Xbox, Bungie, and More Is Facing Massive Layoffs

Is the gaming industry correcting itself? That is the big question as Xbox, Bungie, and more face mass layoffs. Just like the tech bubble of the early 2000s, many feel that there is a gaming bubble set to burst. While I disagree with this sentiment, I think a correction is overdue. Sadly, the cost of this correction will fall on the shoulders of the consumer. Over the last few years, video game prices have increased significantly. Here, I am not referring to the $10 increase but rather the in-game purchases, microtransactions, and deluxe additions. We are paying more money for games than we have ever paid before.

It is at least worth mentioning that triple-A titles are more expensive than ever before. Games stay in production for years on end, with titles like God Of War Ragnarok costing over $200 million to produce. Many studios are using this as an excuse for all the microtransactions and deluxe additions. Obviously, we know that this is a poor excuse for bad video game practices. Since I mentioned God Of War Ragnarok, I will use them in another example. While their budget was $200 million, they never used any bad business models.

They simply relied on sales to make their money back. There are many other examples, such as Elden Ring, Baldurs Gate, and Cyberpunk 2077. Studios are not trying to make costs back when they engage in bad practices, and they simply want to maximize profits. They do this because they serve investors instead of consumers. Studios are under pressure to reduce the next Fortnite or Fifa. Just like with movie studios, game studios are expected to grow forever. You can’t just generate 200 million. You need 200 billion.

Mass Layoffs Hit Xbox, Bungie, And Many More

One of the studios who came under the spotlight recently for studio lay-offs was Bungie. In what many call a tone-death tweet, Bungie boss Parsons tweeted, “Today is a sad day at Bungie as we say goodbye to colleagues who have all made a significant impact on our studio. What these exceptional individuals have contributed to our games and Bungie culture has been enormous and will continue to be a part of Bungie long into the future”.

It goes without saying, but this tweet went over as well as you might have expected. If you listen to the reason why the layoffs happen, it becomes even worse. Bungie reportedly told employees that there was a huge drop in interest for Destiny 2. This massive drop in players ultimately resulted in many firings. While it is being reported that Destiny 2 is suffering from poor sales, I am unsure of exactly how much money they have generated. One number that I do know is $3.5 billion. That is what Sony paid to acquire the studio. This goes back to my original point. Bungie is now at the mercy of a larger publisher who needs to perform for investors.

If studios do not generate enough money, they will take it from the employees as they see them as nothing more than an expense that needs to be cut when times are tough. Lay-offs are part of any job. If you sell a product and people are not buying it, you will find yourself without work. Sadly, in many cases like this, layoffs have nothing to do with not making money. It is all about not making all of the money.

The Xbox Bubble

Sony and Bungie is far from the only studio doing this. Another gaming publisher is also letting people go, and that is Xbox. While Microsoft has $70 billion to spend on Activision Blizzard, they do not have a few extra million to spend on their employee salaries. Earlier this year, Xbox’s parent company laid off 10000 employees. Many of them were part of Xbox Studios as well. Epic and Embracer group also recently had to let go of many employees. In the case of Embracer, some of the lay-offs were at least a bit more understanding. They had one big game, and it failed. After the Saints Row Reboot went nowhere, the studio had to shut down.

The direction of that game was always going to lead to the studio’s downfall. However, mergers leading to employees losing their jobs are always hard to watch. These game developers build up these studios. The reason Bungie is worth 3.5 billion is due to these employees. Once executives have made their money, the developers who built the company lose out on everything. This is why studios always face backlash when things like this happen. It is also never the executives that lose their jobs.

It is always the workers at the lowest level who suffer the most. All across the board in the gaming industry, we are seeing this happen more and more. I will, of course, mention once again that not all of these firings are for no reason. Studios have been over-extending, and the bubble has to burst. Many unknown entities are coming into the space in the hopes of making a fortune.

How The Gaming Bubble Will Burst

One brand that thought it could cash in on the gaming bubble was Imbracer Group. Only a few years ago, they came out of nowhere and decided to double down on gaming content. They spent almost 200 billion buying up studios. When they realized that game development was about more than just studios, thousands had to be laid off. While you can argue that companies like Sony and Microsoft also chased in on the gaming bubble, they came in at a time when gaming was still growing. In a lot of ways, they helped define a generation of gaming.

At least Sony did. Xbox is only now truly starting to leave its mark with game pass, changing the way we pay for games. Xbox is also busy hard at work building up a cloud-based console that will change how we play. Many studios, however, no longer want to take risks. They do not want to bank on video game sales alone, so they open the door to other bad practices. When fans catch on, they turn on the game, which then leads to publishers turning against studios.

All of this leads to game developers wanting to take less risk. Instead of coming up with new ideas, they revert back and rehash old ones. This, in return, leads to even worse sales. It is a cruel cycle, and no one truly wins. This can only stop when studios accept that they do not have to make hundreds of billions every year sucking the consumer dry. Sadly, we know this will never happen. If 1 billion is good, 100 billion is even better.

Conclusion

The gaming industry, as things stand, is still in a great state. Publishers like Xbox and Sony are doing better than ever before. While certain studios might be suffering, others are thriving. While I do see a correction happening in the future with the cost of games and even the duration of how long it takes to make them, ultimately, gaming will continue to grow.

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