Introduction
On February 27, Sony made an announcement stating they were about to lay off 900 employees from their games business worldwide. This move affected several game studios including Naughty Dog and Insomniac Games, both of which had recently launched major titles. Marvel’s Spider-Man 2 and The Last of Us Part II Remastered were received well by both audiences and critics. These layoffs accounted for 8% of the workforce in Sony’s games division.
Shortly after, on February 28, Electronic Arts also announced their plans to lay off 670 employees, which is about 5% of their workforce. CEO Andrew Wilson mentioned that they were moving away from developing future licensed IP that wasn’t expected to succeed in the changing industry landscape. Despite making significant revenue in the third quarter of the previous year, EA still decided to implement these layoffs.
Layoffs Across the Games Industry
In recent times, we have witnessed a significant wave of layoffs in the games industry, which began in 2023. Several prominent developers and publishers such as Epic Games, Embracer Group, Microsoft, and many others have undergone major staff reductions. In just the first two months of 2024, over 8,100 individuals in the games industry were laid off according to data collected by a developer at Riot Games.
This year seems to be surpassing even 2023 in terms of industry layoffs, which set a record for the highest number of job cuts. The exact figures of layoffs are hard to pin down, but according to estimates, around 11,250 individuals lost their jobs in the games industry in 2023.
Impact on Industry Workers
Layoffs are not uncommon in the gaming industry, especially after the release of major titles where many developers are hired temporarily. However, the scale of the current layoffs is unprecedented in terms of both the number of people affected and the number of companies downsizing.
Despite the growth in the games industry, revenue-wise, the layoff trend seems to hinge more on stock market performance than actual profitability. Many companies that reported record profits have still resorted to layoffs as a cost-cutting measure to satisfy investor expectations.
The Industry Landscape
The gaming industry landscape has been evolving, with acquisitions, mergers, and significant investments becoming commonplace. Companies are under pressure to show continuous growth to appease shareholders, often resulting in layoffs to improve financial metrics. Though the industry seems to be thriving in terms of revenue, the recent wave of layoffs paints a different picture.
The industry’s reliance on stock market performance for success has led to a culture of layoffs that prioritize short-term gains over long-term sustainability. This approach has raised concerns about the well-being of industry workers and the ethical implications of such massive layoffs.