Examining the unfortunate trend of reductions in workforce across the games industry. Are recent layoffs an ominous sign of more pain to come? What does this mean for the employment landscape in gaming more broadly?
Anyone who has worked in or followed the games industry closely knows that layoffs are an unfortunate fact of life in our business. Though gaming was largely able to avoid the COVID-induced layoffs experienced by so many tech companies in 2020, recent months have not been as favorable. Lately, headcount reductions have touched nearly all sectors of the industry — from developers to publishers, engines to adtech, gaming-adjacent Big Tech companies to crypto startups, and many others in between.
Hit-driven businesses with sometimes-lumpy revenue streams can be difficult to plan headcount against. This occasionally leads to hiring organizations staffing up before their games can justify the added expense. When KPIs come back below forecast or macroeconomic conditions take a turn for the worse, headcount reductions are sometimes the result. This is especially true for venture-backed games businesses that are expected to meaningfully scale at a rapid pace.
One might reasonably argue that many of the companies impacted by layoffs were already struggling in one way or another. Of the ten downsizing organizations represented in the chart above, the five publicly traded companies (AppLovin, Playtika, Netflix, Unity, and Skillz) have seen their stocks drop by an average of 61% YTD. A sixth (Jam City), previously announced its intention to go public via SPAC, but ultimately withdrew in July of last year due to “current market conditions”. Immutable’s governance token, Immutable X, has also tumbled during the crypto winter, down roughly 82% YTD.
Yet layoffs only capture some of the current employment picture in gaming.
Note: Since the original publication of this piece in Naavik Digest, a number of additional industry layoffs have taken place, including massive reductions at Tencent and Snap.
For a running tracker of games industry layoffs, check out this Twitter thread…
