In 2024, the wave of layoffs sweeping the gaming industry continues.
According to tracking data from Obsidian, June saw 632 layoffs in the global gaming sector. This figure is similar to that of March (~600) but significantly lower than January (over 6,000), February (2,000+), April (1,000+), and May (770+).
In total, the number of layoffs in the gaming industry in the first half of the 2024 phase reached nearly 11,000, already exceeding the 2023 total of around 10,500.
Notable Layoffs
In June, several prominent companies faced significant layoffs in response to mounting economic pressures.
Sumo Group closed Timbre Games studio, while Microsoft’s Xbox division, PlayStation Studios, and EA all downsized their teams following restructurings and acquisitions. Riot Games, Sega, and Bungie also announced cuts, affecting both development and support staff globally.
These layoffs, reaching thousands across various segments of the gaming industry, underscore the financial strains facing many studios in today’s competitive market.
It is important to note that layoff tracking sites, like Obsidian, only track officially announced layoffs, excluding unverified media reports and internal studio changes.
When factoring in unreported layoffs from smaller studios and independent developers, the total number could likely exceed 15,000.
A Global Phenomenon
While layoffs in the gaming industry are not new, the scale and frequency seen in 2024 have been unprecedented. Companies across North America, Europe, and Asia have been impacted by these cuts, spurred by rising development costs and stagnating user growth.
Phil Spencer, President of Microsoft Gaming, remarked on the industry’s challenges, stating, “I don’t think we’re doing a good enough job finding new players.”
Rising production costs, coupled with pressure to increase per-player revenue, have pushed many companies to monetize their games more aggressively. However, players have been responding negatively to over-monetization, leading to diminished engagement.
Despite the success of high-profile games like Hogwarts Legacy, many studios are struggling to break through in a competitive market.
Data from Newzoo shows that global gaming revenue in 2023 reached $184 billion, an increase of just 0.6% from 2022, reflecting a broader slowdown in growth across the sector.
Supply and Demand Imbalance
One of the key challenges the gaming industry faces is an imbalance between supply and demand. The number of games continues to grow, but player-base expansion has not kept pace.
This oversaturation has made it difficult for new games to stand out, as highlighted in an interview by game industry analyst Patrick O’Donnell, who pointed out that an average of 40 new games were released daily on Steam in 2023.
Many of these titles fail to attract attention, leading to financial losses for developers, especially those with high production costs.
Rising expectations for game quality, coupled with production cost increases, have strained the industry further.
Source: SteamDB
Layoffs as a Cost-Saving Measure
For many companies, layoffs have become the quickest way to reduce costs.
According to Rob Loftus, former Executive Producer at Volition, in an interview, development teams often have little to do after a game’s release, leading to layoffs once companies struggle to justify keeping employees on payroll. This inefficiency stems from broader resource management challenges within the industry, where studios sometimes invest in projects without fully understanding player demand.
As an example of the industry’s current state, Tekken 8 faced backlash from players due to its in-game costume purchases. Series director Katsuhiro Harada took to X (formerly Twitter) to explain that without monetization, the game would struggle to survive financially.
However, he also noted that explaining these financial realities to players is rarely effective in swaying their opinions.
A Shift in Strategy
As the gaming market nears saturation, Phil Spencer believes that since the gaming market is nearing saturation, the solution is to expand demand by reaching people who previously did not play games.
This could include those who were previously limited by devices or platforms, lacked access to gaming channels, or were deterred by high pricing.
Microsoft’s focus on cloud gaming over recent years is aimed at breaking free from the Xbox hardware barrier, enabling players to enjoy console games on phones, TVs, and tablets.
In addition to Microsoft’s focus on cloud gaming, other major players like Sony, Google and NVIDIA are exploring similar avenues to reduce dependency on hardware.
Warner Bros. Games President J.B. Perrette commented on the volatility of the AAA single-player market, noting the stark contrast between the success of Hogwarts Legacy and the underperformance of Suicide Squad: Kill the Justice League.
In response, companies are focusing more on long-term engagement through F2P mobile games to generate sustained revenue.
Impact on USC Games Students
The ripple effects of global layoffs are acutely felt by USC Games students aspiring to enter the gaming industry. For students, the shrinking job market and increasing competition are daunting challenges.
Anooj Vadodkar, a second-year MS Computer Science (Games) graduate student, captured the state of the industry, describing the layoffs as “very scary” and admitting a prevailing “sense of fear” among his peers.
“We’re competing not just with other new graduates but with developers who’ve been in the field for years,” stated Vadodkar,Vadodkar also speaks to a frustrating dilemma faced by many students.
“Employers want experienced candidates,” he noted, “but there are limited opportunities for graduates to gain that experience.”
This “never-ending cycle,” as he calls it, leaves many students disheartened, as companies increasingly lean toward hiring seasoned talent over taking on interns or entry-level candidates.
As a result, USC Games students who have invested time honing technical skills find themselves entering a field that is prioritizing cost-cutting and outsourcing, significantly altering the landscape for new graduates.
