Amazon just pulled the plug on its Lord of the Rings MMO for the second time in six years. The cancellation comes as part of sweeping layoffs that are reshaping Amazon's gaming strategy, with the company halting "significant" MMO development and cutting New World content updates. For a company that's spent billions trying to crack gaming, this latest retreat signals a major pivot away from ambitious in-house development.
Amazon just dealt another blow to its gaming ambitions, canceling its Lord of the Rings MMO development with Embracer Group. The news broke through a LinkedIn post from a laid-off Amazon Games engineer who revealed they were "part of the layoffs at Amazon Games, alongside my incredibly talented peers on New World and our fledgling Lord of the Rings game (y'all would have loved it)." The company confirmed it's halting a "significant" amount of its MMO work as part of broader layoffs hitting multiple divisions. This marks Amazon's second attempt at bringing Middle-earth to the MMO world - the first project was announced in 2019 before being scrapped in 2021 due to a contract dispute with Tencent. The latest partnership with Embracer, announced in 2023, seemed more promising given Embracer's extensive IP portfolio and Amazon's renewed gaming focus. But the gaming industry's current downturn has forced even tech giants to reassess their strategies. Amazon's retreat from original MMO development reflects broader challenges facing the gaming sector, where development costs have skyrocketed while player acquisition becomes increasingly difficult. The company's New World: Aeternum, its most successful in-house MMO, will no longer receive new content updates, though Amazon spokesperson Brittney Hefner told The Verge that servers will remain active through 2026. Instead of building games from scratch, Amazon is pivoting toward publishing partnerships. The company will continue supporting Throne and Liberty and Lost Ark, both developed by external studios. This publisher-focused model allows Amazon to leverage its cloud infrastructure and marketing reach without the massive upfront investment required for original development. The gaming layoffs are part of Amazon's broader cost-cutting initiative as the company sharpens its focus on AI and core business operations. While Amazon Web Services continues to power much of the gaming industry's backend infrastructure, the company's direct gaming ambitions have consistently underperformed expectations despite investments exceeding $1 billion over the past decade. For Embracer Group, this cancellation adds to mounting pressures facing the Swedish conglomerate. The company has been after a major acquisition deal fell through, leading to studio closures and project cancellations across its portfolio. Losing Amazon as a development partner removes a significant funding source for what could have been a flagship MMO project. The LOTR MMO cancellation also highlights the challenges of working with premium IP in today's market. Even with Amazon's resources and the enduring popularity of Tolkien's universe, the economics of MMO development have become increasingly challenging. Publishers are gravitating toward live-service models that require less upfront investment and can generate steady revenue streams.
