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The state of video games: Big releases, bigger layoffs, and an imminent crisis point (Geekwire)


I thought this was an interesting and unfortunate discussion, this is one of the best years ever for high quality video games but also one of the worst for layoffs and overall treatment of developers.
 
Publishers are optimizing for big-budget games, hiring hundreds to do so. When the game doesn't hit its unrealistic target, the publisher then needs to scale down to survive. Rinse and repeat.

Typical entertainment-industry problem, this is the reality when the product determines outcomes to such a degree as it does with games. Can't get away from that.

The problem is the outliers, the games making hundreds of millions, it makes organizations see stars and scale up hoping to cash in "embracer cough cough".
 
Publishers are optimizing for big-budget games, hiring hundreds to do so. When the game doesn't hit its unrealistic target, the publisher then needs to scale down to survive. Rinse and repeat.

Typical entertainment-industry problem, this is the reality when the product determines outcomes to such a degree as it does with games. Can't get away from that.

The problem is the outliers, the games making hundreds of millions, it makes organizations see stars and scale up hoping to cash in "embracer cough cough".

It’s kind of insane that we’ve seen game budgets go from 5 million to 50 million to 500 million with no signs of slowing down and the AAA publishers are like “this is fine”.
 
damn..and primarly this is due to mismanagement of projects plan and resource allocation, imho.

100% Agree on resource allocation.
Just look at the two biggest pieces of the pie.

Unity has been shitting the bed for years now.
And Epic...
Timmy's been putting money into a new giant Corporate office(seems to be on hold at the moment LOL) and battling it out with Apple and acquiring dumb things like Bandcamp and other companies Epic has no need to acquire.

Did Epic forget they are in the business of engine development/video game making? Rhetorical question, of course.
 
Considering most of this is also just from company that we have news access there. We don't even know how bad the damage is in countries like China, South Korea, South East Asia, Latam, and other less known gaming development nations there.

The layoff has been absolutely brutal this year.
 
Considering most of this is also just from company that we have news access there. We don't even know how bad the damage is in countries like China, South Korea, South East Asia, Latam, and other less known gaming development nations there.

The layoff has been absolutely brutal this year.

Not only that, but there's plenty of smaller private studios that don't disclose much that are for sure tightening their belts at this current time.

Venture Capital money has been drying up, interest rates for loans are also up. Publishers are probably also being more critical of what kind of game they support as well. This is a pretty hostile environment for studios in the region of sub 40~ headcount.

There is a reason why Embracer was able to gobble a bunch of them, they were out of funds and publishing partners were not interested in whatever idea they were showing them.
 
the more things change, the more they stay the same...rumors and doom and gloom have always been part of the industry. same thing was talked about in super Nintendo days.

As long as we get a lot of varied new releases I think the industry is OK. I dont see that changing? I do see some somewhat worrying consolidation, which is a long term trend. but tbh even ms acquisition of abk seemed somewhat of a long shot than anything real. but not sure what real effect it has when a steady flow of indie titles always remains. OTOH you have people rightfully talking about what a huge year it's been with so many quality new games.
 
It’s kind of insane that we’ve seen game budgets go from 5 million to 50 million to 500 million with no signs of slowing down and the AAA publishers are like “this is fine”.
Well, when the games are continuously more and more successful regardless and the suits at the top calling the shots are making as much money as they can (while being able to offload the responsibility and concequences of failures to the workers), then, well, of course the publishers will think it's fine. It's not like it's affecting them or their bottom line.
 
It’s kind of insane that we’ve seen game budgets go from 5 million to 50 million to 500 million with no signs of slowing down and the AAA publishers are like “this is fine”.
That's because in the meantime; the ways to extract more profit from games also grew.

First you had CDs which brought down costs & risks significantly, alongside a bigger cut for 3rd parties with the Playstation.

Then, it was how digital increased profit per unit while allowing a longer tail for product (and hence higher sales).

