Although layoffs are an unwelcome fact in any industry, the amount and extent of layoffs in the video game industry in 2023 are significantly higher than in a regular year. Layoffs more than any particular video game or news story shaped the last 12 months. Both big and small businesses have been impacted. Unofficial estimates place the number of affected workers at 9,000, with firms at the center of it all having prized expansion at any cost, including human capital.
830 workers were let off by Epic Games in September. CEO Tim Sweeney said, “We’ve been spending way more money than we earn,” in a statement. … In hindsight, I realize that my long-held optimism that we could make it through this shift without layoffs was misplaced. A portion of that money was spent on businesses that Epic acquired in 2021 and 2022, namely SuperAwesome and Bandcamp. Not long after Epic announced layoffs, both companies were auctioned off.
In addition to creating the multibillion-dollar game Fortnite, Epic also licenses the Unreal Engine software, which is used by numerous developers to create games including Star Wars Jedi: Survivor, Lies of P, and Final Fantasy VII Remake. Finally, Epic operates an unprofitable gaming store. And Epic still spent so much of that money that it had to fire 830 employees to keep profitability at a level that investors could accept.
The Embracer Group has gained notoriety over the past two years for its several acquisitions of media firms, game studios, and The Lord of the Rings intellectual property. This year, after a $2 billion investment proposal collapsed, the corporation immediately reversed course and started a huge reorganization exercise. According to Axios, the agreement was made with Savvy Games Group, the Public Investment Fund of Saudi Arabia’s gaming division. Following the failure of this investment strategy, Embracer has terminated over 900 people, closed three studios, and is in the process of selling the remaining ones. It has also canceled other projects.
These are only the most prominent and outrageous instances. One thousand workers were let off by Hasbro, including the majority of the crew that collaborated with Larian Studios on Baldur’s Gate 3. 780 employees, or 6% of the company’s workforce, were let go by EA. Activision Blizzard, Microsoft, Bungie, Naughty Dog, Ubisoft, Amazon, CD Projekt Red, Sega, and BioWare were among the companies that suffered. And one of the biggest, most attended events in the industry failed to even acknowledge the truth of these tragic layoffs, the effects of which we have yet to witness.
This does not have to be the case. In order to avoid firing developers in the wake of the Wii U’s dismal sales, Nintendo executives infamously took a pay cut in 2013. During an investor relations Q&A, Satoru Iwata, the president of Nintendo at the time, stated, “Employee morale will decrease if we reduce the number of employees for better short-term financial results.” “I genuinely doubt that workers who worry about losing their jobs will be able to create software titles that have the potential to inspire people all over the world.” Nor was this the only instance. 2011 saw Iwata and the Nintendo board take compensation cuts as a result of the 3DS’s poor sales, which led Nintendo to lower the device’s pricing.
Nintendo, a company that has produced some of the best video games ever, is arguing that, in the long term, it is far more crucial to put people before profit since those people will have stronger incentives to produce high-quality games. 19 million copies of Tears of the Kingdom had been sold as of September, which is more than half of Breath of the Wild’s total sales in the six years since its release. The fact that the production teams for the two games were essentially the same contributed to its success, which had journalists, players, and game developers alike going crazy over the game’s bridge physics. Institutional knowledge is transmitted and maintained through retention. It creates room for new people to enter the industry and is the best method for developers to advance in their careers.
Additionally, unionization helps shield developers from layoffs. In 2023, developers at Sega, CD Projekt Red, Avalanche Studios, and ZeniMax all voted to establish unions, demonstrating the ongoing push to unionize studios.
This is not to argue that there should never be layoffs. But it most certainly shouldn’t be on the size that we’ve seen in 2023. With millions of dollars in compensation packages, we have no idea what efforts, if any, the CEOs of these corporations took to prevent or minimize the need for layoffs. Prioritizing mitigating measures such as reducing salaries and canceling bonuses should come before firing employees.
2023 has been dubbed a “great year for games, terrible for game developers” in the gaming community. I would contend that the first half of the sentence should be removed entirely. Games cannot have a fantastic year in a year that is dreadful for game makers.
