Why is the $180bn games industry shedding thousands of staff?
Why is the $180bn games industry shedding thousands of staff?
Despite healthy sales, publishers such as Epic Games and Activision Blizzard are making hundreds of employees redundant – which may radically reshape the industry
It's not that we're not making profit, it's that we're not making ENOUGH profit.
A.K.A Capitalism.
This. I’ll be the last one to defend any of these megacorps but folks calling it greed are being reductive. These are publicly traded companies which means their loyalty is to their shareholders and their #1 goal is to make them more money than they made them last quarter. So it’s more than greed, it’s their job within this capitalist system. They have to do that every quarter for as long as they exist. The only ways to do it are to increase revenue or decrease costs. If they can’t make enough money they have to fire people. That’s the world we’ve built.
But it’s not only about making more profit than last quarter, but also the amount the profits increased by has to be higher than the amount they increased by the quarter before last. That’s how you end up with companies seeing record profits and still laying people off. They made more than last quarter, but only 2% more. The quarter before they made 3% more so now people have to go. It’s insane.
It will never be enough...
pure corporate greed.
i think its the stock market. it creates this false reality where things need to keep climbing.
if you have a company where everyone gets paid, and the customer is very satisfied and you have no profit you are somehow a complete failure. because we all just cant be.
the stock market is humanities downfall... human greed distilled, authorized and removed from all responsibility.
There's some off-base comments here that ignore why the industry is being hit particularly hard. Note that when it comes to companies like Microsoft, you're right it's pure greed. They don't need to shed those jobs, but that will make shareholders money, so bye-bye livelihood. Fuck Microsoft in particular on this round of layoffs, money for a 65 billion purchase but nothing else, pricks.
But for most of the job losses, it really comes down to high interest rates. High interest rates disincentivizes investing. And the past decade or so has been highly investment based.
A lot of the traditional big publishers like EA and Activision went entirely in-house, so any studio outside of those big ones needed to find funding somewhere. They turned to investment companies.
This works whilst investing is cheap, but when it's hard to come by, suddenly you have to make payroll and can't. This is why Embracer has failed, for example.
Why were people laid off by Microsoft? Were they redundant after the acquisition? Were they part of departments that were cut? Like 90% of acquisitions lead to layoffs.
But Microsoft told the FTC they specifically were not gonna do that after the merger, which is why the FTC is angry at them. https://www.polygon.com/24065269/ftc-microsoft-activision-deal-layoffs-appeal
Very true, and Microsoft in particular could have just shouldered the cost of those employees and likely found more work for a lot of them. Some of what I've heard from Jeff Grubb in the past week or two is that ABK expanded by 3000 employees in the past two years while interest rates were cheap, so it was unlikely they did so sustainably; and hundreds of those who were laid off were basically the entirety of Microsoft's physical distribution department, which we'll probably hear in this upcoming business update no longer exists for Xbox going forward.
Plenty of profit to go around. The issue is shareholders expect infinite growth, which is impossible.
Capitalism (when it works best) basically requires occasional market crashes that can "reset" the wealth distribution. But for obvious reasons, nobody wants that.
So every year, shareholders get richer and expect bigger growth next year, but eventually the profits will plateau. And one can only guess what happens then.
When the profits plateau, you look for the next thing the market wants. Sometimes those bets are right, and sometimes they're wrong. In the meantime, people were paid salaries out of investors' pockets while they worked on providing the next potential answer. That's what happened here.
I had a shower thought this morning:
At a certain point in capitalism, a wealthy person can get enough money to live comfortably the rest of your life. If you decide to continue to grow your wealth from there, you're essentially not just making money for yourself, but so others can't have it.
I have a feeling that number is well below a billion, but I'm no economist.
It's called hoarding and it's an unhealthy habit so why isn't anybody doing anything? Because if you give them enough of that money they won't complain.
if they have to do that to enough people we would have inequality solved
There was a study from 2010 that said that the happiness already plateaus somewhere around 75k annually. But more recent studies suggest that for some people, more money means more happiness well beyond that, and for some it doesn't. Basically, if you're generall an unhappy person, money doesn't help much. https://penntoday.upenn.edu/news/does-more-money-correlate-greater-happiness-Penn-Princeton-research
But I agree that owning more than 1 billion (or even 100 million) is just useless hoarding, since no one can spend that much money in a lifetime (at least without decadent spending for spending's sake).
Nearly all social animals would be punished in some way for hoarding resources from the group. Between loss of social status all the way to being killed. Our closest relatives like apes straight up murder individuals that do this.
It's a mental illness. We'll probably find out it was caused by lead or micro plastics if our species survives this time.
For now. I believe the correct call to action involves guillotines. We can dial it back if things get better.
It's to keep score.
It's super gross.
Also power.
If you decide to continue to grow your wealth from there, you're essentially not just making money for yourself, but so others can't have it.
This is a zero-sum fallacy. The size of the economy isn’t fixed. It continues to grow each year. The hyper productive people you’re referring to are disproportionately responsible for that growth, and they are disproportionately the recipients of that growth. My father was one of those people. Working 18 hours every day for 30 years. It led to a divorce and our family falling apart, but fuck did he generate a lot of economic value for the world, his company, and himself. He didn’t steal it from you. He created it.
Line need go up more
Where u get MBA?
You don't need an MBA to know that the goal of a large business is to deliver profit to its investors and that this can be accomplished by cutting costs.
The line went up but not as high as expected so now Riot games owner of the most popular videogame League of Legends need to fire 500 people.
…because capitalism.
