Firings, Layoffs, and Shelved Projects: Has the gaming bubble burst?
Trying to comprehend the events of last week in the gaming industry.
Hyderabad: The gaming industry has historically been immune to economic realities; it thrived during recessions and economic downturns, and expanded during pandemics.
One of the only industries that grew during the 2008 economic crash, the gaming industry today generates more revenue than most media industries. Market reports from firms like Newzoo and Niko estimate that the growth is expected to continue in the forthcoming years.
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If one observes the gaming landscape over the last two years, it’s impossible to ignore the surge in overall gaming experience quality and the value players receive from game developers.
In 2023 alone, numerous high-quality AAA titles and free-to-play experiences were launched, overwhelming even me as a reviewer who couldn’t cover half of them. Therefore, in this era where players are spoiled for choice with exceptional games, it’s perplexing to fathom where the money from game sales, subscriptions, and other revenue streams has gone.
This concern is particularly alarming as various organizations and studios across the industry are grappling with the harsh reality of employee layoffs and financial constraints.
The predicament is best felt in the laments of the CEO of Larian Studios (makers of Baldur’s Gate 3) who observed how despite the game being voted the best of 2023, nearly no one from the original meetings remained. This sentiment resonate strongly today as we come to terms with the aftermath of Microsoft’s decision to lay off nearly 2,000 employees from their gaming division. This came just months after the approval of their $69 billion acquisition of Activision Blizzard. A timeline insufficient for HR teams to map competencies and unique skills of incoming workers, let alone allow the time for teams to merge and mesh effectively.
While management experts and self-styled gurus may cite efficiency and operationalization as rationales behind the layoffs, it’s crucial to emphasize Xbox’s November 2023 multi-year partnership with Inworld AI.
This partnership was expected to leverage generative AI to expedite game development and reduce the costs of game-making. Many leading studios have explored similar partnerships as jobs for writers and designers are expected to be replaced by AI capabilities. If this is the reasoning behind the loss of over 10,000 jobs worldwide since 2023, it is the most techno utopian and determinist approach that I have ever come across.
To shutter projects deep in development and to fire people who developed unique skills to create niche experiences over the capabilities of something untested is the most predictable disaster waiting to happen.
But then we are all culpable of killing the golden goose.
As more layoffs loom, I couldn’t help but notice the news emerging from the Swedish Embracer group, one that was on its own Rupert Murdoch-like shopping spree of gaming studios in 2022-23. A firm that bet heavily on blockchain gaming and NFTs, once disruptive tech now labeled as a passing fad.
It is difficult to wonder if it could be the same with AI two years from now. I can’t help but wonder if generative AI can create an aesthetic palette like the one Bastion or Transistor offers or even music the way Venba does, let alone a journey as immersive as Geralt’s. We all need a plan B, but I don’t know if tech utopianism has the room for pondering its own failure.
