2024 Game Industry Layoffs: What Does It Mean for Games?

When my editor asked me if I could write a timely article about the recent Twitch layoffs, I told them there was no real rush. Yes, the Twitch layoffs are fairly fresh in everyone’s mind, and there’s certainly a lot I could say on the topic of Twitch and the way they do business. Sure, I could talk about how they’ve entirely stopped operating in South Korea, and how some of the things they do just don’t make anyone happy.

But Twitch is just one part of a much bigger issue. The games industry, including gaming-adjacent services, has seen a years-long escalating trend of layoffs that is going to change everything.

This statement raises a few questions of course: How is everything going to change for gaming? Why is this happening? Didn’t we just have a huge year for video games in 2023? Can things really be so bad if Timothée Chalamet was on the same stage as Hideo Kojima at the Game Awards?

As someone who spent a fair amount of effort to break into the games industry, at exactly the wrong moment in history, yes. It can be that bad, and I have some idea of how it’s going to go from here.

An Outline of the Layoffs So Far

Over the pandemic, gaming companies achieved record profits, and swelled to almost unimaginable sizes. With everybody staying home and not having so much to do, gaming saw a surge in popularity that has firmly cemented the hobby as part of the mainstream. Most people are playing games, even if they don’t identify as “gamers.”

But even as profits continue to grow overall, that surge in available jobs has somewhat reversed. It got so bad that, starting in 2022, someone actually started a website called “videogamelayoffs.com,” which is something that probably shouldn’t have to exist.

Even so, I am grateful for their efforts. It is thanks to them that I can tell you that an estimated 8,500 people in gaming lost their jobs in 2022. That number increased to 10,500 in 2023, and in 2024 so far? Oh boy. In the first two weeks of 2024, an estimated 2,300+ jobs were lost. That’s around a fifth of the total jobs lost in the year before.

Recent major layoffs include the following companies:

• Twitch — the world’s largest live streaming service.
• Unity — Hey, we talked about them on this blog before! Man, I hate being right sometimes.
• Zhaoxi Guangnian (Nuverse) — owned by ByteDance, the company that owns TikTok.
• Epic Games — creators of Fortnite.
• Microsoft — These layoffs were company-wide, but their gaming divisions were definitely affected.

While those numbers might seem small when compared to other industries, keep in mind that the games industry is, in terms of people, rather small. Everyone knows someone who knows someone else, and all those someones are generating hundreds of billions of dollars a year.

In short, a snowball spending the summer in hell has better odds of survival than your average game industry employee’s chances of staying employed. And do keep in mind: more than one company has announced layoffs almost immediately after bragging about their record profits.

Update: as of January 22nd, Riot Games (makers of League of Legends and Valorant) have announced layoffs as well. The estimated number of jobs lost is around 530, or about 11% of Riot’s total workforce. Multiple experts expect the trend to continue.

Why Is This Happening?

There are several reasons it could be happening. As I am not on the board of any particular company, I can’t tell you who’s doing what for which reason… but I can give you the usual reasons:

Boosting Profit Margins

Layoffs are a classic strategy to boost profit margins in the short term. It’s shady as hell, but it’s not uncommon for an executive to pad their numbers for the quarter by letting people go. The general thinking is that they can always hire more later if needed.

By the way, if you’ve ever wondered why so many layoffs happen right before Christmas, this particular phenomenon is usually the culprit.

They Grew Too Fast, or Made Bad Decisions

Only an economist could actually believe in the idea of infinite growth, and a fair number of them seem to be in charge. The swell in demand for games during the pandemic was a boon to the industry, but with people spending less time indoors, many companies are preparing for a crash by letting people go in advance.

In other cases, they just… chose poorly. The Embracer Group was buying companies left and right, apparently waiting for Saudi investment money that never came. Unity has been bleeding cash for ages, and then lost the trust of the entire community when they decided to charge a fee every time someone installed a game made with the Unity engine.

The result? Layoffs.

Bad Luck

Sometimes things just don’t turn out like you planned. It sucks, but it happens.

A Potential Shift to AI

This is mostly speculation, but some companies may be gearing up for a shift to AI tools (well… LLMs, really). After all, producing more with fewer people is the dream of every business owner the world over.

