Gaming Nitpicks: Downsizing and Layoffs
The Catalyst
I was trying to think of something to write about recently. Should it be something silly? Should I talk about another game in my collection? Should I delve down the rabbit hole that is another “Origins Of” post? I was recently on a relaxing vacation and I came to the realization that not many days go by without hearing about another game studio shuttering or downsizing or laying off a number of their employees. That was when I figured I’d use my Gaming Nitpicks category to vent and rant about this a little bit, coming from the perspective of a retro gamer and someone who manages a business.
I do want to preface this with the following: my knowledge of how the video game industry works from a business perspective is very high level. What I will discuss here is based on my own feelings and sense about the industry as a fan of gaming and as someone who has played games for about 33 years. I know times are challenging and there’s no simple solution.
Layoffs are the New Normal
So, I’m sure if you are a fan of games, you’ve perused Kotaku or IGN or Substacks such as Gamedev Relay that do gaming news reporting. More often than not you will find an article about a company laying off folks or a studio shutting down. Maybe even a larger conglomerate like Microsoft shutting down a studio they paid a lot of money for. We live in a time where this is normal and that sucks, to put it mildly. It feels like with every new positive gaming article, one about someone losing their job swiftly follows to bring the reader back down to reality.
Money Behind the Madness
Why are these companies constantly doing this? To add insult to injury, sometimes the same companies perform multiple rounds of layoffs within a short period of time. Is it because the gaming executives, the financial officers are incompetent? Are they evil and heartless? From the outside looking in, the answer sometimes feels like a Yes to both and I’ve read pieces from outlets trying to purport that one or both are true.
But the reality is much less interesting most likely. Like it or not, video games are a business more than they have ever been. The product the businesses are selling is a video game and the profit is money. With games like Grand Theft Auto and Call of Duty and Assassins Creed, the profit is massive. However, with the invent of successful live service and multiplayer games like Fortnite and Apex Legends, the potential profit becomes astronomical. Exact profit numbers aren’t disclosed but Fortnite has reportedly made $26 BILLION dollars1 since it launched. Apex Legends? Well only a measly $3.4 BILLION dollars2 since 2019. So, you can see that some games make money and lots of it. But, not every game is the same and not every game makes billions of dollars. Especially not curated and immersive single player experiences. The real money lies elsewhere.
Chasing the Jackpot
Looking into the announcements from studios and companies that perform these layoffs and shutterings, their reasoning generally is “adopting a new posture to keep up with current market conditions”. The company Iron Galaxy - the studio that has helped with the development of games such as The Last of Us Part 2 Remastered on PC, developed Pro Stater 3+4, and helped with the original Borderlands - just announced that they were doing a second round of layoffs for this very reason. What are these “current market conditions” that game companies are chasing? I will tell you what I think. Remember this is my opinion.
