- 2 days ago
Layoffs continue to spread across the gaming industry, and it's no longer just Microsoft's Xbox division making headlines.
This time, 1047 Games, the developer behind Splitgate, has reportedly conducted another round of layoffs, raising even more questions about the future of AAA development, rising budgets, and the live-service business model.
In this video, I discuss why layoffs are affecting studios of every size, whether blockbuster game budgets have become unsustainable, and what publishers may need to change to avoid repeating the same cycle.
Do you think the gaming industry needs a major reset, or are these layoffs simply part of a changing market?
Let me know your thoughts in the comments!
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https://www.patreon.com/cw/JamesSchierer
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Game On!
This time, 1047 Games, the developer behind Splitgate, has reportedly conducted another round of layoffs, raising even more questions about the future of AAA development, rising budgets, and the live-service business model.
In this video, I discuss why layoffs are affecting studios of every size, whether blockbuster game budgets have become unsustainable, and what publishers may need to change to avoid repeating the same cycle.
Do you think the gaming industry needs a major reset, or are these layoffs simply part of a changing market?
Let me know your thoughts in the comments!
🎮 Support the channel on Patreon:
https://www.patreon.com/cw/JamesSchierer
If you enjoy gaming news, industry discussions, editorials, and retrospectives, be sure to Like, Subscribe, and turn on notifications so you never miss a video.
Game On!
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GamingTranscript
00:00Gaming industry layoffs continue as developers face growing uncertainty.
00:04While Microsoft's Xbox restructuring has dominated recent gaming headlines,
00:09layoffs continue to impact studios across the entire industry.
00:12From major publishers to smaller independent developers,
00:16companies are cutting staff as they attempt to manage rising development costs,
00:20changing consumer habits, and uncertain financial returns.
00:23The latest example comes from 1047 Games,
00:27the studio behind the popular arena shooter Splitgate,
00:30which has reportedly conducted another round of layoffs
00:32as part of ongoing efforts to adjust its operations.
00:36Another studio hit by industry-wide cuts.
00:401047 Games joins a growing list of developers
00:43affected by workforce reductions over the past several years.
00:46The studio gained attention with the original Splitgate,
00:49a free-to-play multiplayer shooter that combined traditional arena combat
00:53with portal-based gameplay.
00:55The game's success led to significant investment
00:58and the development of Splitgate 2,
01:01which aimed to expand on the original's foundation.
01:04However, like many studios attempting to compete in today's crowded gaming market,
01:081047 Games has faced challenges maintaining momentum
01:12while managing the costs associated with modern game development.
01:16The latest layoffs highlight the workforce reductions
01:19are not limited to major corporations like Microsoft, Sony, or Electronic Arts.
01:23Smaller studios are also being forced to re-evaluate their plans and budgets.
01:29The AAA development problem.
01:31The continuing layoffs have reignited debate
01:34over whether the current AAA gaming model is sustainable.
01:38Honestly, I don't think it is.
01:40Not when you've got games that have hundreds of millions of dollars as a budget.
01:44Modern blockbuster games require enormous investments,
01:48with development budgets often reaching hundreds of millions of dollars
01:51before marketing expenses are even considered.
01:54See?
01:55While successful releases can generate massive profits,
01:58the risk has increased significantly.
02:00A game can sell millions of copies and still fail to meet a publisher's expectations
02:05if it does not recover its escalating production cost.
02:08This pressure has encouraged companies to pursue safer strategies,
02:12including sequels, established franchises, remakes, and live service games
02:17designed to generate long-term revenue.
02:20The live service gamble.
02:22The rest of live service gaming has also changed how publishers approach development.
02:26Yeah, everybody thinks live service gaming is going to be their golden goose.
02:30Companies have invested heavily in games designed to keep players engaged for years
02:34through regular updates, seasonal content, and in-game purchases.
02:39However, the market has become increasingly difficult to break into.
02:43Players often dedicate most of their time to a small number of successful games,
02:47making it harder for new live service titles to attract and retain audiences.
02:51I gotta stop right there.
02:54It's not always successful games, I don't think.
02:59100% of the time, it's just what people stick to.
03:02And let me explain.
03:05Let me use myself, for example.
03:09I have a Sega CD.
03:11I have Sewer Shark in my Sega CD.
03:13That was a pack-in game for the Sega CD.
03:17But most people would not say that game is a success,
03:23or is even liked by many people.
03:25It has a small crowd of people who like playing that game,
03:31myself included.
03:31But, you know, since that's not a successful game,
03:37and while the field might be small people who do enjoy playing it,
03:43it shows that not everyone sticks to successful games,
03:46because successful games, that also varies in definition to every different person.
03:54What you might consider successful, someone else might consider a failure.
03:59Another one, before they, Splatterhouse.
04:04You know, I don't think anyone would say Splatterhouse was a success,
04:08but that game was still good.
04:11You know, and most of the team at NatGo was let go after Splatterhouse came out,
04:18because of how poorly it performed.
04:20But that doesn't mean the game was bad.
04:23But, you know, that's still a game that I enjoyed playing when it came out,
04:27in 2012 or whatever year it was.
