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The computer game industry is a giant — but behind the figures are widespread gaming industry layoffs.
As of November 2024, there have been more than 14,000 gaming layoffs this year, surpassing the 10,000 layoffs in 2023.
Yet why should it be so? The video game industry is a $406 billion revenue machine — bigger than the combined music and film industries by 18% and rapidly closing in on the $699 billion TV industry.
How can the thriving video game industry lay off so many workers at such an alarming rate? Spoiler: It’s not due to generative AI just yet.
Techopedia speaks exclusively to senior managers across the gaming industry and finds out what to expect in 2025.
Key Takeaways
- Microsoft axed 8% of its 22,000-member gaming division workforce in September, while Unity began the year with 1,800 layoffs.
- Sony laid off 900 PlayStation employees (also 8% of its workforce).
- By June 2024, video game industry layoffs had already surpassed the total from 2023 — and the numbers keep increasing.
- Post-pandemic market correction and over-hiring as key factors, changing user behavior, and the scale of bets on AAA titles are all contributing factors.
- Ex-PlayStation chief boss suggested laid-off developers should ‘drive an Uber’ or ‘go to the beach for a year’.
- Show Full Guide
Which Gaming Companies Laid Off Workers in 2024?
Before we speak to industry experts, a quick recap of some of the gaming layoffs as we reach the end of 2024.
On November 25, 2024, Sky Mavis, creator of Axie Infinity, announced a 21% workforce reduction, “not related to the company’s budget or financial health” but on “long-term vision” and “hypergrowth in 2025 and beyond”.
2024 has been a transformative year for Sky Mavis. The Ronin Wallet surpassed 10 million downloads. Today, Ronin is the third most used Blockchain in the world with more than 1.1 million daily active addresses.
As crypto-friendly policies gain traction, we anticipate a wave of…
— trungfinity.ron (@trungfinity) November 23, 2024
Affected employees were told they will receive severance packages and support, but while the company “shapes the future of web3“, it will be a hard Christmas period for the 21%.
They will not suffer alone as, four days earlier, Reflector Entertainment, a Bandai Namco studio, laid off 18% of its workforce only a month after launching its debut game, Unknown 9: Awakening.
The company said the downsizing was not due to “commercial success or external pressures”, but rather there was not enough work to support their current project demands.
In October 2024, Team Blue, the California gaming studio owned by Netflix, closed — with 35 people losing their jobs.
In September 2024, Microsoft gaming layoffs hit the headlines after the axing of 650 jobs in its gaming division, which followed Microsoft’s $69 billion acquisition of Activision-Blizzard. This was in addition to the 1,900 roles eliminated in January.
January 2024 also saw an awful start to the New Year for employees of Unity Software, which farewelled about 1,800 employees, or 25% of its workforce.
Source: Gaming Layoffs Tracker
Sony and Electronic Arts (EA) have also made substantial cuts, with Sony laying off 900 PlayStation employees (about 8% of its workforce) and EA letting go of 670 employees (5% of its workers).
Meanwhile, mobile game publisher Tilting Point unveiled plans to lay off around 90 jobs — 20% of its workforce.
Stepping away from game production, the UK High Street retailer?GAME has faced a difficult 2024 with layoffs, store closures, and widespread operational issues disrupting both staff and customers.
Following the company’s integration with Frasers Group’s systems, an alleged 78% of GAME’s head office staff were made redundant, according to an investigation by Eurogamer.
But the bigger question is, why is this happening?
Why Are There So Many Layoffs In The Gaming Industry?
Oindrila Manda, Senior Game Product Manager at Electronic Arts, believes video game layoffs are the result of multiple factors.
But let’s begin with the strange macro-climate the world faced over the last five years.
Manda said:
“The video game market saw a boom in 2020 and 2021 during the pandemic when people mostly stayed indoors and spent a significant part of their leisure playing games
“Many video game companies were over-hiring during the pandemic to serve the then-growing demand. But, these companies are now struggling to recalibrate their workforce to adjust to the latest market conditions.”
Kaveh Vahdat, Founder and CEO at RiseAngle, also sees the ripple effects of COVID-19 as a factor.
“The wave of layoffs in the gaming industry is less about poor performance and more about a post-pandemic market correction. Companies scaled up aggressively during the pandemic, fueled by a surge in player engagement and cheap capital.
“Now, they’re grappling with overcapacity, declining user growth, and higher operational costs due to inflation and rising interest rates.
“But the real concern here is not just the layoffs — it’s the industry’s lack of sustainable labor practices.
“Game studios have become infamous for ‘hire-and-fire’ cycles, and this unpredictability is driving top talent away from the industry altogether.
“If this trend continues unchecked, we’re facing a brain-drain that could cripple future innovation in gaming.”
Manda added:
“In the near term, we might see a large pool of talented games industry professionals looking for work as large developers and publishers continue to be cautious around hiring.
“Financing around new projects would also be conservative while the high-interest rate market persists.
“With the Federal Reserve issuing rate cuts, this might ease slightly in the near to long term.
“In the long term, developers need to seriously evaluate their business models and focus on cost optimizations.”
This factor has also been seen in the wider tech industry, which saw more than 130,000 layoffs in 2024.
Long Development Cycles & the Challenge of ROI
The recent surge in gaming company layoffs is prompting industry leaders to reevaluate their strategies.
