'I've Never Seen It This Bad:' Game Developers Explain the Huge Layoffs Hitting Riot, Epic, and More

ign.com:

In August of last year, Ascendant Studios developer Aaron (name changed for anonymity) was ready to take a well-deserved victory lap. He had crunched hard with many of his colleagues in the final sprint to complete Ascendant’s debut game, Immortals of Aveum, but the team had finally done it. He attended a launch party in the Bay Area where he celebrated with his colleagues, some of whom he said had to pay partially out of pocket to make the trip. But while the event was supposed to be jubilant, there was an uneasy atmosphere: it seemed like Immortals of Aveum wasn’t performing especially well. At the party, developers kept asking leadership how the game was doing, only to be met with non-committal answers.

A few weeks later, almost half of the studio – Aaron included – had been laid off, with managers citing Immortals of Aveum’s underperformance.

Ascendant Studios was just one of numerous studios that has laid off a chunk of its workforce in the last year, and a half as part of an ongoing trend of mass layoffs impacting studios large and small. There have been many attempts to answer the question of why exactly this is happening, with analysts, CEOs, and other industry experts weighing in on discussions trying to explain it. The commonly-cited villain was fairly straightforward: COVID-19. Take-Two CEO Strauss Zelnick actually put it quite effectively to us when we asked him about layoffs last November:

"With regard to the industry, I do think people got a little fat and happy during the pandemic," he said. "I think there was a perception on the part of many that the music would never stop."

Zelnick was stating a refrain we've heard elsewhere: the big surge in spending during the pandemic effectively tricked a lot of companies into overspending, overhiring, overestimating. Then, when games revenues leveled back out in 2022 or so as gamers left the house again, cuts had to be made. The ESA has touted this explanation, as has the IGDA. A Tencent business development