04:31So, you know, this whole thing about people sticking to successful games,
04:34that's such a broad term.
04:37You know, anyone can say anything was successful.
04:40And like I said, there's two games there that weren't successful,
04:44either later on, either when it first came out or later on.
04:48But they still have either a niche following or even smaller than a niche following
04:53of people that will still play them.
04:56Now, you're probably saying, well, he was talking about most players.
04:59Yeah, but there's also, just because it's a niche following or smaller than that,
05:03doesn't mean there's people that, you know,
05:08doesn't mean that only successful games that were deemed a success
05:12when they first came out are the only ones people play.
05:15That's the point I'm trying to make.
05:21So, yeah, the failure of several high-profile projects has caused publishers
05:25to reconsider whether chasing the next major online hit is worth the financial risk.
05:31Developers question the future.
05:33Many developers and industry analysts believe the current rate of layoffs
05:37reflects deeper problems within the gaming business.
05:40The pandemic era boom created unrealistic expectations
05:46as companies expanded teams and invested heavily to meet increased demand.
05:52As players' spending returned to more normal levels,
05:56many studios found themselves with larger workforces and higher operating costs.
06:01The result has admitted a difficult adjustment period,
06:04with employees often facing the consequence of decisions made at the corporate level.
06:09A changing industry.
06:11Despite the changes, the gaming industry remains one of the largest entertainment markets in the world.
06:17Successful releases continue to generate billions of dollars,
06:20independent developers continue finding audiences,
06:23and new technologies are creating opportunities for innovation.
06:27However, the current environment suggests that publishers may need to rethink how games are funded and developed.
06:33Lower risk projects, more realistic budgets, definitely that one,
06:37and sustainable development schedules could become increasingly important
06:41as companies attempt to avoid the cycle of rapid expansion followed by mass layoffs.
06:46What comes next?
06:48The layoffs affecting Xbox, 1047 games, and countless other studios
06:53raise larger questions about the future of game development.
06:57Are modern AAA budgets simply too high?
07:00Yes.
07:01Has the industry become too dependent on blockbuster franchises and live service models?
07:06Yes.
07:07Can publishers find a balance between profitability
07:09and supporting the talented developers who create these games?
07:13I don't know if they will, but they could.
07:17For now, the industry remains in a period of transition.
07:19As companies continue adjusting to a post-pandemic market,
07:23one thing is clear.
07:24The challenges facing game developers extend far beyond any single publisher or platform.
07:31So, yes.
07:33Modern AAA budgets are definitely too high.
07:36If you create a game,
07:39just think about this.
07:41If you create a game
07:44and it sells millions of copies
07:47and it still fails,
07:50you have to rethink
07:53how much was spent on that game.
07:55Maybe it should have been broken up into two, three, four, five games
07:59to mitigate costs or lower costs.
08:03That way you only make part one,
08:04that way you only make part one,
08:06and part two only gets made if part one is a success.
08:11I mean, you probably wouldn't expect me to say that
08:17because Bloodstone 007 for PS3 and Xbox 360,
08:21I love that game,
08:23but we're never going to see the sequel
08:26to finish, to wrap up the story that started in that game
08:29because Bloodstone 007 didn't perform well enough.
08:32Again, another game that I enjoyed playing
08:36start to finish
08:37that wasn't a success.
08:44So, you know,
08:45but if you're making a game
08:47and you got like a $400, $500, $600 million budget,
08:54that's not going to be sustainable
08:56because then you're thinking,
08:58okay, well, we got to sell, you know,
08:59we got to sell 10, 20 million copies.
09:05Right there, that means, no,
09:07your project is doomed for failure.
09:10So, yeah, definitely budgets are too high.
09:16Me and Dr. Games 101 talked about this with Concord
09:18when we heard the budget was $400 million.
09:22I was like, all right,
09:23how much of that money is going to blow?
09:24How much of that money is going to strippers?
09:26How much did people actually work on that game
09:30and not just enjoy the blow and strippers
09:32that were obvious,
09:34that were probably in the office
09:35waiting for the development team?
09:38Yeah, because Concord, $400 million,
09:42that was double,
09:43that was almost double the budget of Grand Theft Auto V.
09:46And Grand Theft Auto V had one of the biggest budgets
09:49in video games that people had ever seen
09:52or heard about at that time,
09:55ranging anywhere from $165 million to $250 million.
10:02So Concord comes along
10:03and they have a budget of $400 million
10:07and it looks like the game was barely worked on at all.
10:12And you cannot tell me,
10:14I don't even believe $400,000 of work went into Concord.
10:21So that's my thought on that.
10:24Has the industry become too dependent
10:26on blockbuster franchises and live service models?
10:30When it comes to live service models,
10:32it's not dependent on them.
10:34Live service models is companies want to make games
10:37so they can continue getting revenue
10:39for months and years after the game comes out
10:43and everyone thinks and everyone says,
10:46look at Fortnite,
10:47look at Apex Legends,
10:48look at PUBG.