EA’s Oindrila Manda believes that long development cycles for video games and uncertain ROI are largely to blame for the recent layoff news. To make a good game, developers and publishers must invest a significant amount of time and money.
Manda said:
“The latest AAA video game Black Myth: Wukong, has sold 20 Million copies so far and took a team of over 140 employees nearly six years to make and launch.
“Most investors are unwilling to bet on projects that take so long to market and generate a return on investment, especially in the current high-interest-rate market.”
It is an example that highlights why she believes the games industry investment has slowed down, leading to studio closures and project sunsetting even before release.
“With it being tough to predict a video game’s market success or failure and hence investors, they tend to err on the side of caution, making it harder for independent game studios to raise funding, leading to further right-sizing initiatives.”
The Impact of Privacy Laws on Mobile Gaming Economics
EA’s Oindrila Manda also added that in free-to-play and mobile games, many of these problems are exacerbated by technology changes on the platform end.
“Apple and Google have introduced stricter privacy laws, making it extremely difficult for advertisers to target users with relevant ads. This has significantly driven up user acquisition (UA) costs and ballooned up the marketing budgets of video games.”
Games in development had to revise their ROI estimates in light of this new UA challenge, and many publishers have re-evaluated their portfolio of games to focus only on the most profitable ones.
This has led to further game developer layoffs as projects are being shut down.
Travis Lindemoen, managing director, nexus IT Group, added:
“Mergers and acquisitions in the industry have led to restructuring and redundancies as companies seek to streamline operations.
“Rising inflation and interest rates have increased operational costs for game companies while reducing consumers’ disposable income. This has created financial pressure on companies to cut costs.”
Alongside that, Lindemoen added that player trends are changing:
“Players are increasingly concentrating their time and spending on a smaller number of established games, making it harder for new titles to gain traction.
“This trend favors large incumbent franchises over new releases.”
The Future of Gaming Layoffs in 2025
As the gaming industry enters a period of cautious hiring and technological advancements, a transformation in game development is on the horizon, driven by artificial intelligence and global diversification.
Manda from Electronic Arts believes we will continue to see widespread change.
“In the near term, we might see a large pool of talented games industry professionals looking for work as large developers and publishers continue to be cautious about hiring. In the long term, developers must evaluate their business models and focus on cost optimizations.”
Game companies may diversify globally to reduce the cost of labor and use the latest technologies, such as AI, to accelerate time to market.
“Generative AI can drastically impact how games are built, making game development faster and cheaper.
“It can automate art and design pipelines, reduce the burden on artists and engineers, and enable faster prototyping.
“This will give rise to a new generation of AI-powered games.”
Despite the headlines of AI removing jobs, its impact on layoffs within the gaming sector is minimal. Vahdat of RiseAngle thinks its future impact is still up for debate.
“While generative AI promises future efficiency and is changing the dynamics of every industry, including gaming, it hasn’t significantly impacted layoffs in the gaming sector yet. How it will reshape gaming and industries at large remains to be seen.”
Recent layoff trends highlight more disruption in the gaming industry, raising concerns about job security.
This has made it an incredibly stressful year for workers and their families, especially when sympathy from industry experts appears to be in short supply.
Chris Deering, former boss of PlayStation, suggested that displaced workers should drive an Uber or go to the beach for a year…
Chris Deering, former boss of PlayStation, does not believe the recent, widespread layoffs in the games industry derive from corporate greed, and that affected workers should “drive an Uber” or “go to the beach for a year” until things turn around: pic.twitter.com/uXUkNTbXQ5
— Simon Parkin (@SimonParkin) September 10, 2024
The Bottom Line
Despite being bigger than the film and music industry combined, the video game industry has seen 20,000 layoffs in 18 months. Something doesn’t quite add up.
The ongoing consolidation and the potential of generative AI could further reshape the industry in the next few years. But for now, the industry must balance cutting costs and fostering an environment that continues to attract and nurture creative talent.
Without carefully considering these factors, the gaming industry may face long-term consequences that could stifle the explosive growth needed to overtake its next target, the TV industry.
Until then, maybe we should all just drive an Uber or go to the beach and see what 2025 holds in store.
FAQs
Why are game studio layoffs increasing in 2024?
Which gaming companies laid off employees in 2024?
Are privacy laws affecting gaming layoffs?
Is AI responsible for gaming industry layoffs?
How many gaming employees were laid off in 2024?
What is the long-term outlook for gaming layoffs?
References
- A $406bn gaming industry and the melee for advertiser’s next frontier (The Drum)
- Film And Music Market Size, Industry Share, Analysis 2024-2033 (The Business Research Company)
- TV & Video – Worldwide | Statista Market Forecast (Statista)
- PlayStation to axe 900 jobs and close London studio – BBC News (BBC)
- Oindrila Mandal (LinkedIn)
- Latest Games – Official EA Site (EA)
- Kaveh Vahdat – RiseAngle, Inc.?(LinkedIn)
- RiseAngle – AI Game Creation Company (RiseAngle)
- Travis Lindemoen – Enjoy Mondays (LinkedIn)
- 2024 – Game Industry Layoffs (Obsidian Publish)
- Inside the fall of GAME: “no games, no accessories – instead we received 136 Zendaya action figures” (Eurogamer)
