The Real Cost of Gaming: Behind the Layoffs Sweeping Through the Industry

The gaming sector has been going through a turbulent time, with both big and small businesses being struck by a wave of layoffs. One glaring illustration of the personal impact of these layoffs is the tale of Aaron, a developer at Ascendant Studios. After putting in many hours on “Immortals of Aveum,” the studio’s debut game, Aaron and over half of his coworkers were let go because of the game’s poor success. There have been around 10,000 layoffs in the business in 2023 and another 6,000 in 2024, so this is not a unique incidence.

This pattern initially appeared to have a simple explanation: the COVID-19 pandemic. Take Two This feeling was summed up by CEO Strauss Zelnick, who said, “I do think folks got a little fat and happy during the pandemic… Many others seemed to believe that the music would never end, in my opinion. With the belief that the higher revenue during the pandemic would last forever, this assumption resulted in excessive employment and spending. However, businesses were compelled to reduce spending as it became more commonplace.

However, the issue is not entirely explained by the pandemic story. The Ascendant Studios layoffs and the sheer volume of layoffs in recent years point to a more serious problem in the sector. In their announcement on their 530-person layoffs, Riot Games admits that the choices that led to these reductions were made before the outbreak. Riot acknowledged that its rapid growth and lack of concentration led to unmanageable expenses and limited space for innovation.

It appears that the issue stems from the way video game executives spend their money, with developers frequently taking the brunt of bad financial choices. Speaking with more than 40 game creators paints a picture of an industry that is expensive, risky, and volatile. Businesses have been growing quickly, making investments in acquisitions and new technology, only to discover that they are unable to maintain the expansion when the anticipated revenues do not materialize.

This would imply that Epic Games laid off 800 workers due to investments in projects such as the pursuit of metaverse projects that had a legible plan. The CEO of Epic Games, Tim Sweeney, referred to the layoffs as a “survival move,” even though the company has already tried to cut expenses elsewhere.

While overspending afflicts larger businesses, the smaller studios and companies working with new technologies like blockchain suffer. The wrong strategic move of OliveX when investing in NFTs brought several losses and layoffs. Businesses like the Embracer Group also ran into financial troubles due to their high dependence on external financing and poor investments.

These layoffs have a consequence in that it ripples out of those who lost their jobs: it is an indication of a greater problem of poor management and low investment in high-caliber game production. A turbulent labor market and probable drop in the caliber of games created are the results of the industry’s emphasis on raising revenues at the expense of employee stability and product quality.

With these challenges continuing to stare the industry in the eye, there is that feeling of real realization that things need to take another route. Growth should be sustainable, investments strategic, and employees matter too. Only then can the gaming industry hope for some semblance of stability to continue thriving for many years in the future.