How Layoffs Are Killing The Gaming Industry

Unless you’ve been living under a rock, you’ve seen the recent bloodbath at Microsoft as their gaming division plans to lay off 3,200 employees in the next year. You’ve seen Bungie suffer a 50% reduction in force after ending development on Destiny 2. You’ve maybe even seen that IOI has had to lay off people after their very successful James Bond: First Light. And if you’re like me, you start to wonder, where do all these people go?

The short answer is largely nowhere. In an industry that is chasing short-term valuations over long-term success, jobs just don’t exist on this scale. And that’s a lot of the problem. The industry chases the short term instead of prioritizing the long. I’m going to quote the late great Sotoru Iwata from a Q&A he did in 2013.

When asked about Nintendo’s fiscal year (the dreaded year of the Wii U), he had this to say:

“Regarding why we have not reduced the number of the personnel, it is true that our business has its ups and downs every few years, and of course, our ideal situation is to make a profit even in the low periods, return these profits to investors and maintain a high share price. I believe we should continue working toward this ideal. If we reduce the number of employees for better short-term financial results, however, employee morale will decrease, and I sincerely doubt employees who fear that they may be laid off will be able to develop software titles that could impress people around the world.” 

And he hit the nail on the head. When you gut Bungie, the people left are just waiting for their turn. On top of that, some of the most talented people in the industry now have nowhere to go, leading to a decline in quality of output. To pick on Sony for a second, they have given their studios such as Naughty Dog massive budgets and nearly unlimited time for their single player games, but aren’t willing to do that with Bungie and Destiny This means if they ever wanted to make another Destiny, or one of the Bungie incubation projects gets greenlit, the new team will have to burn resources training and learning the engine, and on top of that, they won’t be able to rely on the talented staff that built one of the greatest FPS games of all time.

Xbox is even worse. They’ve created a subscription model that means their first-party games will not sell well. And yet when games such as Doom: The Dark Ages don’t sell well (even though they perform pretty fantastic on Gamepass), the teams get gutted, as we see with iD Software and their iD tech team. This means iD tech, one of the better engines in the industry, is now understaffed, and unless the MachineGames team or the German team is unaffected, probably dead. Which, in the long term, means more money and time spent on rebuilding the engine or familiarizing developers with something new.

It’s all incredibly short-sighted, based largely around the desire to see the number on the stock tracker go up, with no real care about the future or the people it affects. Microsoft is in no danger of shutting down; neither is Sony, and yet they act as though if they don’t make a profit immediately, the company will die. To bring up Iwata again, when the Wii U launched and failed, he famously took a salary cut to avoid laying off employees. That attitude is nowhere to be seen now, 13 years later. We can only hope that the people affected by these layoffs manage to find a new use for their talents, and we, as consumers, are going to suffer either way.