Mass Layoffs: The Beginning of the End for Console Gaming?

The gaming industry has been hit hard lately with mass layoffs shaking up some of the biggest studios. Starting in 2023 and continuing into 2024, over 18,000 jobs vanished, leaving many talented individuals without work.

Among those affected were seemingly profitable studios like Naughty Dog, Guerrilla Games, and Insomniac Games, known for crafting beloved titles like The Last of Us, Horizon Zero Dawn, and Marvel’s Spider-Man.

The impact of these layoffs rippled across continents, with North America and Europe bearing the brunt. Entire studios closed their doors and games in various stages were cancelled.

These job losses weren’t sudden, but rather the culmination of various factors converging over time.

Firstly, the cost of developing AAA games has been steadily rising. Creating immersive experiences with cutting-edge technology doesn’t come cheap, and as player expectations soar, so do production costs.

The global economic slowdown, coupled with tightening budgets, made it increasingly difficult for companies to sustain their workforce. The COVID-19 pandemic initially boosted gaming revenue as people sought entertainment during lockdown and companies invested heavily in AAA projects and buying up smaller studios. But as the world gradually reopened, and the effects of ongoing wars and the pandemic on the world’s economies became apparent, the industry saw a decline in revenue growth, further exacerbating financial strains.

Moreover, gaming giants, such as Sony, began shifting their focus from narrative driven, cinematic, single player action/adventures to mobile and live service multiplayer games, hoping to cash in on the success of League of Legends or Fortnight. It is reported that Sony had initially planned to release 12 live service titles before March 2026 but this has now been reduced to 6. This resulted in many of Sony’s most recent cancellations.

Mergers and acquisitions also played a significant role in job cuts. Companies anticipated continued growth post-pandemic, leading to a flurry of takeovers. When these expectations fell short, layoffs became inevitable. A controversial $75.4 billion merger between Activision Blizzard and Microsoft and $3.6 billion between Bungie and Sony last year reportedly resulted in the loss of 8% of their workforce each.

To compound the issue, Generative AI technology promises to revolutionise game development, offering cost-effective solutions and endless creative possibilities but could also be influencing corporate “hiring and firing” decisions.

Yet, amidst these shifts, the human toll is palpable. Developers express frustration, disillusionment, and concern for the future. Many felt blindsided by the layoffs, questioning corporate priorities. Some developers pointed out that management decisions often overlooked the bread and butter realities of game development. CDPR’s Cyberpunk 2077 is a prime example. Developers were reportedly pressured to work under extreme crunch, with unrealistic time constraints. It was subsequently released before they had time to complete it. Resulting a class-action lawsuit against the company, stock market losses of 75%, the game initially been delisted from the Playstation Store and gamers reimbursed for their preorders. Others criticised that companies prioritised executive salaries and unnecessary expenses over investing in game development. The average CEO at the biggest gaming firms made $10.9 million in 2019.

The pandemic may have exacerbated existing issues, but it’s clear that broader industry trends are at play.
Algorithms are being used to determine what games will be backed and what will be tossed. Like the movie industry, we are already seeing an increase in the development of so-called “sure fire” AAA Superhero games, classics remakes and the Rougelike genre as studios look to cutting their costs. Some might grumble that this cookie-cutter approach often comes at the expense of creativity and innovation.

All we know for sure is that the gaming community are an independent and fickle bunch, and not as easily influenced as other consumers. So it remains to be seen how these tactics will impact the industry in the long run, added to this, at a whopping R1500.00 for the average AAA game, gamers have had to become more selective about their purchases. Could this be the beginning of the end for console gaming?

26 Mar 2024

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