Survive 'till 25: Now what?

It's now 2025, what's going to happen next?

In the span of two years, around 25 - 30,000 people lost their jobs in the games industry.

This ranged from game developers, to games journalist, to the people manning the phone lines and those working in Finance and HR.

The industry was decimated, and whilst we weren’t the only industry to suffer such layoffs, by proportion, we were one of the biggest.

The ‘official cause’ of this was financial management. These companies and many others had borrowed aggressively during a time where interest rates where low, however in the past year interest rates shot up and this changed the financial position of many of these companies.

The unofficial cause, was poor decision making and late stage capitalism. Larger game developers and venture capital firms (who fund smaller studios), were pouring money into a long string of high risk, high reward strategies.

Live Service Games and Blockchain games took up a large portion of the funding post 2020, and nearly all of them failed to return on their investment. The last point is that the investors and C-Level suite of most of these companies expect a certain amount of return from these companies and are unwilling to accept anything less than they were promised despite them being the ones to blame for the companies position. So in order to continue to pay investors and executives, millions of dollars in payouts vital services and game projects needed to be axed.

And so the motto amongst the industry became ‘Survive until 25’.

Why was that the motto?

Well given the bulk of these cuts where driven by the desire to make the financial positions of these companies look good for the FY24 and FY25 years, there is a general understanding that these companies will need to start investing in new projects in order to survive the following financial years. So we’re expected to see an increase in hiring and funding of new projects.

But what does that actually mean?

If the expectation is true, it means we should see an uptick in hiring for game developers, and related services like HR, between April and September.

However, it’s not a magic bullet for the damage that has been done. Teams take time to build up and not all projects that start will result in a delivered game. These games, if green-lit, will take two to three years to be delivered. During that time more people will be hired to help support the delivery and life cycle of the game.

However, it’s not like we’re going to see twenty thousand job openings in the next twelve months. Whilst some that were laid off, have found work, we won’t balance out for a long time.

I don’t see a come back for those working in games journalism, and those who worked in a support role such as finance, HR, and community roles. Much of those job losses where down to consolidation. When Microsoft eats another company it doesn’t necessarily need two Marketing teams, when it can downsize to an appropriate size.

We also have more layoffs coming.

We have several high profile games being delivered in the coming year or so. Its common for the industry to get rid off staff once a project is delivered. Rockstar is known for very large development teams, and with GTA 6 on the way, it’s expected that some of that team won’t be required any more. Same with the next Assasins’s Creed.

This would see talented developers return to a market that’s already cut throat.

This also isn’t a globally applicable saying.

Most high profile games are made in the US, Canada, Europe, and Japan. Each place has their own economic factors that need to be taken into account. For example, I live in New Zealand, we have our own economic depression that’s expected to last a few more years. Whilst NZ doesn’t produce AAA games, it does pump out a disproportionate amount of Indie darlings (considering we are a country of 5 million).

These indie developers rely on local funding and tax breaks from the government and none of that is looking too rosy at the moment. Both America and Canada will be undergoing a change in leadership in the coming months, and that could have ramifications.

It’s not all doom and gloom, I just didn’t want to lie to people and say that twenty thousand jobs are going to be magically reinstated in the coming year.

For one we do have multiple large profile games currently in development or about to launch, keeping developers in work. There will be pressure to quickly move onto something new as to keep the wheels going.

The launch of the next Switch will create an appetite for existing and new games to be available on the hot new platform that will probably sell like crazy for at least nine to twelve months.

Not to mention, both Sony and Microsoft will start to look their next generation of consoles, priming key developers to either create something new or port an existing title to the new powerful console.

It’s going to take years for the industry to recover, and whilst it’s not going to necessarily start tomorrow, it will start soon. No one wants a quite year in gaming, it means that players will spend their money elsewhere and investors get very jealous of that. It’s an industry with billions upon billions of dollars of potential and that’s a very well known fact. We’ve just got to pick ourselves back up, wait for the investors wallets to open, and hope that some serious lessons were learned.

Here’s to 2025.