Layoffs are an unfortunate reality in any industry, but the scope and scale of layoffs in the video game sector in 2023 are far beyond a typical year. More than any video game or specific news story, layoffs defined the last 12 months. Companies large and small have felt its impact. Unofficial figures estimate 9,000 workers have been affected, and at the center of it all are corporations that valued growth at all costs, including people.
In September, Epic Games laid off 830 employees. In a sentence, CEO Tim Sweeney wrote, “We have been spending a lot more money than we earn. (…) For a long time I had been optimistic that we could push through this transition without layoffs, but in retrospect I see that this was not realistic.” Some of that spending went to companies like SuperAwesome and Bandcamp, which Epic bought in 2021 and 2022, respectively. Both companies were sold shortly after Epic announced layoffs.
epic brands fortnite, a multi-million dollar revenue generator; licenses the Unreal Engine software that many developers use to create games, including Final Fantasy VII Remake, Lies of Pand Star Wars Jedi: Survivor; and has its own game store (not profitable). And Epic still spent so much of that money that, to maintain a level of profitability acceptable to investors, it had to lay off 830 people.
Over the past two years, Embracer Group has made headlines for its numerous purchases of game studios, media companies and intellectual property rights. The Lord of the rings. This year, the company immediately pivoted and began a massive restructuring program due to the failure of a $2 billion investment deal. axios reported that the deal was with Smart Playgroup, the gaming arm of the Saudi government's Public Investment Fund. As a result of this failed investment strategy, Embracer closed three studios, sought to sell others, canceled numerous projects and laid off more than 900 employees.
These are just the biggest and most egregious examples. Hasbro laid off 1,000 employees, including most of the team that worked on Baldur's Gate 3 with Larian Studies. EA laid off 6 percent of its workforce or about 780 people. BioWare, Microsoft, Bungie, Naughty Dog, Ubisoft, Amazon, CD Projekt Red, Sega, Unity, and Activision Blizzard were all affected, just to name a few. And in the face of these devastating layoffs, whose ramifications We have yet to see, one of the industry's biggest and most watched events didn't even acknowledge this reality.
It does not have to be this way. In 2013, Nintendo executives He famously took a pay cut after poor sales of the Wii U. to avoid layoffs of developers. “If we reduce the number of employees for better short-term financial results, employee morale will decrease,” Nintendo's then-president Satoru Iwata said in an investor relations Q&A session. “I sincerely doubt that employees who fear being fired can develop software titles that can impress people around the world.” This wasn't the only time either. Two years earlier, in 2011, Iwata and the Nintendo board of directors accepted salary cuts after weak sales of the 3DS led Nintendo to reduce the price of the handheld.
Nintendo, developer of some of the highest-quality video games ever created, says here that in the long run, it's much more important to prioritize people over profits because those people will be better incentivized to make good games. From September, Tears of the Kingdom has sold 19 million copiesmore than half of what Breath of the wild it has done so in the six years since its launch. That success, the kind that made game developers, journalists and gamers lose their minds. bridge physics game – is due, in part, to the development teams between the two games largely remaining the same. Retention is how institutional knowledge is preserved and transmitted. It is the best way for developers to get promoted, creating space for new people to enter the industry.
Unionization can also protect promoters in the event of layoffs. The effort to unionize the studios continued in 2023 with some developers at Sega, CD Projekt Red, Avalanche studiesand Zenimax all voting to form unions this year.
None of this is to say that layoffs should never happen. But the scale we've seen in 2023 certainly shouldn't be like that. We don't know what steps, if any, the executives of these companies, with millions of dollars in compensation packages, took to avoid or lessen the need for layoffs. Such mitigating actions, such as pay cuts and bonus cancellations, should be prioritized before laying people off.
The refrain of 2023 in gaming has been “a great year for games, terrible for game developers.” I would say that the first part of that statement should be removed entirely. A terrible year for game developers can't be a great year for games.
