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Game Sector Boom in 2023 Did Not Save Developers from Layoffs

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By Christian Webster - - 5 Mins Read
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In a year where blockbuster games like Baldur’s Gate 3, Alan Wake II, The Legend of Zelda: Tears of the Kingdom, and Spider-Man 2 dominated the gaming scene, 2023 was seemingly a golden era for the video game industry. 


However, amidst the cheers for commercial success, a dark shadow loomed over the developers who brought these games to life.


Reports surfaced of layoffs sweeping the gaming industry, leaving thousands of talented professionals in uncertainty and despair.


As the curtains fell in 2023, well-known gaming studios like Amazon Games, Ubisoft, Epic Games, and Niantic grappled with the aftermath of massive layoffs, which collectively affected a reported 6,500 jobs. 


Shockingly, approximately one-third of developers found themselves directly or indirectly impacted by this wave of job losses.


Despite the gaming sector's booming success, it became evident that the glitz and glamour of hit titles didn't shield the industry from the harsh reality of video game company layoffs.

Unveiling the Industry's Woes: GDC's Startling Survey

The Game Developers Conference (GDC), an annual gathering of industry professionals, recently revealed disconcerting data that shed light on the challenges faced by developers.


In a survey conducted in October 2023, 3,000 developers from large and small game studios participated.


A staggering 35 percent revealed they had experienced layoffs or witnessed colleagues facing job cuts within their companies. 


This revelation exposed the vulnerability of job security within an industry that, despite its outward success, faced internal turbulence. So, looking into the survey findings, a particular group emerged as the most affected – quality assurance workers. A significant 22 percent of QA professionals reported being laid off last year. 


This statistic highlighted the human toll behind the scenes, highlighting a group often underappreciated despite its role in ensuring the quality of gaming experiences.


Interestingly, quality assurance workers led the unionization efforts within the industry, seeking to address issues of job security and fair working conditions.

Lingering Fears of Future Layoffs

The survey reflected the reality of past layoffs and unveiled a pervasive fear among developers regarding the future.


A staggering 56 percent of respondents expressed apprehension about potential layoffs in the coming year. 


Video game developers working on a video game
Developers working on a video game | Shutterstock


Unlike the predictable cyclical trend of layoffs following a project's completion, the current scenario seemed unpredictable and erratic, causing anxiety among developers.


One respondent captured the prevailing sentiment, stating, "The layoffs are concerning because they don’t seem to be following the ‘typical’ cyclical trend of layoffs after a project ships. Not that that was great either, but it’s hard to predict these days where and when layoffs might happen." 


So, this uncertainty hung over the industry, impacting the morale and well-being of those who create the virtual worlds millions enjoy.

Unraveling the Roots: Pandemic-Related Turbulence

Many developers speculated about the root cause of the industry-wide layoffs, with a common consensus pointing towards the lingering effects of the pandemic.


Studios that experienced rapid expansion during the Covid-19 era were now grappling with the harsh realities of a changed market.


As consumer spending shifted, some studios had inflated headcounts and dwindling revenues.


"I see it as a correction now that revenue is back to more normal levels post-pandemic," commented one respondent. Another developer deemed it "a reality of doing business.”


The shifting scenario brought challenges not only for job security but also for the overall well-being of developers, with some feeling compelled to stay in toxic work environments due to the fear of job scarcity.

The Industry Shift: Consolidation as a Double-Edged Sword

Amidst the turmoil, smaller studios sought refuge in the industry's rush toward consolidation.


For these studios, positioning themselves as desirable for acquisition became a strategic move to alleviate financial burdens. 


However, this approach created a dichotomy of opinions within the developer community.


While it provided financial relief for some, 43 percent of developers believed consolidation would negatively impact the game industry.


Embracer Group's journey in 2023 became a vivid illustration of the challenges posed by acquisitions.


After acquiring prominent studios like Gearbox Software and Crystal Dynamics, the company faced financial setbacks that led to the closure of studios such as Volition, resulting in hundreds of job cuts.


One developer astutely remarked, "Once a huge publicly traded company buys up large swaths of an industry, it will inevitably end up creating redundancies and placing innovative, more ‘exploratory’ studios in a position where they’ll never be seen as profitable enough for shareholders."

Catalyst for Change: Unionization Gains Momentum

The instability within the gaming industry has become a catalyst for a growing movement – unionization.


The GDC survey revealed that 57 percent of developers now support the idea, marking an increase from 53 percent in the previous year.


The sentiment towards unions has undergone a shift, with some developers reconsidering their stance due to the impact of large-scale layoffs.


"I used to be extremely anti-union, as it felt it would adversely impact an industry reliant on flexibility and innovation to continue to thrive and grow," confessed one developer. "I still mostly feel this way, but the large-scale layoffs are making me rethink my otherwise confident stance." 


Layoffs, concerns about working conditions, and the increasing use of AI in the industry are driving developers towards the pro-union camp.

Advocating for Change: Voices Within the Industry

Proponents of unionization argue that it offers a potential shield against the uncertainties of job security and unfair working conditions.


The survey captured the voices of developers advocating for change.


"One of the departments at my company unionized, and they were less impacted by layoffs than other departments," shared one developer, highlighting a tangible benefit of collective bargaining.


Another developer shed light on the prevailing working conditions at their company, stating, "I got a 1 percent raise during an 8 percent inflation period. My needs around WFH flexibility are getting ignored. Incoming AI automation is a risk to my job security. Crunch is coming back. Leadership won’t listen." 


These personal thoughts illustrate the complex challenges that developers face beyond the surface level of successful game releases.