Gaming Layoffs Show AAA Developers’ Refusal to Support the Industry’s Future

Three months after paying $68.7 billion for Activision Blizzard, Microsoft is gutting its gaming workforce, with the biggest cuts coming to the newly acquired studio. In total, Microsoft laid off 1,900 employees on Thursday (eight percent of its gaming staff) across Activision Blizzard, Xbox, and ZeniMax. That makes this the largest layoff in gaming this year, and according to experts, the situation isn’t likely to get better any time soon.

“Today’s layoffs are an anticipated decision as acquisitions generally rely on the expectation to create more value at a lower cost,” Joost van Dreunen, a lecturer on the business of games at the NYU Stern School of Business, tells Inverse. “Despite its size, Xbox has to respond to current market conditions. As the overall industry readies for a tough year, it is not out of step with the rest of the market.”

The move from Microsoft means 5,800 games industry workers have been laid off this year, according to Kotaku, compared to just over 10,000 for all of 2023. Earlier this week, Riot Games also laid off 530 workers (the third-highest cut after Microsoft and Unity’s 1,800 layoffs earlier in January). While any layoffs are obviously deeply painful, the cuts at Microsoft and Riot also demonstrate an unnerving trend that’s likely to keep hurting the games industry as long as cuts continue.

“Layoffs in the video game industry are becoming the norm, even at companies that continue to deliver huge profits,” said Wayne Dayberry, Senior Quality Assurance Tester at ZeniMax and a member of the Communications Workers of America union. “Union representation can't always protect against layoffs, but through union representation and the bargaining process, video game workers can establish greater transparency and policies that put our needs first, including layoff protections. That’s why we want every video game worker to join our union.”

As a result of today’s layoffs, Activision Blizzard is canceling its previously announced survival game and “shifting some of the people working on it to one of several promising new projects Blizzard has in the early stages of development,” according to an internal memo shared with The Verge. Job postings for the survival game, which Blizzard had previously touted, are still up on the company website, listing salaries of $80,000 to more than $200,000. It’s not clear how much of the team is remaining at Blizzard. Microsoft did not respond to Inverse’s request for comment on the matter, but did verify the authenticity of the memos shared with The Verge.

As part of its layoffs, Riot also shuttered Riot Forge, a collaboration between the studio and a number of indie developers created in 2019 that produced games like Ruined King, The Mageseeker, and the upcoming Bandle Tale, all under the banner “A League of Legends Story.” Riot Forge was part of the company’s push to make more League spinoff games, and did not get much time to see those projects through before the shutdown announcement. Riot did not immediately respond to Inverse’s comment about the end of Riot Forge.

Both Activision Blizzard and Riot appear to be closing ranks around their proven successful franchises, leaving more experimental games behind. While that might make sense economically, it seems like a bad omen for the industry’s future.

Riot and Activision Blizzard are both companies with deep enough pockets to fund more experimental games (even more so after the latter joined Microsoft, a company that hit a $3 trillion valuation just a day ago). To see them both pulling back from those projects doesn’t just mean some potentially great games won’t ever see the light of day — though that is a loss in itself. More importantly, it means that developers have one less path into working for a major studio.

With Riot Forge, developers that had already made some excellent indie games were able to partner with one of the most well-known studios around for ambitious games with a massive potential audience. Projects like Activision Blizzard’s unnamed survival game could also serve as a way for developers to get work with a successful publisher outside of its existing mega-hits. The loss of those opportunities means fewer paths to a career for developers, especially those without the experience or even interest to work on massive games like World of Warcraft or League of Legends.

The effects of today’s layoffs are immediate and urgent to those affected, but in the long term, each layoff also hurts the industry as a whole. More developers end up competing for an ever-shrinking pool of jobs, and the jobs that are available are centered on a narrower range of games. As even companies with the ability to support unproven games choose to instead limit themselves to safer endeavors, it’s bound to leave the industry and medium of games poorer for it.