Despite good sales, publishers like Epic Games and Activision Blizzard are laying off hundreds of employees, which could lead to drastic changes in the industry.
That 2023 has been an excellent year for video game developers is common place. Whether blockbuster hits or independent gems, hardly a single week went by without a release. But it was also a year of massive layoffs for the industry, Major publishers like Ubisoft, Naughty Dog, Sega and others laid off employees by the hundreds, but smaller studios were also affected. This is dissonant with the information that the value of the gaming industry has passed 180 billion.
Situations can be different. For example, if a large developer buys one or more studios, employees from duplicate roles become unnecessary. This is what happened, for instance, with Activision Blizzard. The company simply fired those who were doing the same work. thus optimizing its staff.
Embracer Group, a Swedish publisher, conducted an aggressive M&A campaign, which resulted in more than one thousand people looking for new jobs.
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The COVID pandemic also had a significant impact on the industry. During the quarantine, there was an explosion of interest in video games. The effect was twofold: high sales of games such as Animal Crossing and Call of Duty: Modern Warfare increased revenue and caused stock prices to skyrocket, thus attracting the attention of outside investors who flooded the industry with funds. Ambitious projects began to be developed and new employees were hired for them, but sales plummeted as soon as the quarantine was lifted. As a result, many projects were shut down – likely many more than the average user is aware of. Accordingly, those who worked on those projects were also laid off for lack of use.
Game development recruitment experts cite three main factors that led to the job losses – adjustments to revenue forecasts, higher interest rates, and high inflation. Indeed, inflation rates are rapidly outpacing industry growth, so many publishers have decided to stop working on the riskiest projects. That said, this approach is also risky, as gamers are still expecting promising projects from major developers, and their disappointment will negatively impact profits.