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An estimated 45,000 video game jobs have been cut between 2022 and mid-2025. That number represents entire studios shuttered, projects canceled mid-development, and decades of institutional knowledge walking out the door with severance. Early 2024 was particularly brutal, with 8,619 jobs lost in the first quarter alone, the highest quarterly number in gaming history. According to the Game Developers Conference's 2025 State of the Game Industry report, 41% of game developers were impacted by layoffs in 2024, either by being laid off themselves or having cuts affect their teams. The troubling thing is the wave hasn't crested; it's still building.
The COVID Boom Created an Unsustainable Bubble
Gaming exploded during lockdown. People stuck at home spent money on games like never before, and investors noticed. Companies went on hiring sprees, expanding teams to meet what looked like permanent growth. Except it wasn't permanent. Once people could leave their houses again, that spending plateaued.
Embracer Group is the poster child for this disaster. They went from 15,701 employees to 7,873, cutting more than half their workforce. They closed or divested 44 studios and reduced their game projects by 80. That's not restructuring, that's dismantling.
AAA Development Costs Have Become Untenable
Some major franchises now exceed $500 million when you factor in marketing. When budgets get that high, publishers can't afford to take risks or justify large teams working on anything experimental. Everything has to be a safe bet, which means sequels and live-service games designed to maximize ongoing revenue.
Sony closed Firewalk Studios after their live-service game Concord flopped, and within a matter of weeks, 170 people were laid off. They also shut down Neon Koi, cutting another 40 employees. That's how little margin for error exists now.
You're either spending $300 million on a blockbuster that needs to sell tens of millions of copies, or you're making indie games with tiny budgets. Studios that used to make interesting, moderately-budgeted games can't find funding because investors want guaranteed hits or cheap experiments, nothing in between.
Players Are Feeling the Impact Directly
When experienced developers get laid off, games suffer. Institutional knowledge matters, and you can't just swap out people like interchangeable parts and expect the same results.
Game delays and cancellations are becoming routine. Projects get killed mid-development when studios realize they can't afford to finish them or when new management decides they're not profitable enough.
The aggressive monetization everyone's complaining about is partially driven by these cost pressures. Tekken 8 director Katsuhiro Harada had to explain on Twitter that without in-game purchases, the game couldn't survive financially. The disconnect between what games cost to make and what players expect to pay is widening, and developers are caught in the middle.
Studios Are Closing Faster Than They're Opening
Legendary studios are not immune. Arkane Austin, makers of Prey and the Dishonored series, is defunct. Volition, the Saints Row developers, and Riot Forge, which was publishing interesting experimental games are both gone. Ready at Dawn, the studio behind The Order: 1886 and several excellent VR titles has also been disbanded.
Smaller studios and indie teams are getting hit too, though they don't make headlines. Early layoffs concentrated in North America, specifically California and the Pacific Northwest where major studios cluster.
Now we're seeing cuts across Europe, significant reductions in Asia, studios closing in emerging markets that were supposed to be the industry's future. When middleware and engine companies start contracting, that affects everyone building games on their platforms.
The Industry Keeps Pretending It's Temporary
Company statements always frame layoffs as necessary restructuring, one-time events to realign priorities. The reality is that these alleged one-time events are ongoing contractions dressed up in corporate language about strategic focus and operational efficiency.
Newzoo’s Global Games Market Report shows the industry earned $187.7 billion in 2024, up 2.1% from 2023’s $184 billion. Revenues are projected to reach $188.8 billion in 2025, a 3.4% year-over-year increase. That's still growth, just not the explosive growth investors expected. The industry isn't dying by any stretch of the imagination. Companies are cutting staff not because they're failing, but because they overextended during an unsustainable boom and now they're correcting.
[Unionization efforts are increasing], with 57% of GDC survey respondents saying the industry should unionize. Only 5% are actually in unions, though. Without collective bargaining power, individual developers have no leverage when companies decide to cut costs. The whole ecosystem is contracting, and workers are bearing the cost.
