Lower-cost regions are key to the industry's rebuilding | Opinion

gamesindustry.biz:

The enormous wave of layoffs, studio closures, and corporate consolidations which hit the games industry last year is by no means over – but it does appear to have crested, at least, with the pace of such announcements starting to slow down as we've entered the second quarter of this 2024.

The knife will still fall in some painful places before this is over, but at last we're also starting to see early signs of recovery – green shoots amidst the rubble, with new studios being formed and some established ones cautiously starting to expand again.

The scale of the downturn this time around was unprecedented – not least because the industry overall is so much larger than in previous cycles, so there are more jobs to be lost in the first place – but the downturn itself was a familiar story. Companies over-extended in an economic environment where capital was easy to come by and made some bad bets on trends that didn't turn out to have the appeal or longevity they hoped; a shift in economic climate then dampened risk appetite and companies that had voraciously pursued growth for years suddenly found themselves obsessed with cost-cutting instead. This cycle has repeated throughout the industry's history at various intervals and at different scales.

It is a cycle, though, and the wheel that turns downwards eventually reaches its nadir and begins to move upwards again. It's a little too early to proclaim that we've bottomed out, but at some point fairly soon the industry will start the process of rebuilding the capacity it has just lost; hiring will outpace redundancies, and studio openings will become more commonplace than studio closures.

The big question, then, isn't whether the jobs that went away will come back – they will – but where and in what form they'll come back. The capacity the industry will rebuild will have a different focus and form to the capacity it tore down over the past year and a half. Crucially, it may also have a different location.

"When the wheel turns