[14] Executive Director of Circana (The NPD Group), Mat Piscatella suggests that the most optimistic projection indicates a potential decrease of about 2% for American video game industry in 2024.
[20] However, as the world reopened and the market returned to pre-pandemic trends, the rapid growth proved unsustainable, and companies found themselves with bloated operational costs, necessitating cutbacks.
The increasing complexity of game design, the adoption of advanced technologies to create "visually stunning" experiences, and rising player expectations for expansive and cinematic content all contributed to this cost inflation.
[26] Activision noted the increasing need for multiple studios to meet the demands of annual Call of Duty releases, leading to greater reliance on outsourcing.
[45] These games, which employ a substantial portion of the industry workforce and generate significant profits, have faced challenges including rising development costs, user fatigue with monetization, and revenue declines post-COVID-19.
Video game companies believed that the significant growth witnessed during the pandemic would continue afterward, leading many firms to explore mergers and acquisitions.
[67] After several acquisitions, Embracer Group announced that they will undergo a significant restructuring of the company, including the closure of studios, layoffs of employees, and cancellation of dozens of video game projects.
[70] Embracer CEO Lars Wingefors had previously faced criticism for accepting investment from Savvy due to concerns about human rights violations by the Saudi government.
[71] After several restructuring programs, Embracer Group reduced its headcount by 7,761, closed or divested 44 internal and external studios, and decreased the number of game projects by 80.
[72][73] Several studios and publishers under Embracer Group, Sega and Microsoft Gaming have either opted to spin off from their parent companies or have been compelled to be sold off, resulting in mass layoffs.
[85] Vladimir Putin made a series of edicts over the following two years with the aim of revitalising the Russian games industry; these were ridiculed by outside observers as ineffective and impossible to fulfill.
[80] Embracer Group made multiple layoffs, game cancellations, and studio closures between August 2023 and March 2024 after its $2 billion deal with Saudi Public Investment Fund fell apart.
[72][73] The organization with the highest amount of layoffs in the first year was Unity Technologies, with 2,900 jobs lost across several rounds; a significant proportion of the 16,000 losses sector wide by January 2024.
A number of studios announced that they were moving away from the engine permanently in the wake of the decision,[93][94] and tools were developed to assist in porting existing projects away from Unity.
[98] On January 31, 2023, as part of broader Microsoft job cuts, 343 Industries laid off 95 employees following the "disappointing" launch of Halo Infinite's multiplayer mode.
This move was part of a larger "reprioritization of titles and resources" to focus on high-impact games and new intellectual properties, resulting in the cessation of development on certain projects and the reassignment of teams within Bethesda and ZeniMax.
[101] On October 31, 2023, Sony Interactive Entertainment announced additional layoffs affecting around 100 Bungie employees and disclosed delays for two upcoming titles: Marathon and the Destiny 2 expansion, The Final Shape.
[102] On February 27, 2024, Sony Interactive Entertainment announced the layoff of 900 employees across various studios, citing the need to restructure operations in response to the evolving economic landscape and changes in product development, distribution, and launch strategies.
[103] On March 29, 2023, Electronic Arts laid off 6 percent of its workforce as part of a strategic shift to reevaluate its investment strategy and reduce office space, according to a blog post by EA CEO Andrew Wilson.
EA's CEO, Andrew Wilson, outlined the company's focus on owned IP, sports, and massive online communities as part of its business advancement.
CEO Tim Sweeney explained in an email to staff that the decision was due to the company's ongoing financial situation, stating that they had been spending more money than they were earning.
By prioritizing the growth of Xbox through attracting new players and nurturing creators, Phil aims to guarantee enduring strength and prosperity for the platform and the industry overall.
[140][141] When asked about the gaming layoffs, Phil Spencer addressed both the broader industry trend and the unique aspects related to Xbox's current business.
Spencer also touched on the evolving nature of Xbox, stating that the brand is moving away from traditional exclusivity models to adapt to the preferences of younger audiences.
Spencer emphasized that Xbox aims to be a platform where players can find the games they want, regardless of the device they use, aligning with the accessibility and cross-platform trends seen among younger gamers.
[144] Sony Interactive Entertainment chairman Hiroki Totoki stated that he acknowledges the need to manage development costs better in PlayStation studios, recognizing industry-wide challenges like rising expenses and lengthy schedules.
[146][147] Wes Keltner, CEO of Gun Interactive, expressed concern about the shrinking space for creative and innovative ideas from small game development teams.
[151] There were instances where studios spent extravagantly on events or office perks shortly before laying off a significant portion of their workforce, leading to feelings of betrayal among employees.
[2] Developers highlighted broader industry trends contributing to the instability, such as the increasing reliance on outside investors and shareholders who prioritize short-term profits over long-term sustainability.
[182] The industry's failure to hire and train new workers is exacerbating existing skills shortages at the senior level, as there are not enough staff progressing through the field and moving up to higher positions.