Commissar SFLUFAN Posted February 13 Share Posted February 13 'I've Never Seen It This Bad:' Game Developers Explain the Huge Layoffs Hitting Riot, Epic, and More - IGN WWW.IGN.COM I spoke to over 40 game developers whose companies had been impacted by layoffs in the last year. They shared with me the explanations companies gave them for what was causing the sudden loss of their livelihood, but they also told me why those explanations didn’t always seem to match reality. Quote In August of last year, Ascendant Studios developer Aaron (name changed for anonymity) was ready to take a well-deserved victory lap. He had crunched hard with many of his colleagues in the final sprint to complete Ascendant’s debut game, Immortals of Aveum, but the team had finally done it. He attended a launch party in the Bay Area where he celebrated with his colleagues, some of whom he said had to pay partially out of pocket to make the trip. But while the event was supposed to be jubilant, there was an uneasy atmosphere: it seemed like Immortals of Aveum wasn’t performing especially well. At the party, developers kept asking leadership how the game was doing, only to be met with non-committal answers. A few weeks later, almost half of the studio – Aaron included – had been laid off, with managers citing Immortals of Aveum’s underperformance. Ascendant Studios was just one of numerous studios that has laid off a chunk of its workforce in the last year and a half as part of an ongoing trend of mass layoffs impacting studios large and small. There have been many attempts to answer the question of why exactly this is happening, with analysts, CEOs, and other industry experts weighing in on discussions trying to explain it. The commonly-cited villain was fairly straightforward: COVID-19. Take-Two CEO Strauss Zelnick actually put it quite effectively to us when we asked him about layoffs last November: "With regard to the industry, I do think people got a little fat and happy during the pandemic," he said. "I think there was a perception on the part of many that the music would never stop." Zelnick was stating a refrain we've heard elsewhere: the big surge in spending during the pandemic effectively tricked a lot of companies into overspending, overhiring, overestimating. Then, when games revenues leveled back out in 2022 or so as gamers left the house again, cuts had to be made. The ESA has touted this explanation, as has the IGDA. A Tencent business development director told NPR the same thing. It's a likely and understandable explanation given the havoc the pandemic wreaked everywhere. But it isn’t the entire story. Layoffs like the ones at Ascendant don’t fit in with the pandemic narrative. And with over 10,000 layoffs in 2023, and over 6,000 more in 2024, simply saying that companies got a little too eager during a global pandemic is starting to sound overly trite. Even executives are starting to sense they can’t rely on this explanation. In Riot Games’ public statement explaining the reasoning behind layoffs affecting 530 individuals, or 11% of all of Riot Games, Riot admitted that the decisions that led to these cuts were made long before the pandemic began: Since 2019, we’ve made a number of big bets across the company with the goal of making it better to be a player. We jumped headfirst into creating new experiences and broadening our portfolio, and grew quickly as we became a multi-game, multi-experience company — expanding our global footprint, changing our operating model, bringing in new talent to match our ambitions, and ultimately doubling the size of Riot in just a few years. Today, we’re a company without a sharp enough focus, and simply put, we have too many things underway. Some of the significant investments we’ve made aren’t paying off the way we expected them to. Our costs have grown to the point where they’re unsustainable, and we’ve left ourselves with no room for experimentation or failure – which is vital to a creative company like ours. All of this puts the core of our business at risk. In this letter, Riot publicly admitted a problem that's been quietly festering across the entire games industry: there’s something deeply wrong with how video game executives are choosing to spend their money, and rank and file developers keep paying the price for it. For this piece, I spoke to over 40 game developers whose companies had been impacted by layoffs in the last year. They shared with me the explanations companies gave them for what was causing the sudden loss of their livelihood, but they also told me why those explanations didn’t always seem to match reality. While the details in each story vary, almost all of them painted a picture of the games industry as an increasingly volatile environment fraught with high costs, growing risks, and increasing volatility. And often, developers say, those in charge of navigating that precarious environment have little regard for the hundreds of developers who pay the price when things go wrong. Quote Link to comment Share on other sites More sharing options...
