What the recent holiday wave could mean for the gaming industry.

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Highlights of the story

  • The gaming industry has seen a large wave of unemployment throughout the year, with an estimated 10,000+ jobs lost.
  • Major studios like Epic and Ubisoft have also been affected, with some even going bankrupt.
  • A smaller workforce and budget means studios can take longer to make games and may even have to abandon popular, but less profitable, titles.

The year 2023 has seen some remarkable heights in the world of gaming. Baldur’s Gate 3For example, Hit the Scene and received rave reviews, cementing its place as one of the highest-rated video games on Metacritic. But it’s the only game to give Baldur’s Gate 3 a run for its money in terms of critical acclaim The Legend of Zelda: Tears of the Kingdom.

Apart from these standout titles, 2023 has blessed us with many other great games.Including Spiderman 2, Assassin’s Creed Marriage, Armored Corps 6, Dead space Remake, Starfield, Final Fantasy XVI, Hi-Fi Rush, Star Wars Jedi: Survivor, and Hogwarts Legacy. Usually, such releases define the gaming year. However, 2023 may not be remembered for its stellar game lineup, but as a year of widespread retrenchment in the game industry.

Like many other sectors, game developers have been downsizing their workforce due to economic uncertainty throughout 2023, a trend that doesn’t show any signs of stopping anytime soon. According to Farhan Noor’s website, videogamelayoffs.comthe game developers have so far issued pink slips to over 6,000 employees in 2023.

with regret, The actual number is likely to be much higher.. For example, Microsoft alone lets approx. 10,000 employees from its gaming division at the start of the year, and several other companies have chosen not to disclose the exact extent of their job cuts. With all these uncertainties in the air, what can we expect from the industry?

Working in the video game industry has never been more uncertain.

No studio is safe.

The gaming industry is facing. More than 100 waves of layoffs this yearstarting with Microsoft announces 28,000 job cuts in January, which included 10,000 from their gaming division, which influenced major players such as 343 Industries and Bethesda Zenimax. Rumors even suggested that 343 might stop working on the Halo series to move into a more supervisory position, Although he immediately denied these claims.

The trend continued throughout the year, with EA laying off 800 employees in March, Relic Entertainment saying goodbye to 121 developers in May, and Recent Layoffs at Telltale Games. Embracer Group, one of the largest video game companies with 129 studios, They too have fallen prey to this trend.. Sadly, some studios have not survived, the biggest example being Volition, which used to be under the Embracer Group. A particularly painful loss for our Saints Row fans, as it ended all hope of a recovery.

If that wasn’t enough, Epic Games took the industry by surprise. Laying off 16 percent of its workforceDespite their immense success thanks to Fortnite and Unreal Engine, whose CEO Tim Sweeney Accused of excessive expenditure. I mean, if even Epic, with its money-printing machines, wasn’t safe from massive layoffs, who can really feel safe anymore?

Although these terminations vary in scope and impact, they share a common theme as the driving force behind these difficult decisions: Cost reduction and downsizing. If we trust the latest information provided, it strongly suggests a clear idea: the video game industry, in its current state, has grown too large to be self-sustaining.

Tim Sweeney

The signs are always there.

We’ve seen video game sales reports. Decline in America and Europe By January this year, Ubisoft issued a profit warning and canceled some of its upcoming projects. There have also been layoffs in the media departments of studios, including Xbox, Unity, and even larger companies. Riot Games.

Of course, declining sales are never a good thing in business, especially with rising costs due to inflation and the growing threat of a global recession. In the US, spending on games fell by 5 percent in 2022, while game sales across Europe fell by more than 7 percent. Now, this data sounds pretty bad, but there was a bigger reason for the decline: COVID 19.

Back in 2020, when the lockdown began, video game sales soared. The titles that drove the market were actually older games, with the exception of some newer games such as Animal Crossing and The Last of Ace: Part 2, but it was titles from last year that saw the biggest increase, Debunking the idea that the gaming industry is recession proof.

