A wave of layoffs in the gaming industry: “Games will soon become less beautiful and less good”

Many successful games were released in 2023. New games about Harry Potter (Hogwarts Legacy), Call of Duty, Resident Evil, The Legend of Zelda and Final Fantasy, for example.

He said that all games generated revenues of 169 billion euros last year Preparation From gaming market analyst Newzoo. An increase compared to 2022, but it is now becoming ominous in the gaming industry.

Thousands were laid off

For example, Microsoft announced in January that nearly 2,000 employees could leave the tech giant's various gaming divisions. This mainly concerns Activision Blizzard employees, but there are also hits on ZeniMax (known for Doom) and Xbox.

A month later, Sony introduced a favour 900 employees who were working worldwide in the PlayStation games division will have to leave, that is, eight percent of the workforce.

At the end of February, game publisher Electric Arts (EA) further announced a reorganization under which five percent of its employees will be laid off between March and December, i.e. more than six hundred jobs. This is the second round of layoffs at the company, with nearly 800 people having to pack their bags by 2023.

In the time of Corona, trees have grown to the sky. We had to stay home, which meant selling more toys. Gaming companies saw profit growth, which pleased investors. But those same investors are now withdrawing, says Matta Haages Burridge, a game designer and lecturer in creative games and entertainment at Breda University of Applied Sciences (BUAS).

“Investors saw gaming as generating money. They expected to get rich very quickly. But that expectation is unrealistic. Now that the sector is growing less quickly, they want their money back.”

So gaming companies have to downsize. This causes a wave of layoffs. This also means that games in the future will be less beautiful and of lower quality, according to Haggis Burridge.

Games are becoming less good due to brain drain

“To develop a game, you need a lot of skills. You can't develop it in a day. If you fire a third of your staff, you'll lose a lot of knowledge. And the people who stay will get stressed out and maybe leave. You get more of a brain drain.”

This has already happened in the past with previous separations. “The games could have been better and more beautiful if the staff had stayed the same for years. If you are a critic, you will see that many games, for example first-person shooters, are similar. Both in terms of story and design.”

You won't hear users complaining about this. “Compare it to a Marvel movie. You already know what you're getting. But you also don't know what you're missing.”

Multi-billion dollar business

Game publishers are suspicious about game costs. But during a lawsuit Costs leaked Among others, the game Horizon Forbidden West, made by the Dutch company Guerilla Games. The game cost $212 million to make, and employed more than 300 people.

So it is a billion-dollar business, in which acquisitions also occur regularly. For example, Embracer Group, a Swedish holding company, has purchased several game studios in recent years. Making it the largest European computer gaming company. By 2023 it had over 120 different studios.

However, the company is also easily shutting down less profitable studios, such as Square Enix Montreal, known for its Tomb Raider games.

Another gaming company, Unisoft, fired sixty employees last year. “I was fired without warning. I'm divorced, have a mortgage and a daughter. If anyone has a tip to get me another job, please let me know.” The fired employees expressed their despair and colleagues at Ubisoft in one Share on X.

Electronic Arts is known for games like The Sims and FIFA, which it has been making since 1993. However, it lost the rights to that popular football game from the 2023/2024 football season after a dispute with FIFA.

EA and FIFA failed to agree on licensing rights to use the FIFA name. The gaming company paid $150 million (142 million euros) a year to bear the name, and FIFA wanted twice that.

Most profitable title

FIFA was one of Electronic Arts' highest-grossing titles. The company earned more than $1.6 billion a year from the game's Ultimate Team mode alone, and you can purchase player cards for a fee. You can also form your own dream team. These costs were in addition to the costs of purchasing the game.

Did losing the rights to FIFA cost EA? No, according to game journalist Bas Vroegop.

“Fans are also flocking to the new soccer game under the name EA Sports FC. Everything about the box for that game is also similar to the FIFA box in terms of design. Assuming EA made a little less money on it, it means that they are paying for themselves because they are no longer have to pay the license fee.”

Economic wave movement

According to Vroegop, the problem mainly lies in the release of games with a certain wave motion. “If a new gaming console, like the Playstation, is released in 2020, many games will follow. After that peak, a trough will follow.”

During the Corona crisis, the release of many games was postponed because game makers could not work in the office. Due to the shortage of chips, there was a shortage of Playstation 5, which also caused game publishers to postpone the release of games.

“So in 2023, multiple games are released at the same time. Now you're in a valley and companies are having to fire their employees.”

Increasing the price of the game is not possible

Vroegop also mentions investors who wanted to see a quick return on investment. “This reinforces the problem. Games are disappearing now too. For example, EA canceled a planned Star Wars game.”

Making such a game costs millions. It is simply not possible to increase the prices of games. Games have hardly gotten more expensive over time, despite inflation, because players are expected to not want to pay more. “To continue to make a lot of profits, you have to add a lot of new players.”

Vroegop points out that the quality of games improves less quickly due to layoffs. “A sequel is released, which is created by teams that have nothing to do with a previous version of the game. It takes years before you reach the top level as a game creator. These layoffs mean you lose experience.”