Eidos Montreal had been working on a Lord of the Rings project designated P22 that has now been cancelled. According to information shared on the Insider Gaming Weekly podcast, this was going to be a card game with Telltale-style storytelling elements, combining decision-based narrative gameplay similar to The Walking Dead or The Wolf Among Us with collectible card mechanics.
The game would have featured an adventure format where player choices had meaningful consequences, potentially allowing fans to experience Middle-earth stories from new perspectives. However, the cancellation came as part of Embracer Group’s broader strategy of cutting projects that don’t align with current business priorities or lack sufficient resources to complete successfully.
Why P22 If P11 Came Before
Henderson clarified that the P designation signifies a project number that applies to both internal and external games at Eidos Montreal. The studio has apparently reached Project 22 in their numbering system, highlighting how many projects they’ve had to cancel or put on hold over the years. The gap between P11 and P22 represents numerous cancelled, paused, or completed projects in between.
Examples of external projects carrying P numbers include Fable, Grounded 2, and Hideo Kojima’s upcoming project, all of which Eidos Montreal has provided development support for as a collaboration studio. This explains why the numbering jumped so significantly, as each support project receives its own P designation regardless of whether Eidos is the lead developer.
Eidos Montreal’s Role in Xbox Games
Part of the confusion around Eidos Montreal’s situation stems from their heavy involvement in Xbox first-party titles despite being owned by Embracer Group. The studio has been providing significant development support for multiple Microsoft projects, essentially functioning as an outsourcing partner.
Most notably, Eidos Montreal handled the vast majority of work on Grounded 2, which was released in August 2025. In interviews, Obsidian Entertainment revealed that Eidos created most of the game’s art, design, and engineering while Obsidian provided creative direction and oversight. This collaborative model allowed Obsidian to simultaneously develop Avowed and The Outer Worlds 2 while still expanding the Grounded franchise.
Fable and Future Layoffs
Henderson’s reporting also indicated that more layoffs are planned at Eidos Montreal after Grounded 2 and Fable are released. This suggests the studio’s current staffing levels are inflated due to support work on these major Xbox titles. Once those projects wrap up, Eidos will no longer need the expanded workforce unless new support contracts are secured or their internal projects require additional personnel.
Fable, being developed by Playground Games with support from multiple studios including Eidos Montreal, has faced numerous delays and is currently expected sometime in 2025 or early 2026. The completion of both Grounded 2 and Fable would remove significant revenue streams for Eidos Montreal if replacement contracts aren’t lined up, necessitating further staff reductions.
The Broader Context of Embracer Layoffs
Eidos Montreal’s struggles represent just one piece of Embracer Group’s massive restructuring program that began in 2023. The Swedish conglomerate went on an acquisition spree between 2019 and 2022, purchasing dozens of studios including Crystal Dynamics, Eidos Montreal, Gearbox Software, and numerous others. The buying spree was fueled by expected investment funding that ultimately fell through, leaving Embracer overextended.
Since then, Embracer has been selling studios, closing others entirely, cancelling projects, and conducting repeated rounds of layoffs across its portfolio. Crystal Dynamics, which Embracer acquired alongside Eidos Montreal from Square Enix in 2022, has also faced layoffs in 2025 despite working on a new Tomb Raider game with Amazon Games as publisher.
The Human Cost of Restructuring
LinkedIn posts from affected Eidos Montreal developers paint a picture of talented professionals suddenly searching for work in an already difficult job market. One post referenced at least 12 individuals losing their jobs in the December round, though the actual number could be higher. These developers often spent years at the studio working on beloved franchises, only to become casualties of corporate financial decisions beyond their control.
The gaming industry as a whole has seen mass layoffs throughout 2024 and 2025, with over 20,000 jobs lost across major publishers and studios. Eidos Montreal’s situation exemplifies a broader crisis where even successful studios with strong portfolios aren’t immune to cuts when parent companies face financial pressure.
What Happens Next for Eidos Montreal
Despite the layoffs and project cancellations, Eidos Montreal isn’t shutting down. The studio continues working toward the 2026 launch of Project P11 and presumably wrapping up support duties on Fable. The question is what happens after those projects complete and whether Embracer commits to funding additional internal games or primarily uses Eidos as a support studio for external contracts.
The studio’s legacy franchises remain in uncertain territory. Deus Ex has been dormant since 2016’s Mankind Divided, and a new entry was reportedly cancelled in January 2024. Tomb Raider development has shifted to Crystal Dynamics working with Amazon Games. Guardians of the Galaxy received critical acclaim but disappointing sales, making a sequel unlikely. Eidos Montreal needs either new IP success with P11 or securing major support contracts to justify its continued existence under Embracer.
FAQs
Who is Tom Henderson and why is his reporting credible?
Tom Henderson is a veteran gaming journalist who runs Insider Gaming and has a strong track record of accurate leaks and reports about the gaming industry. His sources within development studios and publishers have proven reliable for breaking news about projects, layoffs, and industry developments.
What is Project P11 and when does it release?
Project P11 is an open-world action-adventure game being developed by the Shadow of the Tomb Raider team at Eidos Montreal. It has been in development since 2019 and is scheduled to launch in 2026. Specific details about the game’s setting, story, and gameplay remain undisclosed.
Why was the Lord of the Rings game cancelled?
The Lord of the Rings project, designated P22, was cancelled as part of Embracer Group’s ongoing restructuring and cost-cutting measures. The game was apparently in early research and development phases, making it easier to cancel compared to projects further along in production.
How many people were laid off at Eidos Montreal in December 2025?
While exact numbers haven’t been officially confirmed, reports indicate at least 12 developers were let go in the December 2025 round of layoffs. This follows an earlier cut of 75 employees in March 2025, bringing the total job losses at the studio to at least 87 people throughout the year.
What is Embracer Group and why are they laying people off?
Embracer Group is a Swedish video game holding company that owns numerous development studios and publishers. After a major investment deal fell through in 2023, Embracer has been restructuring aggressively by selling studios, cancelling projects, and conducting layoffs to reduce costs and stabilize financially.
Is Eidos Montreal shutting down?
No, Eidos Montreal is not shutting down. The studio continues operating and developing Project P11 for a 2026 launch while providing support for other projects. However, future layoffs are reportedly planned after current Xbox support contracts complete.
What happened to Deus Ex at Eidos Montreal?
A new Deus Ex game was reportedly cancelled by Embracer in January 2024 during earlier restructuring. The franchise has been dormant since Deus Ex: Mankind Divided in 2016. There’s no indication that Eidos Montreal is currently working on or planning another Deus Ex title.
Did Eidos Montreal really make most of Grounded 2?
Yes, according to interviews with Obsidian Entertainment, the vast majority of developers working on Grounded 2 were from Eidos Montreal. Eidos handled most of the art, design, and engineering while Obsidian provided creative direction and oversight as a collaborative effort.
Conclusion
Tom Henderson’s clarifications paint a complex picture of a talented studio navigating corporate restructuring while trying to deliver quality games. The December 2025 layoffs at Eidos Montreal aren’t signs of complete collapse but rather the painful reality of modern game development where staff reductions accompany project phase transitions and cancellations. Project P11 represents hope for the studio’s future as an internal creative force, though that future remains uncertain pending the game’s commercial performance and Embracer Group’s long-term strategy. For the developers who lost their jobs, the clarifications offer little comfort, but at least the gaming community now understands the context behind these difficult decisions. Whether Eidos Montreal emerges from this turbulent period as a thriving studio or becomes another casualty of consolidation remains to be seen.