| (Image property of Playstation Studios and Sony Interactive Entertainment) However, the past week has revealed that these events were, unfortunately, not a 2023 phenomenon. In the last week alone, Sony has laid off 900 staff across multiple studios, including closing their London studio, with EA following suit soon after, laying off an additional 5% of their own workforce. As such, while this moment is still fresh in our minds and the situation is showing no signs of improving any time soon, it is worth pausing to discuss what exactly is wrong with the industry at the moment and how this might end up playing out in the future. What the hell is going on? Over the last year, the list of video game companies that have seen layoffs or closures is too long to recount here. Overall, 35% of workers in 2023 were either laid off or knew a colleague who was. Keep in mind, that was before this week’s latest wave as well. So, why is this happening? During the Covid-19 pandemic, countless more people were stuck at home than usual which boosted video game player counts and sales dramatically. As a result, publishers and parent companies authorised more hiring so that they could pursue new ways of exploiting this boosted demand.  | | (Image property of EA) However, this demand, as you can guess, did not last and now that people are able to go out again and fewer people are working from home, demand has dropped, pushing the industry into a period of contraction where funding has dried up both in the triple-A and indie spheres. As a result, workers are being laid off and studios are being closed to save money in order to appease shareholders. At the end of the day, shareholders expect growth and a return on their investments, even if companies’ incomes are lower, meaning those companies need to find ways to make up that money with cuts. Why is this terrible? This is a serious problem on multiple levels. Most obviously, while it is easy to quote layoff statistics at you all day like a depressed calculator, we are talking about real human beings. These developers have families and lives. These are people who joined this industry with goals and hopes in mind for what they wanted to achieve that will now never come to fruition. First and foremost, the consequences of this contraction in the industry are human in nature and many people will now be dealing with a new world of struggle that they hadn’t expected thanks to these decisions.  | | (Image property of Insomniac Games, Marvel and Sony Interactive Entertainment) The second tragedy in this ongoing story is how predictable it was. Some commentators at the time of these initial hirings questioned how sustainable these practices were on the basis that Covid was, as we’ve all heard far too many times at this point, unprecedented. I knew that at the time, as did you, so how did these companies not realise it even with all of their millions of dollars of resources? Was it sheer, painful short-sightedness or was it a lack of due care and attention given to the potential consequences of those actions? Ultimately though, the worst consequence of these layoffs is where they have occurred. While any harm caused to the people who make art in this industry is always bad, the studios that have been subject to layoffs, in particular in the recent Sony wave, have been particularly troubling.  | | (Image property of Guerilla Games and Sony Interactive Entertainment) Insomniac, Naughty Dog and Guerilla Games have made some of Sony’s most commercially and critically successful games within the last six years with the Marvel’s Spider-Man, The Last of Us and Horizon series. Within the last six months, Sony has flaunted Insomniac’s success with Marvel’s Spider-Man 2, publicly celebrating its record-breaking sales numbers. These were not failing studios where employees had to be laid off to make up for past failures, these were some of the most successful developers currently operating. For many, myself included, this raises the question; if they couldn’t survive, who can?  | | (Image property of Naughty Dog and Sony Interactive Entertainment) These recent layoffs in particular have strongly emphasised how fatalistic the industry has become where layoffs are no longer an if but a when, regardless of your studio’s previous successes. When studios can perform as well as Insomniac, Guerilla and Naughty Dog and still see layoffs, its clear that the products being made and the people working on them are not the source of the problem. There’s a single word for what is: mismanagement, both in appropriate hiring practices and in budgeting with some of the aggressive overspending happening on major triple-A projects that means that games like Spider-Man 2 can perform as well as they have without turning enough of a profit to satisfy investor’s inflated expectations. Hope for the future So, with all of these problems in mind, what is going to happen in the future? Simply, I don’t know, but I can take some educated guesses. It is safe to assume that, for the immediate future, these layoffs will continue as companies try to cut back on their spending. As such, workers will continue to suffer the consequences of their employers’ mistakes.  | | (Image property of Larian Studios) However, not every employer is exhibiting this behaviour. Larian Studios, the Baldur’s Gate 3 developer, has encouraged recently laid off workers to apply for positions at the studio in the hope that they will be able to keep some of this talent in the industry. Of course, this does risk the possibility of creating more layoffs for Larian in the future if their ongoing growth does slow down but, unlike during the pandemic, Larian’s success is based upon the studio’s actual output rather than environmental factors like Covid. As such, chances are good that this growth will be more stable in the long-term.  | | (Image property of Toys for Bob and Activision) |
Furthermore, some studios have taken direct action to avoid falling victim to these cutbacks. Toys for Bob, responsible for the most recent Crash Bandicoot and Spyro games have spun off into an independent games studio, allowing themselves greater autonomy both creatively and in their business practices. Saber Interactive, the embattled developer of the Knights of the Old Republic remake, have recently purchased themselves from their parent company, Embracer Group which has been responsible for some of the more vicious of the last year's layoffs. These moves represent a potential trend for developers to move away from corporate ownership for the sake of their own stability. Layoffs like Embracer’s and Sony’s project an image of untrustworthiness from corporate owners that have done a lot to push developers away, fearing for the survival of their studios and their own job security.  | | (Image property of Saber Interactive and Disney) |
Within all of this though, there is also a story to tell of how even big name publishers can act to avoid these problems. In the midst of never-ending dumpster fire that the industry has turned into, Nintendo has been reported to be not only the richest company in Japan but also to have $11bn in cash available which, seeing as massive corporations usually accrue debt to pursue an infinite model of growth, is a wild statistic.  | | (Image property of David McNew and Getty Images) |
This would have been borderline unthinkable a decade ago when the Wii U was floundering and questions were being raised about Nintendo’s viability as an entity, let alone as a competitor in the console market. Crucially however, when faced with the possibility of layoffs, their president, Satoru Iwata and other senior executives took up to a 50% pay cut instead in order to give the company a much-needed boost while keeping workers on. While this episode in Nintendo’s history and its current success obviously cannot be directly connected, it is worth noting that Iwata and other’s short-term frugality led to not only the company’s survival but the retention of its talent which proved to be worth its weight in gold in the development of the now massively successful Nintendo Switch. Conclusion As such, it is safe to say that the industry currently finds itself in a grim situation. However, it is not one without hope. While more layoffs are almost inevitable, companies like Larian, Toys for Bob and Saber demonstrate that different paths by which talented developers can survive do exist. What’s more, Nintendo’s ongoing success represents a model for corporate ownership that both developers and gamers alike can point to as a successful alternative to the current boom and bust attitude enshrined within many publishers' and owners' business strategies. As a result, we can look to the future and hope that practices like these become more of a norm than an exception. What's more, we can hope that those developers who have been hit by layoffs are able to find stable employment and fulfilment in whatever they decide to do in return for all of the joy that they have brought us through their work. All images and intellectual properties belong to their respective rights holders and are employed here for the purpose of criticism and review.
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