Game Over or Game On? How the Gaming Industry is Balancing Budgets and Layoffs

By Can Picak – CEO & Co-Founder- DIGA Labs

The game industry has been rocked lately by a bevy of layoffs that have left many people wondering about the viability of the highly saturated industry. With more than 8,100 layoffs announced by major developers, like Playstation, EA, Activision Blizzard, and the like, the situation has turned quite dire of late.

2023 saw near-weekly layoffs across the entire industry. When the dust had settled, at least 6,000 jobs across publishers, developers, and other video game-related companies had been terminated. Sadly, if the first few weeks of the year are any indication, 2024 will outpace that.

Layoffs in the game industry are unfortunately not uncommon, and they can happen for various reasons. Affecting both large and small companies, they often coincide with the completion of a project, the cancellation of a game in development, or when a company undergoes restructuring.

Additional factors such as poor sales of a game, changes in company strategy, mergers and acquisitions, or shifts in market trends can all be contributing factors. The increasing costs of game development and the competitive nature of the industry also contribute to the prevalence of layoffs. Besides impacting the employees who have been let go, leading to possible financial instability and blips on their resumes, layoffs can also have a considerable impact on the morale of remaining employees and the overall culture of a studio or company. 

Take for example, Blizzard Activision who reduced the size of their gaming workforce by approximately 1900 roles out of the 22,000 people on their team. These layoffs were allegedly attributed to various reasons, including restructuring and cost-cutting measures. This, as well as management changes and company policy overhauls, impacted the morale at Blizzard Activision. Employees have responded to all the changes with walkouts, demands for CEO, Bobby Kotick, to resign (which he eventually did), organising for better treatment, and so on. 

The gaming industry is more like a community or a family, and most of these family members were and still are gamers, living out their dream of creating games that bring people entertainment and provide an escape. To that end, some companies have flipped the script and tried to change the narrative by employing cost-cutting strategies while fostering employee benefits to boost morale.

For example, Capcom remains one of the few video game companies that seem to be weathering the financial storm. In fact, the company is even raising its employees’ salaries by at least 5% and facilitating a bonus system for its employees. 

Some companies have shed light on the joy of making games, placing the happiness of employees beyond those of the upper management, which functions as an antithesis of what most AAA developers are going through nowadays. On the other hand, some companies have placed the product above all else, fostering a sense of purpose and drive towards achieving the initial goal of creating memorable experiences with games. 

At the end of the day, monetizing the gaming industry can play out in two ways. Games are meant to be enjoyed, and while microtransactions are not everyone’s cup of tea, they can be a steady source of revenue if the base of the game is an enjoyable one. Take industry giant, Fortnite, a success if there ever was one, for example. The in-game microtransactions have generated more than $1 billion in microtransactions since being released in July 2017. This implies that there may be room for financial implementation in the gaming industry but its goal should be to enhance the experience, not foster corporate greed with all its ricochets and implications.

Can Picak, CEO and Co-Founder of DIGA Labs, leads with a blend of entrepreneurial prowess and tech acumen. Guiding strategic vision, he propels DIGA’s innovation, nurturing a culture of creativity. Under his helm, DIGA transformed Eldarune into a diverse gaming portfolio and navigated market hurdles to launch tokens successfully. With a vision mirroring Valve’s Steam-like metaverse, Can envisions DIGA as a blockchain gaming leader. Emphasizing interoperable platforms, community engagement, and sustainability, DIGA pioneers play-to-earn models for transparent gaming experiences.