Layoffs are an awful reality in any industry, but the extent and magnitude of video game layoffs in 2023 go much beyond what would be expected in a typical year.
Layoffs defined the past year more than any video game or piece of news. Companies of all sizes have felt the effects. Unofficial estimates place the number of affected workers at 9,000, and at the core of it all are firms that prize growth at any cost — including people.
Epic Games laid off 830 staff in September. “We’ve been spending way more money than we earn. […] I had long been optimistic that we could power through this transition without layoffs, but in retrospect, I see that this was unrealistic.” CEO Tim Sweeney said in a statement.
Epic spent some of that money buying startups like SuperAwesome and Bandcamp, which it acquired in 2021 and 2022, respectively. Both businesses were sold soon after Epic announced layoffs.
Epic creates Fortnite, a multibillion-dollar revenue generator; it licenses the Unreal Engine software, which is used by many developers to create games such as Final Fantasy VII Remake, Lies of P, and Star Wars Jedi: Survivor; and it operates its own (profitable) gaming storefront. And Epic still spent so much of that money that it had to lay off 830 people in order to maintain a level of profitability acceptable to investors.
Embracer Group has made news in the last two years for its various acquisitions of game studios, media organisations, and The Lord of the Rings IP rights. Because of a failed $2 billion investment transaction, the corporation immediately reversed course and embarked on a huge restructuring programme this year.
How Bad Were The Layoffs In The Gaming Industry?
According to Axios, the agreement was with Savvy Games Group, the gaming division of the Saudi government’s Public Investment Fund. Embracer has closed three studios, is looking to sell others, cancelled other projects, and laid off over 900 staff as a result of this disastrous investment approach.
These are only the most extreme examples. Hasbro laid off 1,000 people, including the majority of the Baldur’s Gate 3 crew at Larian Studios. EA laid off 6% of its staff, or approximately 780 people.
To mention a few, BioWare, Microsoft, Bungie, Naughty Dog, Ubisoft, Amazon, CD Projekt Red, Sega, Unity, and Activision Blizzard were all struck. And, in the face of these horrific cutbacks, the consequences of which we have yet to witness, one of the industry’s most-watched events failed to even acknowledge this reality.
This does not have to be the case. To avoid layoffs, Nintendo executives notably took a wage cut following the Wii U’s weak sales in 2013. “If we reduce the number of employees for better short-term financial results, employee morale will decrease,” said Satoru Iwata, then-President of Nintendo, in an investor relations Q&A.
“I sincerely doubt employees who fear that they may be laid off will be able to develop software titles that could impress people around the world.” This was not the first time. In 2011, Iwata and Nintendo’s board of directors faced wage cuts after poor 3DS sales caused Nintendo to drop the handheld’s pricing.
What Does Nintendo Say About The Layoffs?
Nintendo, the creator of some of the highest-quality video games ever created, is arguing that, in the long run, prioritising people above profit is significantly more important since those people will be more driven to create wonderful games.
Tears of the Kingdom has sold 19 million copies as of September, more than half of what Breath of the Wild had sold in the six years since its release.
That success — the kind that had game developers, journalists, and gamers freaking out about the game’s bridge physics — is due, in part, to the fact that the development teams for the two games remained roughly the same.
Retention is the process by which institutional knowledge is kept and transmitted. It’s the ideal method for developers to advance, providing room for newcomers to the sector.
Unionisation can also safeguard developers against layoffs. In 2023, some developers at Sega, CD Projekt Red, Avalanche Studios, and ZeniMax voted to create unions, continuing the push to unionise studios.
All of this is not to imply that layoffs should never occur. However, the scale observed in 2023 should not be repeated. We don’t know what actions, if any, the leaders of these corporations, who are paid millions of dollars, took to minimise or reduce the need for layoffs.
Mitigating measures such as wage reduction and bonus cancellations should be prioritised before staff are let go.
