Layoffs are an unfortunate reality for any industry, but the scope and scale of video game layoffs in 2023 goes far beyond a normal year. Layoffs have defined the past 12 months more than any specific video game or news item. Companies large and small are feeling their impact. Unofficial figures estimate that 9,000 workers are affected, and at the heart of it all are businesses that value growth at all costs, including people.
In September, Epic Games laid off 830 employees. Chief Executive Tim Sweeney wrote in a statement: “We spend much more money than we make. […] I had long been optimistic that we could make this transition without layoffs, but in retrospect, I see that to be unrealistic. Some of that spending went to companies like SuperAwesome and Bandcamp, which Epic acquired in 2021 and 2022 respectively. Both companies were sold shortly after Epic announced the layoffs.
epic production fort nighta multi-billion dollar revenue stream; it licenses the Unreal Engine software used by many developers to make games, including Final Fantasy VII Remake, P’s liesand Star Wars Jedi: Survivors; It has its own (unprofitable) game storefront. Epic still spent a lot of money, and in order to maintain a profit level acceptable to investors, it had to lay off 830 employees.
Embracer Group has made headlines over the past two years with its numerous acquisitions of game studios, media companies, and intellectual property rights. Lord of the Rings. This year, after a $2 billion investment deal failed, the company immediately made a U-turn and embarked on a massive restructuring plan. Axios The deal was reportedly struck with Savvy Games Group, the gaming arm of the Saudi Arabian government’s Public Investment Fund. Following this failed investment strategy, Embracer closed three studios, is looking to sell others, canceled numerous projects, and laid off more than 900 employees.
These are just the biggest, most egregious examples.Hasbro lays off 1,000 employees, including most of its team Baldur’s Gate 3 With Larian Studios. EA laid off 6% of its employees, about 780 people. BioWare, Microsoft, Bungie, Naughty Dog, Ubisoft, Amazon, CD Projekt Red, Sega, Unity, and Activision Blizzard have all been hit, just to name a few. In the face of these devastating layoffs, the consequences of which we have yet to see, one of the industry’s biggest and most publicized stories doesn’t even acknowledge this reality.
It doesn’t have to be this way. In 2013, Nintendo executives took salary cuts to prevent firing developers after poor sales of the Wii U. “If we reduce the number of employees in order to achieve better short-term financial performance, employee morale will decrease,” then-Nintendo President Satoru Iwata said in an investor relations Q&A. “I sincerely doubt that employees worried that they might be fired can develop software products that impress people around the world.” This isn’t the only time, either. Two years ago, in 2011, Iwata and the Nintendo board accepted a pay cut as weak 3DS sales prompted Nintendo to slash the price of the handheld computer.
Nintendo, the developer of some of the highest quality video games ever made, said here that in the long run it’s more important to put people over profits because those people will be more motivated to make great games. As of September, tears of kingdom 19 million copies sold, more than half of total sales breath of the wild Everything that has been done in the six years since its launch. Part of this success—the kind that made game developers, journalists, and gamers lose their minds over the games’ bridge physics—was that the development teams for both games remained essentially the same. Retention is the way in which institutional knowledge is preserved and passed on. This is the best way for developers to advance and create space for new people to enter the industry.
Unionization also protects developers in the event of layoffs. Efforts to form studios continue in 2023, with some developers at Sega, CD Projekt Red, Avalanche Studios and ZeniMax all voting to form a union this year.
That’s not to say layoffs should never happen. But it certainly shouldn’t be on the scale we see in 2023. We don’t know what steps, if any, senior executives at these companies with multimillion-dollar compensation packages took to avoid or reduce the need for layoffs. Mitigation measures such as salary cuts and bonus elimination should be prioritized before laying off employees.
2023 is going to be “a great year for games and a terrible year for game developers” for the gaming world. I think the first part of that statement should be removed entirely. A bad year for game developers can’t be a great year for games.