Publishers like Epic Games and Activision Blizzard are laying off hundreds of workers despite strong sales, which could drastically change the gaming industry.
Despite the recognition of these companies, a more disturbing report emerges. The past year has not just been marked by industry achievements but also stained with an increased number of job cuts across various sectors and this trend is extending into the early parts of 2024. Following Microsoft’s notable acquisition of Activision Blizzard for $69 billion, it had to part ways with 1,900 employees. Embracer Group similarly streamlined its workforce after numerous studio acquisitions; releasing approximately 900 individuals and shutting down esteemed UK developer Free Radical Design.
Epic Games, praised as the producer of Fortnite – one of the most profitable game franchises in recent years, unexpectedly let go of 830 team members while Electronic Arts trimmed its employee base by 6% which led to around 780 positions disappearing. An unfortunately similar scenario was reflected at Ubisoft, Naughty Dog Sega, and Unity where downsizing became unavoidable too; contributing towards an alarming pattern affecting both big-name publishers and smaller studios equally.
Why is this taking place? How can an industry that is estimated to be worth $180 billion annually be laying off employees at such a worrying rate?
Despite its enormous success, the gaming industry is going through an employment reduction period for a number of reasons. For example, large companies such as Activision Blizzard frequently end up having duplicate positions as a result of streamlining their operations, which causes layoffs. Similar to this, Embracer Group overstretched due to its quick growth and was forced to make significant changes to its original plans after a big investment agreement collapsed, which led to studio closures and employment losses.
The COVID-19 pandemic was also a major factor. Lockdowns increased game sales and attracted investors, but as they were eased, sales fell. This led publishers to shelve initiatives in favor of safer bets, affecting employment.
Three interrelated causes, according to seasoned game producer Colin Macdonald, are higher borrowing rates, higher inflation, and adjustments made to revenue expectations. These swings in the economy have compelled businesses to reconsider their plans and scale back on riskier endeavors.
Likely, the gaming industry is probably going to continue to be impacted by the COVID-19 aftermath and continued industry acquisitions. Furthermore, the growing use of AI in content creation could have an even greater effect on job security in the sector.
In conclusion, a complicated interaction between business tactics, general industry trends, and economic conditions has resulted in the recent layoffs in the gaming industry. Even if the future is still unknown, it is critical that businesses and employees adjust to these difficulties and look for creative ways to be sustainable in the long run.