The games industry faced another challenging week with a series of unfortunate events, beginning with Eidos Montreal layoffs on Monday, followed by further downsizing at Sega, Nimble Giant, GameSpot, Artificer, and the complete closure of Square Enix’s Tokyo RPG Factory on Wednesday. Airship Syndicate also experienced layoffs on Thursday.
These distressing developments mark an ongoing trend of difficulties in the industry, which has persisted for about a year.
Comparisons to the 2008 financial crisis era were drawn, highlighting the severity of the current situation in terms of layoffs. The 2008 period, marked by economic turmoil, witnessed major industry players like Sony and EA shedding staff significantly. The recent surge in distressing news echoes the challenges faced during that time.
However, amidst the gloom, there are some reassuring signs. Despite the wave of layoffs, the fundamental business of games continues to thrive, much like it did in 2008. Data from the NPD Group indicates that the US game industry’s software and hardware sales reached a record $21 billion in 2008.
In 2023, Circana reported US consumer spending on games at $57.2 billion, making it the second-best year on record. Despite a slight dip compared to 2021, the industry remains robust, with substantial investments and deals still in progress.
Several studios found new investment opportunities during the week, including Carry1st, 8SEC, Loric Games, Order of Meta, and Mountaintop. This follows a trend of continued financial support for emerging game companies, with more funding news expected in the coming weeks.
New operations like Roro, Shapeshifter Games, Megabit, Narwhal Accelerator, ForthStar Games, Moonlight Studios, Hundred Star Games, and Astra Logical have been established, indicating a sustained commitment to supporting fledgling game ventures.
Looking ahead, the industry is anticipated to maintain growth in the coming years, albeit at a more moderate pace than pre-pandemic times. Despite challenges, people continue to engage with and spend money on games, solidifying the industry’s position.
However, the persistent wave of layoff stories raises questions about media coverage. Layoffs have been a longstanding reality in the games industry, but the recent surge in coverage suggests a lower threshold for what constitutes newsworthy layoffs. This may be influenced by the ongoing trend and the inherent nature of journalism, where coverage often aligns with prevailing narratives.
While acknowledging the challenges, there is optimism about the industry’s future. Many of the current issues stem from long-standing business decisions, such as overestimating the lasting impact of the pandemic-induced gaming surge. Business missteps, reckless pursuit of growth, and expansions into unfamiliar territories have contributed to the current predicament.
Despite the temporary setbacks, the core business of selling games remains strong, offering hope for a positive trajectory in the industry. Amidst the negative headlines, there are also positive developments, including potential trends and events that could positively impact the industry.
In parallel, Apple’s entry into the VR/AR market with the Apple Vision Pro has garnered attention. The $3,500 headset has been long-awaited, and initial reviews are mixed, acknowledging impressive technology and design but highlighting tradeoffs in areas such as weight, battery life, and the inherently isolating nature of headsets.
In summary, the games industry faces challenges, but the underlying business remains resilient. Layoffs and negative headlines coexist with ongoing investments and new ventures, demonstrating the dynamic nature of the industry. The entry of major players like Apple into the VR/AR space adds another layer of complexity, with potential implications for the future landscape of gaming experiences.