Bacon Posted February 13 Share Posted February 13 Quote So why is the games industry undergoing a trend of mass layoffs -- According to the people impacted, there’s no simple answer. got it Quote Link to comment Share on other sites More sharing options...
AbsolutSurgen Posted February 13 Share Posted February 13 The Covid pandemic resulted in a huge spike in time spent on gaming -- because people were stuck in their homes. The industry overinvested, and now there are more games coming out than the demand justifies. Industry is now reacting to this by reducing investment. 1 Quote Link to comment Share on other sites More sharing options...
Kal-El814 Posted February 13 Share Posted February 13 It’s more than just COVID stuff, shit is wildly more expensive than it needs to be. Spider-Man 2 shouldn’t have cost 1/3 of a billion dollars while being 3X more expensive than the first game in a relatively short amount of time between them. That’s just not sustainable and there’s no way that money was spent on anything other than chasing increasingly diminishing terms, to say nothing of the fact that it still ended up being the buggiest AAA game I have ever played. Its success was perhaps inevitable to some extent but the extent of it was not, and that trajectory just isn’t sustainable. And you can’t layoff your way to continued profitability when your budget is $300M+. No doubt there’s fat to trim when it comes to actual jobs but at that scale it’s not just the number of employees. Quote Link to comment Share on other sites More sharing options...
Commissar SFLUFAN Posted February 14 Author Share Posted February 14 4 hours ago, Kal-El814 said: Spider-Man 2 shouldn’t have cost 1/3 of a billion dollars while being 3X more expensive than the first game in a relatively short amount of time between them. Which is exactly what said in one of the documents from the recent Insomniac leak: Quote These and other presentations provide a clear sense that Insomniac, despite its successes and the seeming resources of its parent company, is grappling with how to reverse the trend of ballooning blockbuster development costs. “We have to make future AAA franchise games for $350 million or less,” reads one slide from a “sustainable budgets” presentation earlier this year. “In today’s dollars, that’s like making [Spider-Man 2] for $215 million. That’s $65 million less than our [Spider-Man 2] budget.” Another slide puts the problem more starkly: “...is 3x the investment in [Spider-Man 2] evident to anyone who plays the game?” Speaking as someone who is playing Spider-Man 2 right now, I can definitely answer that question with "absolutely not in the least." Quote Link to comment Share on other sites More sharing options...
Kal-El814 Posted February 14 Share Posted February 14 1 hour ago, Commissar SFLUFAN said: Which is exactly what said in one of the documents from the recent Insomniac leak: Speaking as someone who is playing Spider-Man 2 right now, I can definitely answer that question with "absolutely not in the least." Spider-Man 2 is absolutely great... and its budget is completely batshit both in a vacuum and in comparison to the original game. Quote Link to comment Share on other sites More sharing options...
ShreddieMercury Posted February 14 Share Posted February 14 It's crazy to me how much more money is continually being poured into mainstream games when they are generally so homogeneous and unimaginative. If you look at the industry between say 2000-2010, it's like a completely different universe of diverse, interesting, and purely fun video games in the AAA space, delivered at a fraction of today's costs. I guess it's just the demand for better and better visuals at the cost of everything else? Surely that's unsustainable and will need to break at some point... right? 2 Quote Link to comment Share on other sites More sharing options...
best3444 Posted February 14 Share Posted February 14 12 hours ago, ShreddieMercury said: It's crazy to me how much more money is continually being poured into mainstream games when they are generally so homogeneous and unimaginative. If you look at the industry between say 2000-2010, it's like a completely different universe of diverse, interesting, and purely fun video games in the AAA space, delivered at a fraction of today's costs. I guess it's just the demand for better and better visuals at the cost of everything else? Surely that's unsustainable and will need to break at some point... right? I think you suffer from SEVERE nostalgia from your early days playing games. Games are fuckin amazing these days and are much more diverse and interesting than anything was in your nostalgic imagination. Graphics these days are just the cherry on top of amazing gameplay experiences. 1 Quote Link to comment Share on other sites More sharing options...
