After so many layoffs, what’s even left of the games industry?

It’s hard to look back on 2023’s year in gaming. On the one hand, the year became a beacon of hope for quality games, with releases like Alan Wake 2, Tears of the Kingdom, Dave the Diver, and the record-breaking Baldur’s Gate 3. Yet, on the other hand, the year’s releases became intensely overshadowed by the industry’s sudden downfall as signified by seemingly constant layoffs, with more than 11,000 jobs being cut by the year’s end. 

We all hoped that the end of the year would mark the end to these layoffs. There’s been no lack of excellent releases this year (Team Asobi’s Astro Bot most recently being subject to near-universal acclaim) – and yet, by June 2024 there were already more layoffs in 2024 than the entirety of 2023. Even more have just been announced; after cutting more than 1,900 jobs in January, Microsoft have recently announced that another 650 will be laid off. 

2024 also saw Microsoft close a number of major studios under their jurisdiction in May, including Tango Gameworks, hot off the heels of Hi-Fi Rush, Tango’s most successful game yet. The Austin branch of Arkane Studios was also closed, despite their 2021 release Deathloop receiving a flurry of positive reviews, more than 5 million players after launch, and winning a number of awards including being awarded Game of the Year by Gamespot and Edge. I guess if there’s anything we’ve learned from the Microsoft layoffs, it’s that financial and critical success is evidently not enough to rescue games industry workers from being stripped of their jobs. 

While many other entertainment industries suffered during the Covid-19 pandemic, the gaming industry profited from more people spending more time at home, reaching a total revenue of $235.7 billion in 2022 according to PwC, up from $196.8 billion in 2020. This rapid growth encouraged shareholders, resulting in the rapid expansion of the industry as many looked to capitalise on what they saw as a rapidly expanding market. As things return to normal, gaming’s growth has tapered off – a shock to what was previously a rapidly growing industry

Other issues have arisen in the games industry amidst the layoffs, too. Unity Technologies cut over 1,000 employees in 2023 in what CEO John Riccitello called in a letter to employees a reassessment of “objectives, strategies, goals and priorities”. Following this, in another attempt to increase profitability, Unity embroiled itself in one of the largest controversies of the year after announcing that developers using their software would be compelled to pay a fee every time someone downloaded a game using the engine, leading many major developers to denounce the company. 

Other financial issues have arisen. Development cycles are longer than ever – Baldur’s Gate 3, the most lauded title of the last handful of years, was in development for a full seven years. Likewise, games have increasing amounts of money poured into them, and yet the introduction of so-called ‘quadruple-A’ games in the past year, which both cost more to make and to buy, has garnered a lukewarm response at best. Meanwhile, companies that are expected to keep up with yearly or biennially releases (Call of Duty, or Assassin’s Creed both come to mind) are compelled to outsource work.

Even beyond the financial trouble the gaming industry has faced, we’ve also seen the Microsoft and Activision Blizzard merger reaching a conclusion, with Microsoft receiving court approval for its $68 billion takeover of Activision Blizzard. This merger remains incredibly controversial, with many arguing that it solidifies the gaming industry even more into major players. Others argue that Xbox Game Pass will massively stand to benefit and consumers will benefit from a consolidation of gaming subscriptions. And, of course, the merger has been seen by many as the reason for the 1,900 layoffs in January, as mergers so often do result in job loss.

Of course, this trend of industry cuts is intensely worrying. Many workers are losing their livelihoods, and those whose jobs are not cut are left to struggle for increasingly ambitious targets. CD Projekt Red workers formed a union in response to layoffs in their company, stating on their FAQ page that these layoffs “created a tremendous amount of stress and insecurity, affecting our mental health”. CEOs, however, have seemingly been unaffected; As TheGamer points out, Bungie CEO Steve Parsons spent over two and a half million dollars on vintage cars just before laying off over 300 of Bungie’s employees.

In the wake of all this, then, what’s left? How does such a broken industry look to the future? Well, it’s my hope that all of this results in some major changes. You’ll notice that all of these layoffs have occurred in large, old corporations that are well-established within the industry. Perhaps the true future of the games industry, then, is a corresponding rise in new developers and publishers with fresh ideas and directions. We’ve spent so long cooped up in the hands of old giants; now it’s finally time for some fresh blood.