2024 Sets New Record For Most Video Game Industry Layoffs
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As if 2023 wasn’t bad enough with around 11,000 layoffs in the video game industry, 2024 has already set a new record as we enter October with 15,000 additional lost jobs thus far and a few more months still left to go. These losses have in large part been driven by rising game development costs, the lingering economic effects of the COVID-19 pandemic, and the demand for unending revenue growth year after year by company stakeholders.
One of the most obvious trends that may be behind these layoffs is the shift towards live-service games at the cost of quality. While this has often been shown to bring in consistent revenue streams, they are also largely the cause of widespread company restructuring. Live-service games now clog up development pipelines, leaving fewer resources for traditional single-player experiences or “complete-up-front” games without extra in-game purchases and causing developers to rush out games that feel unfinished because… Well… They are.
Epic Games, which famously introduced Fortnite as a live-service model that many have since adopted, has even undergone its own cuts, laying off 16% of its entire workforce last year as part of a broader reorientation of its business model with the CEO coming out in October of 2024 stating that Epic is finally “financially sound”. The move towards live-service models has also led to more frequent cancellations of high-risk, high-budget projects that are not necessarily guaranteed to pay off or require significantly more time and resources. This problem may only continue to get worse as other developers watch games like Concord almost immediately shut down despite costing hundreds of millions of dollars.
As illuded to in the first paragraph at the top, the financial burden of producing AAA games has also risen sharply in the past decade. Games that once had budgets between $50-150 million now regularly exceed $200 million, with some projects now even doubling that in total. As a result, companies are increasingly reluctant to take risks on new intellectual properties (IPs), leading to a focus on established franchises and well-tested formulas in both the gaming and movie industry (more super heroes, anyone?). This rather conservative approach has resulted in not only canceled projects but also mass layoffs, as studios can no longer afford the “bloated” development teams required for massive titles.
The gaming industry's layoffs are just one snapshot of a larger economic problem, however. During the height of the pandemic entertainment companies thrived, leading to an absolutely incredible boom in hiring and expansion. As the world has adjusted to post-pandemic conditions, demand has stabilized, or rather slingshotted back in the opposite way, with many companies now not sure if they need all of their staff after all and want to push more and more for short-term profits over long-term viability. Inflation and rising operational costs have also squeezed profit margins in an economy where anything but growth is looked down upon, prompting even the most largest and well-known companies like Microsoft and Ubisoft to make difficult decisions about staffing levels.
In addition, the gaming industry has been hit by changing consumer behavior as budgets are tightened. Games as a service have shown diminishing returns as players grow fatigued by aggressive monetization practices and regulations (particularly in Europe) begin to crack down on predatory microtransactions and lootbox mechanics.
Losing your job is always going to be hard, and the effects of these layoffs have been devastating for industry workers, many of whom have faced multiple rounds of layoffs in their careers with gaming and tech in general being a lot more unstable than other areas. It should be noted that, according to reports, the average game developer now experiences at least two layoffs in a five-year period.
Smaller, independent studios have also been disproportionately affected, as investment capital has dried up, leaving them unable to compete with the larger publishers that dominate the market, but, as stated earlier, larger studios have not been immune to these challenges. Earlier this year, Blizzard, Riot, and EA announced layoffs that impacted both frontline developers and support staff, leading to growing calls for unionization within the industry as workers seek greater protections from job instability.
While layoffs are expected to continue into 2025, there is hope that the industry will begin to calm. Many analysts predict a period of consolidation as we have seen, where larger companies absorb smaller studios in an effort to streamline operations and reduce overhead or competition. This could lead to fewer but larger and more powerful companies tightening their grip on things.
At the same time, the focus on established IPs and live-service models is slowly stifling innovation. If studios are unwilling to take risks on new ideas, the creativity that has long driven the gaming industry could be compromised. On the other hand, the rise of indie game development, fueled by easily accessible platforms like Steam, who just reached a new high record of concurrent players, and itch.io, could provide a counterbalance to these trends as we’ve seen with big launches like Manor Lords, offering smaller teams the opportunity to innovate in ways that larger studios seem to have a much harder time doing these days.
