The Blockbuster Games Bubble Has Burst

ign.com:

The video game industry is currently in the thralls of a paradox. For players, it could be argued we’re in one of the greatest times for gaming – there’s incredible breadth of choice across consoles, handhelds and PCs made ever-more accessible through gaming subscription services like Xbox Game Pass and PlayStation Plus. But from an industry perspective, things could not be more dire. More and more studios seem to be closing, original IPs are being scrapped mid-development, and vast legions of game developers, programmers, artists, and animators have been cut loose. To put it simply: the AAA video game bubble has finally burst.

Across the past two years, over 23,000 jobs in the video game industry were lost, with a staggering 6,000 in January 2024 alone. Over 30 video game development studios have ceased operations including Arkane Austin, Volition, and most recently, Firewalk Studios. What’s worse, this trend only shows signs of continuing rather than diminishing. How did we get here? Some analysts have concluded these closures and redundancies are a necessary remedy to companies having overextended themselves in response to inflated demand in the market during the COVID-19 pandemic. While that’s undeniably a factor, I believe the truth lies in other long-gestating issues within the AAA project bubble.

Just five years ago, AAA projects’ average budget ranged $50 - $150 million. Today, the minimum average is $200 million. Call of Duty’s new benchmark is $300 million, with Activision admitting in the Competition & Market Authority’s report on AAA development that it now takes the efforts of one-and-a-half studios just to complete the annual Call of Duty title.

It’s far from just Call of Duty facing ballooning costs. In the same CMA report, an anonymous publisher admits that development costs for one of its franchises reached $660 million. With $550 million of marketing costs on top, that is a $1.2 billion game. To put that into perspective, Minecraft – the world’s