Has the Layoffs Affected How You See 2023 for Games?
2023 is shaping up to be a phenomenal year for gaming, with highly anticipated releases like Zelda: Tears of the Kingdom, Spider-Man 2, and Starfield. But amidst the excitement, a darker side of the industry has emerged: over 6,000 layoffs across major companies like Bungie, Epic Games, and others. While the wave of redundancies may seem sudden, it’s a consequence of a trend that has been brewing for the past two years: the gaming acquisition gold rush.
The Acquisition Spree
The biggest gaming news in 2021 wasn’t a new game release, but Microsoft’s $69 billion acquisition of Activision Blizzard. This set off a chain reaction, with major players like Sony and Embracer Group engaging in a fierce battle for studio acquisitions. The Covid-19 pandemic fueled this trend, leading to a flurry of mergers and acquisitions.
- Embracer Group became synonymous with acquisitions, seemingly acquiring more studios than it released games. Its portfolio expanded rapidly, encompassing iconic franchises like Tomb Raider, Borderlands, and The Lord of the Rings.
The Price of Acquisitions: Layoffs and Closure
However, acquisitions often come with a harsh reality: layoffs and office closures. Business analysts and Google searches both confirm that mergers and acquisitions typically lead to restructuring, which often involves job losses.
- Embracer Group is a prime example of this. Despite its aggressive acquisition strategy, the company is now facing a financial crunch. It has announced the permanent closure of Volition, the studio behind Saints Row, and is exploring the sale of Gearbox, the Borderlands developer.
- Epic Games, known for Fortnite, has also made layoffs, including a significant portion of Mediatonic, the studio behind Fall Guys, which it acquired in 2021.
- Bungie, acquired by PlayStation in 2022 for $3.7 billion, has also made layoffs across key divisions like art, music, QA, marketing, and community.
The Acquisition Aftershock
While not all layoffs are directly linked to acquisitions, the timing of this year’s cutbacks coincides with the acquisition spree of the past two years. Companies like Ubisoft, BioWare, Team 17, and Creative Assembly have also undergone layoffs as part of cost-cutting measures.
The acquisitions rush during the Covid years was always going to be a double-edged sword. While collaborations and team stability can result from acquisitions, the downsides – layoffs, office closures, and a sense of instability – are now coming to the forefront.
The Impact on the Games Industry
The current wave of layoffs is particularly disheartening, as it coincides with a year of strong game releases and financial gains for the industry. It feels ironic that employees who contributed to these successes are facing job losses, especially during a time when the industry should be celebrating its achievements.
The silver lining is that studios like CD Projekt Red, developers of Cyberpunk 2077, are organizing to unionize, hoping to prevent future layoffs. Similar unionization efforts are underway at Activision and EA. While it’s too early to assess the impact of these efforts, it’s encouraging to see workers taking steps to protect themselves and ensure fair treatment within the industry.
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