The video game industry is facing a growing wave of layoffs and studio closures as developers brace for a potential recession. According to a new report from the 2024 Game Developers Conference (GDC) State of the Industry Survey, over a third of game developers said their studio had layoffs last year, while 56% worry there will be more layoffs at their workplace this year.
One Third of Developers Impacted By Layoffs in 2023
The GDC survey found that 35% of developers said their employer had layoffs in 2023. This lines up with recent high-profile layoffs at major studios like Microsoft, Sony, Amazon, and Electronic Arts.
Some key stats on 2023 game industry layoffs from the survey:
| % of Developers With Layoffs at Studio in 2023 | 35% |
|---|---|
| % Worried About Layoffs at Their Studio in 2024 | 56% |
| Most Common Reason for Layoffs | Cost Cutting (63%) |
Developers cited cost cutting and economic challenges as the top reasons driving these job cuts. With inflation high and fears of a recession growing, studios are looking to reduce costs wherever possible. This is hitting quality assurance and support teams especially hard.
While layoffs are common in the volatile video game industry, the current wave has reached an unusually high level according to industry analysts. The fear is these job losses could get even worse as the global economic picture deteriorates in 2024.
Generative AI Adding to Job Anxiety
On top of economic worries, developers are also concerned about the rise of generative AI tools like ChatGPT which can generate game art, code, and text.
The GDC survey found that 49% of developers are currently working at a studio that utilizes generative AI in some capacity. While many see promise in these tools to boost productivity, 51% also worry AI could lead to job loss in areas like programming, art creation, and game design.
Some studios have explored using AI tools to cut costs further during the layoff wave. For example, shortly after laying off 12 employees, UK studio Double Eleven announced it would test AI art creation tools to improve efficiency. This has stirred fears that AI could displace more human roles.
However, 62% of developers believe AI will not lead to significant job loss in the industry, as the unique creativity of humans is still highly valued. Many expect AI will simply change existing jobs rather than replace them outright. But the rapid advance of AI is adding more uncertainty on top of current economic instability.
Bracing For Lean Years Ahead
While video games have performed well financially during the pandemic, the industry is now facing strong economic headwinds. With inflation eating into household budgets for discretionary spending and fears of a prolonged recession, financial analysts predict weaker game sales over the next 2 years.
Major publishers are cutting costs across the board to brace for leaner times ahead. Hiring freezes, project delays, and further waves of layoffs are expected throughout 2024. Independent studios often suffer most during industry downturns, with studio closures spiking.
However, there is a silver lining seen in previous video game recessions – they often pave the way for a new wave of industry innovation and talent in the years after. The GDC survey found developers remain highly passionate about their work and the future of video games. Now the industry must weather the storm of economic volatility and technological disruption.
What Happens Next?
With cost cutting the central focus for most major publishers this year, developers will be watching nervously for signs of stability returning to the global economy. But with recession risks still heightened, there is fear the layoff waves could continue for some time.
AI promises to be a transformative new tool for game creation, but one that may displace some human jobs in the process. How studios balance AI implementation with workforce stability will be key in the years ahead.
For now, video game creators will keep adapting as best they can to the dual forces of economic and technological change reshaping their industry. Many lean years may still be ahead, but the interactive entertainment business has weathered past downturns and is likely to remain highly innovative and resilient, even if the road ahead looks challenging.
To err is human, but AI does it too. Whilst factual data is used in the production of these articles, the content is written entirely by AI. Double check any facts you intend to rely on with another source.
