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Once Atas Game Designers falling out of lime light glibally - 7800 has been chopped , why hah?
- Thread starter k1976
- Start date
Thousands of video game industry workers are out of work following a series of mass layoffs at game developers and publishers over the past three months.
Some 7,800 employees have been let go across companies ranging from Microsoft (MSFT) and Sony (SONY) to Unity (U) and Riot (TCEHY), according to the site Game Industry Layoffs, which tracks public layoff announcements. The moves echo the tech layoffs that pounded the industry in 2022, right down to the reason for at least some of the cuts: overexpansion during the pandemic gaming boom.
But it’s not just poor corporate planning that set the industry on its current path. Broader forces ranging from a change in how consumers play games to where they access titles are impacting the gaming segment as well.
And things might not take a turn for the better until 2025 when Rockstar (TTWO) debuts its highly anticipated “Grand Theft Auto VI” and Nintendo launches its successor to its Switch console.
“Getting from here to 2025 is the challenge right now,” explained Mat Piscatella, executive director and video game industry analyst at Circana. “And it's going be a tough road.”
Some 7,800 employees have been let go across companies ranging from Microsoft (MSFT) and Sony (SONY) to Unity (U) and Riot (TCEHY), according to the site Game Industry Layoffs, which tracks public layoff announcements. The moves echo the tech layoffs that pounded the industry in 2022, right down to the reason for at least some of the cuts: overexpansion during the pandemic gaming boom.
But it’s not just poor corporate planning that set the industry on its current path. Broader forces ranging from a change in how consumers play games to where they access titles are impacting the gaming segment as well.
And things might not take a turn for the better until 2025 when Rockstar (TTWO) debuts its highly anticipated “Grand Theft Auto VI” and Nintendo launches its successor to its Switch console.
“Getting from here to 2025 is the challenge right now,” explained Mat Piscatella, executive director and video game industry analyst at Circana. “And it's going be a tough road.”
A collision of trends
The layoffs hitting the gaming industry are largely the result of a handful of trends coalescing. The chief overarching issue comes down to publishers and developers overspending throughout 2021 and 2022.There was a huge ramp-up in spending when the COVID-19 pandemic hit in 2020,” explained Lewis Ward, IDC research director of gaming, eSports, and VR/AR.
“It was pretty much sustained through 2021, and I would say maybe the first half of 2022. Then things started to cool off.”
Companies like Microsoft, Sony, and Embracer Group spent lavishly on acquisitions, with Embracer snagging “Borderlands” developer Gearbox Entertainment for $1.3 billion in 2021 while Microsoft picked up “Call of Duty” publisher Activision Blizzard for $69 billion and Sony grabbed “Destiny” maker Bungie for $3.6 billion in 2022.
In the early portion of the pandemic, worldwide gaming industry revenue skyrocketed as people stuck inside looked for ways to pass the time. According to IDC, mobile game revenue shot up 32.8% to $99.9 billion in 2020, while digital PC and Mac game spending jumped 7.4% to 35.6 billion. Home console game spending, meanwhile, soared 33.9% to $42.9 billion.
But that growth declined quickly in the following years. Mobile gaming revenue growth fell 15% in 2021, then dropped to -3.3% in 2022 and -3.1% in 2023. PC and Mac game sales climbed again in 2021 by 8.7%, but growth collapsed by 1.4% in 2022 before a slight uptick of 2.1% in 2023. And after rocketing in 2020, console game spending stalled out in 2021, with growth sitting at 0.7%, before declining 3.4% in 2022 and returning to growth at 5.9% in 2023.
What we've seen is basically a flattening of growth in gaming spending,” Piscatella said. “We had a big influx of players and a big influx in our spent gaming in 2021. “[The industry] brought in a bunch of folks, had huge growth, and now … we're looking at a gaming segment that for the last few years has been basically flat.”
That flat growth is new to the games industry, which for years was thought to have no ceiling as more consumers began dipping their toes into mobile games, consoles, and PC and Mac gaming. Couple that with higher interest rates, and the industry was set to come back down to Earth.
What we've seen is basically a flattening of growth in gaming spending,” Piscatella said. “We had a big influx of players and a big influx in our spent gaming in 2021. “[The industry] brought in a bunch of folks, had huge growth, and now … we're looking at a gaming segment that for the last few years has been basically flat.”
That flat growth is new to the games industry, which for years was thought to have no ceiling as more consumers began dipping their toes into mobile games, consoles, and PC and Mac gaming. Couple that with higher interest rates, and the industry was set to come back down to Earth.
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