Video game studios lay off workers while recruiting more
GAME OFF #GAMEOFF
The tech, gaming and media industries have been rocked by layoffs this week, as businesses cite economic head winds. Microsoft announced on Wednesday plans to cut 10,000 jobs, including at its gaming properties 343 Industries, The Coalition and Bethesda. “League of Legends” developer Riot Games cut more than 40 jobs this week. Financial analysts say public companies are likely course-correcting after years of expansive hiring.
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Microsoft plans to lay off less than 5 percent of its 221,000-person workforce, rolling out these layoffs over the next few weeks. Some of the layoffs affected developers who work on “Halo” and “Starfield” games at 343 and Bethesda, respectively. Employees at The Coalition, which works on the Gears of War franchise, and Xbox also lost their jobs, though exact numbers are unclear, and Microsoft declined to share specifics.
These are some of the notable companies laying off workers
The mood across social media platforms has been somber.
“Well, I’m filled with a mixture of shock, sadness and gratitude in equal measure after finding out I’ve been laid off from 343 and Microsoft,” said Will Waltz, a former animator at 343 who posted his news to LinkedIn. “I’m feeling a lot of compassion for the 10,000 other individuals experiencing the same thing with me.”
One game developer, who spoke on the condition of anonymity because they were not authorized to speak to media, said it hurt to see “friends lose their jobs.”
“Some of them have been there for years and years, gave the company and franchise everything. Genuinely cared about Halo and their crafts,” the developer said.
Google said Friday it would cut 12,000 jobs. Its CEO, Sundar Pichai, emailed employees that the company “hired for a different economic reality than the one we face today.” Google shut down its cloud gaming project Stadia on Jan. 18.
Unity Software, which makes software for building video games and other digital simulations, confirmed to The Washington Post that it was eliminating 284 jobs, which it announced Tuesday. The job cuts come as Unity closes its sports and live entertainment department, ending a project that would have allowed viewers to watch sports matches from different angles. A source confirmed the layoffs to The Washington Post and said remaining employees have been fearful for their jobs.
“We’re in a very tough economic cycle,” said Pascale Marchand, Unity’s vice president of global communications. “This process, while hard when it leads to difficult decisions that impact programs and people, allowed us to identify where we need to double down and invest more to get closer to our goals, ultimately resulting in cutting programs and projects that did not make sense to continue in the current economic climate.”
Riot Games laid off 46 employees on Wednesday, citing shifting priorities and organizational changes. The employees were on the publishing, recruiting and esports operations teams.
“We never make these decisions lightly and typically, when roles are no longer needed, we always try to retain Rioters and shift them to other parts of the company instead of letting them go,” said Joe Hixson, a spokesperson for Riot Games. “In this instance, that unfortunately wasn’t possible given the nature of the open roles versus the ones we were closing. While these specific roles no longer make sense for us, we’re still hiring for more than 150 positions after growing to 4,500 plus Rioters over the past few years.”
Industry analysts say the string of layoffs indicates that these companies are looking to improve profitability in the face of current inflation and a potential recession.
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“Investors are demanding cost-cutting. From the business leaders’ perspective, it was probably a good idea to invest the capital on expanding while it was cheap, but now they have to face laying off staff,” said Cassia Curran, founder of games business consulting firm Curran Games Agency.
“No one was worried about margins a year ago; few tech firms talked about cutbacks when the overall economy was strong,” said Joost van Dreunen, a lecturer on the business of games at the New York University Stern School of Business. “More so, it is easier to reduce head count than to abandon any long-term research and development initiatives. Unfortunately, for a lot of talented people that means starting the new year out of a job.”
Van Dreunen acknowledged the layoffs come at an odd time considering Microsoft’s pending nearly $70 billion acquisition of Activision Blizzard, but noted that the job cuts were at studios that came from the tech giant’s purchase of ZeniMax in 2021 and so may have been in the works for a while. The “anticipated market contraction requires a public bloodletting,” he added.
These layoffs in the video game industry come alongside those in the tech industry and games media. Dozens of staff at games outlets Giant Bomb and GameSpot were laid off this week. In recent months, layoffs have also struck outlets such as IGN and Fanbyte, and in October 2022, Comcast closed its gaming-focused network G4 just two years after its relaunch. Vox Media, which includes gaming, pop culture and technology news outlets Polygon and the Verge, announced Friday it will cut 7 percent of its staff.
“It’s terrible to use people to satisfy major shareholder expectations, especially now with inflation so high and engineers being on the downside of negotiations,” said Cher Scarlett, senior software engineer at game developer ControlZee. “Many of these companies start recruiting while they plan layoffs. They always wind up with the same or more employees after the churn.”