2K Games has laid off yet another round of staff, but this time, we have no idea on how many were actually affected this time around.
22.01.2024 - 11:03 / gamesindustry.biz
The current turmoil in the video games industry will continue all year and likely into 2025, games industry leaders have told GamesIndustry.biz.
Speaking to us privately, publishing, development and investment heads have said that continued high interest rates, oversaturated video game stores and cautious investors will result in more restructures, layoffs and closures.
One CEO of a public company told us: "If 2023 was the year of layoffs, 2024 will be the year of closures. Not just developers, but publishers, media, service companies... There are just too many unprofitable businesses in video games. We're looking at up to two years of pain."
Some investors we spoke to expect interest rates to come down, which will likely stimulate more investment, but not until later this year. Until then, there are simply "far safer ways to invest your money than video games. Although it's not the only industry facing this issue," said one angel investor.
A leading VC added: "Why take a gamble with a games company when you can just stick the money in the bank and earn 5%?"
Interest rates put pressure on costs, and not just wages, but also insurance, travel, rent and other business costs. Meanwhile, there is no room to raise video game prices to compensate. "There is simply no tolerance of any further price moves," said one MD.
"If 2023 was the year of layoffs, 2024 will be the year of closures"
But a growing concern for the publishers we spoke to is the abundance of games being released across all platforms.
"Too many games were green lit in 2020 and 2021," one publisher boss said. "We need to get to pre-pandemic levels in terms of the release schedule, and that's probably going to take two years. You can already see publishers signing fewer games. That's happening everywhere. The stores are saturated, not just Steam, and the games just aren't delivering the levels they were. "
Another said: "The expansion and investment over COVID has left engagement-based businesses, not just video games, spread too thin. We're doing too many things that aren't delivering."
The VC added: "Competition isn't the biggest factor [in this current situation], but it is a challenge, especially when you consider how much disposable income people have at the moment. It's also not just the number of new games you're competing with, but all the old games and live service games that are there and doing huge numbers."
The solution is for companies to divest or cut areas of the business that are unprofitable, or a distraction from their core offering, and to focus on what they do best. "Focus isn't exciting, but getting back to basics, back to those foundations, and building back up is needed in a lot of cases," said another prominent business leader.
Yet
2K Games has laid off yet another round of staff, but this time, we have no idea on how many were actually affected this time around.
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It's not even the end of January yet and the games industry has already announced layoffs for several thousand employees, showing that 2024 could be even more problematic than the already troublesome 2023 in this regard. We reached out to MIDiA Research Senior Analyst and Strategy Director Karol Severin to discuss the state of the games industry in this post-pandemic, high-inflation environment.
Microsoft recently cut 1,900 jobs from its gaming division and among the layoffs were many at the recently acquired video game developer Activision Blizzard. Blizzard Entertainment's President Mike Ybarra and co-founder Allen Adham are both departing. The tech giant also announced the cancellation of a Blizzard game, called “Odyssey,” that was already six years in development. On Tuesday, Microsoft reported quarterly earnings, posting its strongest revenue growth since 2022.
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No matter what industry you work in, there is always a chance for layoffs. In many ways, it’s one of the biggest things people fear. After all, they could be happy and think they have a long-term solution to their money problems one day, and then the next day comes, and they’re told it’s their last day at work due to “corporate changes,” or “cost-saving moves” or some words of the like. One might feel that the Video Game Industry, with its various successful studios and titles, would be immune from this. But as the website Video Game Layoffs has noted, that couldn’t be farther from the truth.
The number of games industry job losses announced in January is already more than half the total job losses in the entirety of 2023.
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