When subscription services like Netflix didn’t exist, videogames were a really good value purchase. Nowadays, though, with the presence of consoles that cost more than $400 and games that approach $100, people are buying fewer games. Preferring those that offer longer stories and playability.which was why titles like Baldur’s Gate and The Legend of Zelda: Tears of the Kingdom achieved so much success that year.

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What does this mean for the future of gaming?

From the data we have right now, one thing is pretty clear: Consumers are buying fewer games and spending more time with select franchises., a trend likely to accelerate as the market continues to shift to live service titles. Even single-player titles are demanding more of players’ time, with Avera noting that some of the biggest recent hits, including Baldur’s Gate 3 and Zelda: Tears of the Kingdom, only take 50 or so minutes to reach the main story. It takes more hours.

The gaming industry is about to see a similar push as the music and video industries saw when streaming subscriptions really took off. Of course, there will be many differences in how these dynamics will play out now thanks to the vast market of subscription services, but the fact that the value of individual sports in the eyes of consumers will decrease is an inescapable truth.

Long games, coupled with labor/talent shortages among developers, engineers, and designers, put enormous pressure on an industry that strives to gain as much mindshare as possible from a discerning gaming audience.” Emily Avera, IDG Consulting.

Thus it is very likely that fewer games will be required, And therefore fewer developers and publishers. I wouldn’t be surprised if game studios started releasing a single, super-long game every few years, focusing only on titles they know will make money. This means that popular, yet less profitable titles may never see the light of day.

This is not just a theory, it is already clear how Respawn shelved Titanfall 3 in favor of focusing entirely on Epic Legends Because it made them more, and more, money even though many fans are willing, and able, to buy a new Titanfall game. But, as is clear, Respawn won’t do that because it’s just a one-time purchase.

Titanfall 3 was in development for 10 months before it was canceled and replaced by Apex Legends.
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Is there a long term solution?

As we look at possible actions for the gaming industry, experts have offered several ideas worth considering. To begin with, there is the notion that Creative AI can step in as a valuable aid. Not a replacement for overburdened development teams. the aim? To reduce the total time required to create a game. It’s a concept with promise.

I doubt that’s going to happen, although many employees, especially those who are part of the SAG strikes, Will make sure they don’t.. This is because there are fears that even a small introduction of AI could become a major part of the industry in the long run, something that the Actors Guild and Screenwriters Guild are already facing.

Can AI be a valuable aid to game developers?

Another route is under consideration. Adding User Generated Content As a means of keeping development costs down, the players themselves are basically used as sort of brilliant unpaid interns to work on projects. But, as we have seen with the controversies surrounding sports Roblox And its revenue-sharing models, this approach is flawed.

Still, I find myself aligning with part of this point of view, especially based on my experiences playing games like Skyrim, Pokemon, etc. Minecraft, and Team Fortress 2. It is often evident that modders and fan game developers often specialize in enhancing their beloved titles, Often surpassing the original studios.. If there’s a way to make them part of the development process with added benefits, I’m sure things can work out.

The future of user-generated content in gaming

What can be done to fix it now?

There is no magic solution to solve all the problems facing the gaming industry. The truth is that many of these issues are beyond the industry’s control, with factors such as inflation and interest rates playing a major role. What’s more, it doesn’t look like these job cuts are going to end anytime soon. I wouldn’t be surprised if we continue to hear discouraging news well into 2024.

As new studios continue to grow, so do their needs. Learn how to spend your money wisely.. Overspending can jeopardize their survival, so it’s wise to only hire for essential roles. Realistically, I don’t expect much to change until the New Year, once the industry assesses how well its Christmas releases have fared. The fate of the industry literally depends on it, because Santa is working better overtime.

Despite the challenges on the horizon, though, there is still room for hope. The gaming industry is expanding, with Gen Z playing a huge role, and tech companies such as Meta and Apple are embracing gaming technologies, and later developing phones that Play triple-A games without any hassle.. This development at least offers a glimmer of hope.

Now is the perfect time for talented individuals to use the incredible tools at their disposal to create fun and engaging experiences for gamers. If this period of industry retrenchment acts as a catalyst that inspires people to create new games in a more streamlined, efficient and imaginative way, Then we all stand to benefit from it.

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