In only 2 months, there have been 8000 thousand layoffs in the video game industry. It’s a frightening number that only grows larger each day.
There are two primary reasons for the recent surge in layoffs.
The Pandemic
During this time the video game industry saw a huge boom. People were stuck inside their homes meaning they had more time for video games. This lead to companies massively expanding.
The most notable of these expansions is Microsoft. The industry giant acquired ZeniMax media, the parent company of Bethesda softworks for $7.5 billion and Activision Blizzard for $75.4 billion.
Both of these acquisitions cost Microsoft an absurd amount of money, but back when the industry was at an all time high it didn’t seem like much. However, Microsoft has just announced it has laid off over 1,900 people across both of these companies.
The increased revenue during the pandemic lead to Microsoft hiring more staff with the hope the revenue would continue. Since it hasn’t, old and new staff have been let go en mass.
However, Microsoft isn’t the only company letting it’s staff go. Sony announced that it’s let go of over 900 people across its many subsidiary companies.
The pandemic was a time of growth for the industry, but it’s become very clear that since the pandemic has ended the industry has been unable to transition to a more steady growth structure, leading to the large amount of layoffs in the video game industry.
Escalating Budgets
In the last few console generations, there has been a significant push for more cinematic experiences. Budgets have skyrocketed and sales aren’t able to catch up.
It’s become common for first party exclusives to cost over $1 billion to produce since the pandemic. When before they cost upwards of $150 million. Finding the money to finance projects like these has become difficult for companies.
This has lead to corners being cut, or predatory systems being implemented to get as much money as possible from the people playing the games.
Micro transactions and live-service games have become the trend to recuperate costs. Games like Avengers and most recently Suicide Squad: Kill The Justice League are clear examples of this trend. Both include heavy emphasis on micro-transactions for cosmetics or in game currency. Avengers was officially discontinued late last year and it’s likely Suicide Squad is on its way as well.
Very few games are able to pull of the live-service structure, most of them aren’t huge AAA productions.
It’s clear many companies are trying to find ways to keep there profits high, using predatory schemes and cutting staff are the most convenient ways.
Whats next?
It’s likely over the next few months these layoffs in the video game industry will continue as companies scale back their productions, in an attempt to save money.
This could lead to delays for certain games or projects getting shut down completely.
Featured Image Credit: Pexels.com
Fourth year Film and Journalism student
Deputy editor
Contact - deputyeditor@brignews.com