The digital era also brought DLC and then MTX which extended the revenue of some games way beyond what could be achieved before.

So yeah, the industry continues to go the same route, hoping for a new revenue stream to emerge and save their asses.
 
So yeah, the industry continues to go the same route, hoping for a new revenue stream to emerge and save their asses.
Well in the meantime they are increasing prices. On literally everything too! Consoles, MTX, Subs, Games. Might be a stopgap but not viable longterm
 
It’s kind of insane that we’ve seen game budgets go from 5 million to 50 million to 500 million with no signs of slowing down and the AAA publishers are like “this is fine”.
A big problem endemic to the modern-day industry is that there are now thousands of high-quality indie games that are largely passion projects. This boom didn't exist 20 years ago when publishers acted as gatekeepers to the industry. A major publisher now has to stand out within that glut, and without IP recognition like Nintendo it's an uphill battle to attract attention.

Also, in the midst of the recession in the early 2010s a large amount of AA games failed quite spectacularly which helped diminish focus on them. For example, Sony's Wipeout 2048 on Vita sold just 138K units in the USA across its entire lifetime. If you're a publisher and a game only makes $8 million in revenue essentially breaking even on development costs, what's the point when you crave long-term growth?

Large-scale projects and GAAS have the potential to realize incredible long-term monetization and engagement. Fortnite (>$26 billion) and Roblox (>$4 billion) and GTA Online (>$8 billion) have been insanely attractive to large corps in that regard. Unfortunately in order to realize those successes, it takes an outsized and incredibly risky investment that has a large possibility of backfiring.

When studios don't meet projections to realize these successes (like Destiny 2 for example) it shakes the industry more profoundly than before. Easy and cheap capital drying up certainly doesn't help...it makes publishers more risk-averse by proxy and less tolerant towards development issues.
 
It’s kind of insane that we’ve seen game budgets go from 5 million to 50 million to 500 million with no signs of slowing down and the AAA publishers are like “this is fine”.
On top of the point that @Lelouch0612 made that new cost-saving and revenue generative measures helped paper over things, they were also betting big on market potentiality.

With the advent of the first generation of gamers coming of age and having disposable income not managed by their parents, sales ballooned rapidly and certain platform holders and publishers felt free to re-invest in bigger and flashier productions, to squeeze out any potential rivals for those dollars who would not or could not afford to do the same. So with the advent of new technology, "bigger and flashier" became the only means by which they knew how to maintain engagement and (most) platform holders were happy to accommodate.

The Wii and DS demonstrated to everyone that it was possible to cast an even wider net, and that happened right around the advent of the smartphone. It gave an impression that growth legitimately may not have a limit.

But reality has since come crashing down; there does appear to be a maximum addressable market and that has led to the deployment of monetary schemes that extract the majority of revenue from about 10-20% of players (and that's a high estimate, F2P "whales" in the mobile space have frequently been recorded as making up less than 10% of all players), while those that don't follow that racket are suffering from the knowledge that the only method they know to maintain consumer engagement in their maximum addressable market now costs them buckets and buckets of money and try to achieve more with less (read: try to extract more surplus value from their labour pool, with the company's labour demand constantly outpacing growth of the labour pool), which incentivizes them to try and join the racket for the big payout to keep the good times rolling. Meanwhile, indie creators, many of whom were pushed out of the traditional publisher labour force, are taunting publishers by luring customers in with sales tactics they have long since abandoned and publishers presume they cannot retreat to.

In short: Publishers are most certainly NOT fine with how things are, but acknowledge that this is the bed they made and now they have to lay in it, whether they like it or not is irrelevant. And they got here through the lie of perpetual growth, so when growth of potential consumers dried up, they sought that growth elsewhere. Any lack of turnaround from the accepted "norm" to something more sensible comes from fear that their competitors won't follow them and use their "weakness" to squeeze out another rival, a lack of faith in consumers to accept a dialling down of game budgets with positivity, or both.
 
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