The end of the layoffs tide?

It has been several years since the peak of the COVID-19 pandemic, but many industries are still feeling its aftermath. Aside from the apparent victims, such as real estate and tourism, the video game industry still feels the consequences of the pandemic and the imploded bubbles of AR/VR and Web3. Let’s examine what happened and whether the layoffs barrage is finally ending.

Riding the Storm

COVID-19 immediately crippled specific sectors of the economy but also boosted some others, like IT in general and video games in particular. Many investors became overenthusiastic about the growing number of isolated people sitting at home, thus giving them a bit more time and fewer opportunities to entertain themselves except by playing games. This wave coincided with the seemingly promising prospects of remote work and Zuckerberg’s Metaverse concept. Also, we all remember a now diminished hype for Web3 games with all the promises to revolutionize the ownership over game assets.

This wild mix of factors opened the floodgates for VCs and numerous other funds that saw lucrative opportunities in the tech sector. As it usually happens, the long-term market trends could have lived up to the expectations of rapid and infinite growth. With a typical significant lag between seed investments and the commercial launch of a game, we can still see the aftermath of overestimating the demand.

Oddly enough, despite all the hype around generative AI art, it had a non-existent impact on the layoffs. As I mentioned earlier, it has more cons than pros regarding real game development cases. Simply put, using AI can put you in serious legal jeopardy. Oh, and good luck editing its product. While there are some decent solutions like Leonardo.ai or Dungeon Alchemist, for the most part, generative art is no good for production and won’t be any good soon.

The Hard Landing

Thousands of game dev professionals lost their jobs in 2023 and the first half of 2024. If you want to learn more specific numbers, there is no better source than the living legend Amir Satvat, who monitors the industry's employment trends. Some industry experts claim that it was overkill and that in 2025, the big studios will hit the red STOP button. 

While most angry post-layoff posts on LinkedIn belong to Artists and Animators, Producers and Managers felt the aftermath, too. Large studios may need more PMs to manage co-development and work effectively with contractors.

The Not-So-Grim Near Future

As I mentioned in one of my previous articles, several sources, including BCG, believe that the industry will regain a healthy growth rate and that we are past the COVID-19 bubble aftermath. Also, AI is not whipping out concept artists, modelers, animators, or software engineers. 

The AR/VR/XR/MR market will slowly recover, pivoting to verified use cases instead of trying to reshape entertainment in its entirety. Only Web3 gaming studios will probably stay on the receiving end of relentless cuts, but only after another all-time high of Bitcoin sometime in 2025. 

By the way, if your studio fired too many experts and needs a hand with an upcoming project, we are always ready to help!