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Mass layoffs will define 2023 for the video game industry

Even though instability is the norm, mass layoffs in the video game industry this year were unprecedented.

Published on Dec 24, 2023

Indie game publisher Versus Evil — behind Stoic Studio’s The Banner Saga — shut down on Dec. 22, laying off its entire 13-person company just as their Christmas break began. For a year that saw some of the best-reviewed games, the likes of The Legend of Zelda: Tears of the Kingdom and Baldur’s Gate III, 2023 has been defined by waves of brutal layoffs that rattled the industry.

The year began with Microsoft’s announcement of cutting 10,000 jobs, impacting Starfield’s Bethesda Game Studios, Gears of War’s The Coalition, and Halo’s 343 Industries. Hundreds of layoffs followed at publishers like EA, Take-Two, Ubisoft, and CD Projekt Red. The industry has collectively laid off between 6,500 and 7,000 people, with many more jobs being unaccounted for.

Pedro Pascal and Bella Ramsey in HBO's The Last of Us.

Image: Larian Studios

The industry saw an unexpected surge in sales during the COVID lockdowns as people fell to playing video games to get by — with developers subsequently pouring millions into expansion. After a booming couple of years, the industry recorded a decline in gaming revenue in 2022, a first in over a decade.

While swollen budgets during the pandemic fueled the creation of high-profile games. With developmental budgets for AAA games repeatedly breaking the $100 million mark, even decent sales made it tough for these titles to turn a profit. Management threw around figures that were based on pandemic trends in sales — leaving many stranded when estimates failed to come through.

Epic Games, which laid off 16 percent of its workforce, blamed it on overspending. “For a while now, we’ve been spending way more money than we earn,” CEO Tim Sweeney’s statement said. “We still ended up far short of financial sustainability. We concluded that layoffs are the only way,” he added. The company saw an “unrealistic” transition to a metaverse-inspired ecosystem, and similar to Meta’s outcome, the metaverse couldn’t pull through (at least for now).

The video game industry is brutal — employees regularly “crunch” through long hours and weekends leading up to a release, but most never get to be “hands-on creators.” Instability is a norm for the industry, badgered by constant studio closures and layoffs. “One game company might be saddled with a failed project that it never wanted to make. Another might fold because the corporation that owns it has decided it no longer wants to develop video games. Others might be the victim of shifting priorities and board room shenanigans,” said Jason Schreier, author of Press Reset: Ruin and Recovery in the Video Game Industry.

Pedro Pascal and Bella Ramsey in HBO's The Last of Us.

Illustration: Generated via Bing

Numbers fail to tell the story of the human cost associated with mass layoffs — highlighted in a feature from Polygon. Others believe that tech layoffs this year were at least partly inspired by Elon Musk’s culling of the Twitter workforce, with other companies seizing the opportunity to downsize their workforce to write off at least some of the losses.

The tech industry has long been grappling with gender discrimination and a lack of diversity. So what do workers feel? A need for more transparency and some degree of workplace protection. A growing segment of the workforce has shown support toward unionizing, with ZeniMax, the Allied Employees Guild Improving SEGA, Raven Studios, and Blizzard Albany being notable video game unions.

While unions can’t prevent these layoffs, they do ensure employees adequate compensation as thousands compete for jobs at companies reluctant to hire. ❑