2023 proved brutal for the gaming industry, witnessing numerous studio closures and widespread layoffs. Unfortunately, experts predict a similar fate for 2024, with gaming industry leaders coining it the "Year of Closures" according to GamesIndustry.biz.
A confluence of factors is driving this pessimistic outlook. Gaming Industry heads cite market oversaturation as a key culprit. With a plethora of games vying for attention, it's a buyer's market – fantastic news for gamers, who can explore a vast and diverse library of titles. However, for studios struggling to carve out a niche and secure critical acclaim, market saturation presents a significant challenge. This sentiment is echoed in Google Trends data, where searches for "video game market saturation" are showing significant interest.
Further compounding the issue are rising interest rates, making video game investment a less attractive proposition compared to safer options with guaranteed returns.
"If 2023 was the year of layoffs, 2024 will be the year of closures," said a CEO of a public company. "Not just developers, but publishers, media, service companies... There are just too many unprofitable businesses in video games. We're looking at up to two years of pain."
However, a glimmer of hope remains. Some investors anticipate a later-year decrease in interest rates, potentially leading to renewed investment. Additionally, GamesIndustry.biz's CEO emphasizes the historical resilience of the industry.
"And the situation is temporary. The games business is built on very solid foundations. And when things do start to grow again, we would hope to see a more sustainable and wiser games industry emerge on the other side."
The pandemic, ongoing conflicts, and political uncertainties add further layers of complexity. Yet, it's crucial to remember that these struggles are likely temporary.
The Squeeze on Development Costs
Beyond market saturation, the rising costs of game development are another pressure point for studios. The ever-evolving landscape of technology demands increasingly powerful hardware and software to render immersive experiences. This translates to ballooning budgets, making it harder for studios, especially smaller ones, to compete with the big players. Here, medium-volume searches for "video game development costs" reveal the growing concern surrounding this issue.
The indie development scene, often a breeding ground for innovation, also faces challenges. While digital storefronts offer wider accessibility, discoverability remains a hurdle. Studios need to cut through the noise and stand out to secure a player base, requiring additional marketing muscle.
A Call for Innovation and Adaptation
While the outlook seems bleak, history suggests the gaming industry is adept at navigating turbulent waters. Studios that prioritize innovation, embrace bold ideas, and adapt to changing market dynamics are more likely to weather the storm.
For instance, the subscription model, with its focus on ongoing engagement and revenue streams, has gained traction in recent years. Cloud gaming services, promising seamless access to high-powered titles without expensive hardware, could be another game-changer. Additionally, the continued rise of esports and competitive gaming opens up new avenues for studios to explore and potentially monetize.
Gaming industry in 2024: what's next?
While the gaming industry is comparatively young, its established systems present a significant obstacle to swift implementation of change. However, positive developments are emerging, as evidenced by the increasing number of worker unions forming within the industry. This trend, though unlikely to provide immediate relief to those already displaced from their positions, offers a beacon of hope for the future.
The most concerning observation is the tendency for younger workers, unfamiliar with such experiences, to internalize blame for these layoffs. It is crucial to emphasize that these individuals are not at fault; their performance was not a contributing factor. These job losses are not a reflection of personal shortcomings but rather the consequence of high-risk investment decisions that unfortunately impacted them.
2024 might be a year of reckoning for the gaming industry, but it's not all doom and gloom. By acknowledging the challenges and embracing creative solutions, studios can navigate this period of change and emerge stronger. Gamers, on the other hand, can benefit from a diverse and competitive market with a wealth of titles to explore. If you want to read more about the gaming industry layoffs, you can find more information here. Below is a list of all gaming and entertainment related companies which laid off their staff since the beginning of 2024.
March 2024
Sorare
The fantasy sports company Sorare, which uses blockchain technology (web3), let go of 13% of their New York staff. This comes as they shift their focus to their main office in Paris, according to someone with knowledge of the situation.
February 2024
EA
Video game giant EA downsized its workforce by 5%, laying off around 670 employees. This decision aligns with their shift away from creating new licensed intellectual properties (IP).
Apple reportedly let go of hundreds of employees who were previously involved in the company's self-driving car project, which has been shelved.
Sony
Sony's PlayStation division is undergoing restructuring, resulting in layoffs impacting 8% of its workforce, or roughly 900 employees. Studios like Insomniac Games, Naughty Dog, Guerrilla, and Firesprite will also be affected.
Snap
Social media platform Snap is streamlining its operations by cutting 10% of its staff, translating to over 500 positions. This move aims to reduce bureaucratic layers within the company.
January 2024
Wattpad
Another 15% of workforce laid off.
Microsoft
1,900 gaming division employees cut following Activision Blizzard acquisition. Blizzard president also departs.
TikTok
Dozens of positions eliminated in sales and advertising across US and international markets.
Riot Games
11% workforce reduction (around 530 employees) to focus on fewer projects. Publishing arm (Riot Forge) shut down.
YouTube
100 employees let go in creator management and operations.
Hundreds laid off in advertising sales and hardware teams. More cuts expected throughout the year according to CEO.
Pixar
Up to 20% of animation studio staff (260 people) potentially facing layoffs as Disney reduces output.
Audible
5% workforce reduction due to a challenging market.
Discord
17% staff reduction (170 people) due to overly rapid growth, according to CEO.
Amazon
Hundreds of employees let go from Prime Video and MGM Studios, following Twitch layoffs (500 people, 35% of staff).
Unity
Video game engine company lays off 1,800 employees (25% reduction) after previous rounds in 2023.
VideoAmp
Nearly 20% workforce reduction in its battle with Nielsen, CEO resigns.
