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Things are not going well for the gaming industry. Numerous game companies, including Electronic Arts and Sony, have announced restructuring plans. In doing so, they are following in the footsteps of the tech giants. Those have cut hundreds of thousands of jobs since the end of the corona crisis.

In the news: Several gaming giants have announced rounds of layoffs in recent weeks. An overview.

  • The most recent announcement comes from Electronic Arts. That company plans to cut its workforce by 5 percent. That comes to 670 employees.
  • Microsoft is going through its gaming divisions with the coarse brush. 1,900 jobs will be lost in the process, or 8.6 percent of employees involved in the development of Microsoft games and the game console Xbox.
  • Competitor Sony is also facing layoffs. The PlayStation developer announced early this week that 900 employees worldwide will be laid off. That equates to 8 percent of its workforce.
  • Riot Games, the developer of the popular game League of Legends, among others, is cutting 530 jobs this year, or 11 percent of its entire workforce.
  • Not only the big players are restructuring. Smaller developers and publishers, including Behaviour Interactive and Threshold Games, are also saying goodbye to some employees. We are seeing similar scenes at companies that are otherwise linked to the gaming sector. The U.S. livestreaming service Twitch is laying off 500 employees, and at Discord, a platform on which gamers, among others, can talk to each other, 17 percent of employees have to look for a new job.
  • According to this tracker, 7,800 jobs have already been lost in the gaming sector this year. By 2023, 10,500 were laid off.

What's going on?

Details: Game companies made the same mistake as the tech giants: during the corona crisis, they hired massive numbers of staff, believing that growth would continue.

  • During the pandemic, we were forced to stay home for long periods of time. Many people then found their way to gaming. Since the end of the crisis, we are once again getting out more, and many are abandoning their video games. Therefore, this was reality check for the gaming companies.
  • This led to much less investment in gaming companies in 2023. In an interview with the specialized site Polygon Matthew Ball, video game investor and author of The Metaverse, notes that game revenues have fallen 4 percent in the U.S. since 2021 and 1.5 percent worldwide since 2021, when the market was expected to grow.
    • "Engagement rates and revenues may be higher than in the last quarter of 2019 (just before the start of the corona crisis ed.), but that means, therefore, that there is only gradual growth," it echoes. "Revenues no longer compensate for increased personnel costs. It's not always the case that those hired during the pandemic are the first to be laid off, but many companies had too high expectations and now their (former) employees are paying the price."
  • Note: Both globally and in the U.S., the gaming sector is growing slower than the economy.

Letting users create content

Also this: Game companies are also paying more attention to content created by users. They give them all kinds of rewards in return. That way, they can also save on personnel costs.

  • Epic Games, the company behind Fortnite, is a great example of this. Recently, gamers have been able to develop their own gamemodes using a kit. In this way, the gaming giant can be sure that new content is constantly being added, without having to put in a lot of effort itself.
  • More and more game companies are working on "games as a service." The aim is to keep gamers playing the game for as long as possible by constantly updating the game. Therefore, it is important to add enough new content to keep players. Content created by gamers can certainly help them do that. Therefore, it seems only a matter of time before more developers will follow Epic Games' example.

© The Content Exchange, source News