Might sound like a bit of a conspiracy theorist here, but if all of the big tech companies lay off people at the same time, why could they not hire their recently laid off competitors for a fraction of the cost?
Obviously it drives down the cost of the salaries and lowers the average hiring rate. Huge wins for all these massive companies.
And to prove that they all did this "together" when they all did it a few weeks apart will be rather difficult too.
Maybe that's just me thinking from both corporations and employees side at the same time, though...
Why would it? I usually get a pay raise when I get a new job.
What's actually going on is they're massaging the numbers a bit to get investors to invest more. Salaries aren't the concern here, it's just a game of staying on the investing trends to get the most investor capital they can. Employees are just caught in the crossfire.
As another poster said, those of us in tech generally get a significant pay bump, significant. Hell, that goes for most people with skills and experience.
I've preached before on here, move on, keep moving on.
That's illegal.
Because they would like to be the $360bn games industry.
Capitalism.
Greed
Greed.
Same reason as every other tech company
Because lethal company is a much more fun game than anything the big guys are putting out and it only costs 10 bucks
Same with Battlebit, that's $15.
It's annoying seeing people buy the same copy paste games from AAA companies then complain that games aren't good anymore. Like no shit, you just preordered it without even looking at a review
Top heavy teams suffer the problem of play it safe don't innovate mentality. Especially if a publisher is pulling the strings.
Industry figures indicate employment in IT is still above pre-covid levels. Companies over-hired and are normalising. We’re not seeing this labour activity in most other sectors. There’s no reason to panic.
That's one way to look at it, if you're looking to downplay the human impact. The way I look at is these companies had a short sighted hiring spree and now thousands of people are without income and can't just get a new job as the industry is laying off everywhere. That seems like a reasonable source of panic for the people with no income and not a lot of prospects.
Workers are numbers
Unless your a developer
Pursuit of bigger numbers.
This is the best summary I could come up with:
The Legend of Zelda: Tears of the Kingdom, Baldur’s Gate 3, Alan Wake 2, Marvel’s Spider-Man 2 … barely a week passed without some blockbuster hit or independent gem.
Epic Games, the creator of Fortnite, one of the most successful titles of the decade, laid off 830 employees; Electronic Arts shed 6% of its workforce, amounting to approximately 780 jobs.
The effect was twofold: strong sales for titles such as Animal Crossing and Call of Duty: Modern Warfare boosted revenue and sent share prices soaring, thereby attracting the attention of external investors who flooded the industry with funds.
For publishers looking to cut development costs, expanding the use of AI in production (already a limited element in the process) may be a tempting prospect, especially in areas such as quality assurance and performance capture.
In January, the Sag-Aftra union was criticised for reaching an agreement with an AI company that would allow it to create digital likenesses of actors’ voices, prompting furious responses on social media.
Starfield and Mortal Kombat actor Sunil Malhotra wrote on X: “I sacrificed to strike half of last yr to keep my profession alive, not shop around my AI replica.”
The original article contains 1,217 words, the summary contains 195 words. Saved 84%. I'm a bot and I'm open source!
Greed
Because it's about greed, not culture. And anything having to do with culture has itself been traditionally appropriated by greed anyway.
Mergers.
Maybe they overhired when we had "cheap" money in 2021.
Why is it that in my own experience Atlus and Nintendo are the only two companies that provide fun games that run with little to no issues and meanwhile every single other triple A company doesn't anymore? Look at both of them, Persona 3 Reload, Mario Wonder hell even indie games like Palworld are more fun to play. Wtf is wrong with the gaming industry nowadays?
Why spend millions on QA, delaying games, etc when people buy millions of copies regardless? You get an influx of cash that can sustain further development. If the game sells badly, you saved millions when you sunset the game without fixes. If not, you fix stuff, add content that was meant to be in the game and diehards love it.
People aren't patient and they buy the next big thing. They don't want to play a game half a year after release, they want it now. They want fifa 24 or whatever it is, not 22. You wait on Baldur's Gate 3 - you got to play an excellent game way after everyone. What if the next Call of Duty is as good as BG3 was?
Obviously we all know that won't be the case, but if gaming is what you do for an hour every week, you probably won't do a lot of research.
Exactly I waited 6 months for Persona 3 Reload and I am very happy with my purchase just like I was with FES/Portable. These companies need to do better
Pokemon...
Both those companies have the advantage of owning a ton of beloved IPs and Nintendo releases a lot of stinkers as well.
Atlus is Sega, though
Nintendo isn't really pushing the envelope on, well, anything and they are basically the Disney or Apple of video games with hordes fans who can see them doing no wrong.
Nintendo is not exempt from this.
They do this every year and nobody cares.
Not at this rate and not nearly as many studios close per year.
Hey don't call me nobody! I have a whole body.
I'd recommend watching this
Got a TL;DW? Shits over an hour long fam
There's a hype cycle that companies like MS ride to bolster stocks, during the hype they over hire to give investors the impression that they are doing really well, when the hype starts to fall, they use layoffs to inch out a bit more, because it shows investors that they're slimming down now that the hype is falling off. One of the interesting things he mentioned is that the hype is more important than the product, the product is just there to increase the hype and justify the hiring, showing investors that something great is on the way.
Here is an alternative Piped link(s):
https://piped.video/-653Z1val8s
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Funny how all the retarded NPCs cry about greed, over the fact that they think every random idiot is entitled to a paycheck for all of eternity regardless of whether or not anyone actually wants to employ them.
all the r—- NPC’s
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Who straight faced says NPC’s?
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It isn’t 1999 don’t use that word.
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Some people love universal basic income, other people love to see people starve.