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So, We're Heading For Another Video Game Crash, Right?


Dreadknux

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Man, the video game industry is super depressing these days. After last year's constant tornado of developer and publishing layoffs, 2024 has been even rougher on the employment scene. Microsoft slashed 1900 staff last month. SEGA is about to drop over 60 personnel from its US offices. Twitch mercilessly cut 500(!) jobsThunderful. Riot Games. Eidos Montreal. Unity. And that's just the biggest names, in JANUARY.

This past week has also been absolutely sobering, as PlayStation and EA made their inevitable cuts.

900 at PlayStation, including the entire closure of its London Studio (with rumours that Media Molecule only survived based on a hypothetical coin toss). A photo soon started floating around of soon-to-be-former boss Jim Ryan visiting London Studio from five days prior to the cuts floating around, grinning like the Grim Reaper ate the Cheshire Cat. But it wasn't just UK talent - every studio appeared to be impacted, with even Insomniac Games - possibly the hardest-working and most successful PS Studio this entire PS5 generation - seeing headcount reductions. It simply makes no sense.

Speaking of making no sense, EA announced most recently that it was chopping 670 people from its business operations, justifying it by adding that it would be reducing its focus on licensed IP projects and doubling down on its owned IPs and EA Sports titles instead. To prove this, the company also apparently cancelled a Star Wars FPS that was being developed by Respawn... while in the same breath reaffirmed its dedication to making an Iron Man game (which, spoiler alert, is also a licensed IP). Uh...? Okay?

Broadly speaking, however, EA's statement was simply an admission that it didn't know what it was doing for the last five years and is fixing that by skating to where the puck is, rather than where it's going. The consumer trends that EA mentions in its own statement should not be shocking news to anyone who has been paying attention to the games industry over the last decade, or even EA itself considering the hyper-success of its FIFA EA FC Ultimate Team micro-transaction scheme.

Of course, all of these companies have rolled out the PR black carpet and declared that these cuts were 'absolutely necessary' in order to 'ensure stability and growth' for their businesses in a 'period of changing consumer habits and market uncertainty' and blah blah blah. The truth is, in almost all of these instances, you can reasonably argue that, actually, these employees no longer have jobs because of the inherent failures of the executives at the top. Failures that those executives are not willing to take responsibility for themselves.

Is it the fault of, for example, a random designer at Insomniac for PlayStation's rumoured internal hard pivot towards GAAS (Games as a Service) projects (a whopping 10+ being worked on from practically all of its studios) - a strategy that ended up tanking hard once it was clear that development time was being wasted on games that were destined to be commercial failures (as per Bungie's reported assessment of Naughty Dog's large-scale The Last of Us multiplayer game, which was recently cancelled - years of work down the drain)? I don't think it is!

Before, hearing of studio layoffs would be incredibly sad and I'd be wishing everyone impacted the very best of luck to find a new role elsewhere. But, with everyone cutting jobs at the same time, where can these amazingly talented people go? It's despairingly horrifying. I can only wish upon all wishes that everyone affected, who do not deserve what has happened to them, will find the strength to take their talents where they would be most appreciated.

But maybe that place isn't necessarily the games industry right now. It feels like we are entering a full-blown industry crash - if we've not already entered it! We all thought the layoffs were just a course-correction from an over-confidence in business during COVID lockdown, but it's evident that this was never the case. Ballooning costs of development, increasing prices for games and consoles (ensuring a maximum cap on audience growth), and erratic "all-in" executive decisions that harm business prospects are all leading us to a space where making games - at least, AAA games - becomes unsustainable. Something has to give. And it shouldn't be the people.

Shedding headcount might be a fantastic way of 'helping to re-engage growth' for all of these companies in the short term, but for the long term there needs to be a lot more consideration as to what their place in the industry is going to be, and the execution of actually-sensible strategies will need to be a big part of the equation.

I fear that this is going to be a big issue for PlayStation in particular. This is a company that has spent the last generation convincing its audience that costly, AAA, single-player narrative experiences are all they need, at the expense of smaller-scale games that can help support those projects. And it has abjectly failed to foster any kind of live-service online community to boot - its hyperactive GAAS development initiative was never going to be the solution to that, and it needs to find another way.

While I'm looking forward to the year/s ahead in terms of promising game releases, I'm also curious to see exactly how the current titans in the industry try to stay relevant in a "changing" landscape. If it even IS changing. PlayStation discovered with the launch of the PS4 that all you needed to succeed were games that were affordable. And games are no longer affordable - not for game studios to make, and not for consumers to buy either. Maybe the answer lies in something as simple as that. But we'll see.

In the meantime, I hope the human element of this industry is no longer treated as the scapegoat for bad business decisions, as it has been this past year.


(Sorry that my first games-related blog on here has been rather depressing... wasn't my intention, but I just felt compelled to write something, you know?)

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SadVlad

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It's a real struggle lately, and it shows. Another sad aspect of it all is that it seems that the companies that are actually making quality products are the ones turning right around and making layoffs... This isn't video game related but it's just another example, which is that Hasbro recently went under some massive layoffs. And one of the main branches of their company that took the biggest hit was Wizards of the Coast. Ironically enough, their biggest profit margin for the past year was Magic the Gathering as it nearly tripled all of their other profit margins. And then they turned around let go of nearly 45% of that departments staff... And it seems that SEGA is currently taking some hits as well after the the low sales of Sonic Superstars.

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