The gaming industry has been facing a tumultuous period, with a wave of layoffs hitting companies both large and small. The story of Aaron, a developer at Ascendant Studios, is a stark example of the human cost behind these layoffs. After working tirelessly on the studio’s debut game, “Immortals of Aveum,” Aaron and nearly half of his colleagues were laid off due to the game’s underperformance. This is not an isolated incident; the industry has seen over 10,000 layoffs in 2023 and an additional 6,000 in 2024.
The initial explanation for this trend seemed straightforward: the COVID-19 pandemic. Take-Two CEO Strauss Zelnick encapsulated this sentiment, stating, “I do think people got a little fat and happy during the pandemic… I think there was a perception on the part of many that the music would never stop.” This perception led to overspending and overhiring, with the expectation that the increased revenue seen during the pandemic would continue indefinitely. However, as spending normalized, companies were forced to make cuts.
Yet, the pandemic narrative does not fully explain the situation. The layoffs at Ascendant Studios and the sheer number of layoffs in recent years suggest a deeper issue within the industry. Riot Games’ statement regarding their layoffs, which affected 530 individuals, acknowledges that the decisions leading to these cuts predated the pandemic. Riot admitted to growing too quickly and losing focus, resulting in unsustainable costs and a lack of room for experimentation.
The problem seems to be rooted in how video game executives are spending their money, with developers often bearing the brunt of poor financial decisions. In speaking with over 40 game developers, a picture emerges of an industry fraught with high costs, growing risks, and increasing volatility. Companies have been expanding rapidly, investing in new technologies and acquisitions, only to find themselves unable to sustain the growth when the expected revenues did not materialize.
For example, Epic Games’ layoffs of 800 employees were a result of spending on initiatives without a clear strategy, such as the pursuit of metaverse projects. Tim Sweeney, CEO of Epic Games, described the layoffs as a “survival move,” despite the company’s previous efforts to cut costs in other areas.
The trend of overspending is not limited to large companies. Smaller studios and those working on new technologies, like blockchain, have also been affected. OliveX’s investment in NFTs led to repeated losses and layoffs, showcasing a lack of strategic planning. Similarly, companies like Embracer Group faced financial issues due to failed investments and a reliance on external funding.
The impact of these layoffs extends beyond the individuals losing their jobs. It reflects a broader issue of mismanagement and a lack of investment in quality game development. The industry’s focus on maximizing profits at the expense of product quality and employee stability is leading to a volatile job market and a potential decline in the quality of games produced.
As the industry continues to grapple with these challenges, it is clear that a change in approach is needed. Companies must prioritize sustainable growth, strategic investment, and a commitment to their employees. Only then can the gaming industry hope to stabilize and continue to thrive in the years to come.
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‘I’ve Never Seen It This Bad:’ Game Developers Explain the Huge Layoffs Hitting Riot, Epic, and More
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IGN – ‘I’ve Never Seen It This Bad:’ Game Developers Explain the Huge Layoffs Hitting Riot, Epic, and More