10:49You know, these games,
10:50they continue to bring in money year after year,
10:53although Fortnite's had its own problems
10:56in 2025.
10:58And people are like,
10:59we can make our own
11:00and continue to get money.
11:02those games offered something
11:06that wasn't widely available before then.
11:09Making a Fortnite clone
11:11or Apex Legends clone
11:13or a PUBG clone
11:15or whatever
11:16and then expecting that to be your golden goose
11:19is,
11:20that's,
11:21again,
11:21I think that's a recipe for failure.
11:24You're setting yourself up for failure
11:26at that point.
11:27Um,
11:29and,
11:29you know,
11:30live service games are,
11:32don't forget when Sony said that,
11:34like,
11:34they were going to start,
11:35uh,
11:35they wanted to release
11:3610 different live service games
11:38like over the next 10 years
11:40starting in 2025
11:41and then they canceled like five of them
11:44before people even knew
11:45what the concept was going to be.
11:47It's like,
11:48how many people can,
11:50can even afford five
11:51to spend money
11:52on five different live service games,
11:54let alone 10?
11:56Uh,
11:57and then,
11:58and,
11:59uh,
11:59also,
12:00what are these live service games
12:01that you're creating,
12:02offering,
12:03that no other game offers
12:04that people want?
12:07No one ever answered that question.
12:09Um,
12:10so,
12:10I don't think it's live,
12:12I don't think it's dependent
12:13on live service games.
12:14I think people,
12:16um,
12:16just,
12:17or,
12:18or,
12:18um,
12:19not even developers,
12:20but executives,
12:21see it as,
12:22uh,
12:23low work,
12:24massive profits.
12:26Low work,
12:26high profits.
12:28Because people are just going to keep spending
12:30and spending and spending.
12:32Yeah,
12:33well,
12:33for people to keep spending
12:34and spending and spending,
12:35they have to have,
12:36A,
12:37have a reason to be able to spend.
12:39B,
12:39make sure they can still keep their lights on
12:41and keep,
12:43you know,
12:43food in their fridge
12:45before they spend on your game.
12:49So,
12:50you know,
12:50I,
12:50I think too many people have figured,
12:53you know,
12:53live service would be a way to,
12:55uh,
12:57keep revenue coming in no matter what.
12:59And it's like,
13:00no,
13:01that's,
13:01to keep revenue coming in
13:03and make a live service game a success,
13:05it's like winning the lottery.
13:07Yeah,
13:08sure,
13:08people won the lottery.
13:09Sure,
13:10people won Powerball.
13:11That doesn't mean you are.
13:14So,
13:15I think that's the problem
13:17with live service games.
13:18As far as,
13:19um,
13:21blockbuster franchises
13:22becoming reliant on that,
13:25yeah,
13:26but I also think there's some laziness in that too.
13:29Uh,
13:29Crash Bandicoot 4 did not work out too well.
13:31Despite having three previous games,
13:34I don't know how well Crash Bandicoot 3 was,
13:36I never got to play that,
13:37but I do have the first two on PlayStation.
13:39PlayStation.
13:40So,
13:41um,
13:41and what happened,
13:43how Crash Bandicoot 4 performed,
13:45that killed what was going to be Crash 5.
13:48Uh,
13:49that killed,
13:49um,
13:50so,
13:51you know,
13:51people think,
13:52I think,
13:53uh,
13:54one similarity between both types of games is,
13:56whether it's sequels or live service,
13:59people think,
14:00oh,
14:00it's going to succeed no matter what.
14:03You know,
14:04uh,
14:04people love Crash Bandicoot,
14:06people love Spiral the Dragon,
14:08people love,
14:10um,
14:11I'm trying to think of,
14:12of,
14:13uh,
14:14ongoing game franchises,
14:16not previous,
14:16not ones that have ended.
14:18You know,
14:19people love this,
14:20people love that,
14:21they're going to buy it no matter what.
14:24No.
14:25Um,
14:26that's not going to happen.
14:28Um,
14:29and live service games,
14:30people think,
14:31oh,
14:31well,
14:32people love live service games,
14:33so they'll love ours.
14:34No.
14:35Look at Fortnite.
14:36People love Fortnite.
14:38And they're having problems,
14:40and had to cut staff.
14:41So,
14:43if they're having problems,
14:44what makes you think you're going to be,
14:46come in,
14:47and make your live service game a success?
14:50I think it's people thinking those,
14:53uh,
14:54those,
14:54um,
14:56options are the only available ones for success.
15:02But they do it,
15:03uh,
15:04but they think,
15:04just,
15:06uh,
15:06just because they,
15:07um,
15:08if they go with one of those,
15:09they're going to,
15:10uh,
15:10they can be as lazy as they want.
15:12And I'm talking about executives here.
15:14Who cares?
15:15Just put it,
15:17just put it,
15:18make a game.
15:19Uh,
15:20who cares if it works?
15:21Put it,
15:21make it over,
15:23um,
15:24about a popular franchise,
15:26and it'll sell.
15:27Yeah,
15:28that works so great for Suicide Squad.
15:29Kill the Justice League.
15:30Need I say more?
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