© Pexels/Tima Miroshnichenko
It's a real paradox. At first glance, the video game industry is doing wonderfully. According to projections by Newzoo analysts, the global market will generate growth of 2.6% year-on-year, to $187.7 billion.
The sector therefore seems to be in full swing, boosted by game sales which explode over one year (+7.4%) to $56.1 billion. In fact, there are many locomotives and we think of these numerous hits recorded throughout the year: Hogwarts Legacy: Hogwarts Legacy, The Legend of Zelda: Tears of the Kingdom, Baldur's Gate 3 , or even Starfield.
Why do studios lay off people?
But this improvement masks a dark reality for all workers in the video game industry. 2023 is indeed particularly violent on a social level. The site videogameslayoff.com has counted 6,100 job cuts to date, and the year is not over.
In detail, it is Unity, which has hit the headlines recently, which tops this dark ranking with 900 layoffs. The company is followed by Epic which announced 830 job cuts, just ahead of Amazon Games which separated 535 employees (mainly at Twitch). Next come Electronic Ars and the Swedish giant Embracer (375 and 296 positions). The list is still long, and 80 companies in all have chosen to let go of some of their employees.
How can we explain these layoffs? Our colleagues from 01Net rightly mention the end of the health crisis. Companies have been hiring heavily during the pandemic, and appear to be rebalancing as sector growth slows.
We must also mention inflation which impacts industry players as well as other economic sectors. Indeed, increases in interest rates practiced by central banks increase the cost of credit and slow down investment.
Similarly, the big studios face more modest-sized structures which come take market share from them. We think in particular FromSoftware which, with its excellent games, often does better than its rivals and imposes new quality standards with which it becomes difficult to align.
What to remember :
- The video game industry generates increasing revenues in 2023: $187.7 billion
- Paradoxically, it is also a year punctuated by numerous layoffs in the sector
- The causes identified are the rise in interest rates and a rebalancing after the numerous hirings made during the pandemic