I don’t have time to go into how I think that’s a terrible idea on copyright grounds alone, never mind the moral and ethical implications, but this should be messy to watch.

The Immediate Fallout in the Games Industry

So what’s happening right now? How is all of this affecting the game studios that you love, hate, or love to hate, as the case may be? Well, it’s obviously not going great.

• A lot of people are just straight up leaving the industry. Many of these people will take jobs wherever they can get them, and may just stay there. When the games industry grows again, that tried and true talent will simply not be available.
• Projects are being left short staffed. This is especially not-great for live service games.
• Employee morale is at an all-time low, which is probably affecting productivity. It’s darned hard to be creative when there’s a hole in the pit of your stomach, and you’re constantly wondering, “Will I be next?”

How Will This Affect the Games You Play, or Look Forward To, in the Immediate Future?

Well, a few things come to mind. Rather specific examples include, but are not limited to:

• The Unity engine may become an even less viable option for some devs.
• Services like Twitch will come to rely more on automated tools, in all likelihood. Having seen automated moderating and customer service tools in action before, and what happens when it’s really hard to find a human to talk to (cough YouTube cough), I do not expect this to be a resounding success.

But the effects of the layoffs will be felt throughout the whole industry, in some rather big ways. Gamers too will begin to notice when:

There Will Be Fewer Games in General

This will affect AAA studios more than anyone else at the moment. With their talent pool reduced, a lot of projects have already been cut, and more will be put on the back burner, at best.

The gamers who just buy the latest COD every year and play that may not see much of a difference. But those who like to play a variety of big-budget games every year will see a severe lack of options.

There Will Be Less Long-Term Support for Games

It was a strange moment to see Bungie get nominated for “Best Community Support” at the game awards right after they laid off large chunks of their community team. It was a moment of dissonance that highlighted just how important it is to have people around, not only to keep the game running, but to keep the community informed and happy.

Well, I wouldn’t call the Destiny 2 community “happy” but that’s another article altogether.

The lack of people is going to hit live service games particularly hard. You know, those games that are designed to be played “forever,” usually online, preferably with friends.* Truth be told, we have too many already, but the layoffs will definitely hasten the demise of all but the most popular titles.

* And ideally with a gaming VPN like PIA to help you stay safe while playing.

The Quality of the AAA Games That Are Left Will Suffer

Some people already see AAA games as creatively bankrupt. That’s a bit of a stretch, in my view, but as fewer people are pushed to make bigger, prettier games with fewer resources, the big publishers are likely to launch more duds than usual. Let’s be clear, I hope I’m wrong about this, but I don’t think I will be.

Some Game Companies Will Shrink More

Lastly, businesses that handled their layoffs particularly badly, or laid people off to boost profit margins, are in for a rude awakening. That sort of behavior comes with consequences. When they’re ready to hire people again, they will struggle to attract the best and most experienced talent.

That’s not to say they’ll immediately fail. There’s no shortage of bright-eyed and bushy-tailed young game devs who would love to be a part of the industry. But those companies will never be what they were.

New Game Developers Shall Rise!

Not all of the people who were laid off will disappear into the ether. More than a few will set out to make their own games, their way. Independently published games will likely see even more popularity as some gamers, bereft of their usual AAA fare, go looking for something new.

Yes, we’re going to see the formation of a number of new indie studios, but making games takes time. It’ll be a few good years before they have much to show us, but I do have hope that we’ll continue to see great things from the indie space.

Where Does the Industry Go from Here?

Ideally, the bigger game publishers and studios will take a step back, and realize that while unsustainable growth is bad, they also can’t really make games without people. And you know what? They will get there. The industry will see growth again, in one form or another. Some companies may close, and others will open.

As mentioned above, I have high hopes for the indie space, and a lot of developers will head that way. Moreover, all is not lost in the AAA space. While the layoffs were painful, and arguably unnecessary in many cases, more than a few of those big-name studios are certain to survive.

It’s going to be an interesting, and quite possibly frustrating few years, though, so buckle up. Play a few more Japanese-made games. Their publishers are still doing pretty well.

Get PIA VPN

FAQ