AbsolutSurgen Posted February 14 Share Posted February 14 19 hours ago, Kal-El814 said: It’s more than just COVID stuff, shit is wildly more expensive than it needs to be. Spider-Man 2 shouldn’t have cost 1/3 of a billion dollars while being 3X more expensive than the first game in a relatively short amount of time between them. That’s just not sustainable and there’s no way that money was spent on anything other than chasing increasingly diminishing terms, to say nothing of the fact that it still ended up being the buggiest AAA game I have ever played. Its success was perhaps inevitable to some extent but the extent of it was not, and that trajectory just isn’t sustainable. And you can’t layoff your way to continued profitability when your budget is $300M+. No doubt there’s fat to trim when it comes to actual jobs but at that scale it’s not just the number of employees. The only way to meaningfully reduce the development costs of games is to reduce the amount of people working on them. Yes, they need to reduce scope -- but that results in less people -- meaning layoffs. Quote Link to comment Share on other sites More sharing options...
Spawn_of_Apathy Posted February 14 Share Posted February 14 17 hours ago, ShreddieMercury said: It's crazy to me how much more money is continually being poured into mainstream games when they are generally so homogeneous and unimaginative. If you look at the industry between say 2000-2010, it's like a completely different universe of diverse, interesting, and purely fun video games in the AAA space, delivered at a fraction of today's costs. I guess it's just the demand for better and better visuals at the cost of everything else? Surely that's unsustainable and will need to break at some point... right? I think there are multiple factors and not every example of a game/studio succumbs to the same factors. I suspect AAA gaming is starting to have Hollywood style of accounting. Ie, the games aren’t really costing that much. They’re saying they cost that much for whatever tax/revenue/bonus/ etc schemes they have cooked up. Not that the game is really cheap to make, but the numbers are inflated a bit compared to generations past or even what an Indy developer might claim a game cost to make. Other factors could be stuff like that unless you’re reusing assets or purchasing assets, high fidelity assets take longer to make. Which has also ballooned the size of staff working on AAA games. Polyphony Digital says it takes them 270 days to model a car for GT7, when in GT1&2 it took 2 hours, and 2 weeks per car for GT3. All that time, money, and that hurts too if and when stuff eventually becomes cut content too. and I think the industry’s need for every game to have an insanely detailed, densely packed, full of action and activity open world for their games isn’t helping. I think making these massive game worlds vs having paired down, more linear level design ends up being much more work. More to have to optimize, more that can break everything especially, more that has to be done so it doesnt seem barren and lifeless and not worth exploring. A lot more factors because you cant control what the player sees, where they can go and when. Quote Link to comment Share on other sites More sharing options...
Remarkableriots Posted February 15 Share Posted February 15 Blackbird Interactive cuts staff again WWW.GAMESINDUSTRY.BIZ Vancouver-based Blackbird Interactive confirmed to GamesIndustry.biz today that it has laid off staff for the second ti… Quote Link to comment Share on other sites More sharing options...
skillzdadirecta Posted February 15 Share Posted February 15 10 hours ago, Spawn_of_Apathy said: I suspect AAA gaming is starting to have Hollywood style of accounting. Ie, the games aren’t really costing that much That's not how Hollywood accounting works. 1 Quote Link to comment Share on other sites More sharing options...
Spawn_of_Apathy Posted February 15 Share Posted February 15 5 hours ago, skillzdadirecta said: That's not how Hollywood accounting works. So youre telling me when Hollywood calculates the cost of overhead to factor into a movie’s budget theyre 100% honest? Like they never say… bill a production for their own movie in their own studio for the use of cameras and equipment that has already been paid for by past productions? Quote Link to comment Share on other sites More sharing options...
Kal-El814 Posted February 15 Share Posted February 15 15 hours ago, Spawn_of_Apathy said: I suspect AAA gaming is starting to have Hollywood style of accounting. Ie, the games aren’t really costing that much. They’re saying they cost that much for whatever tax/revenue/bonus/ etc schemes they have cooked up. Not that the game is really cheap to make, but the numbers are inflated a bit compared to generations past or even what an Indy developer might claim a game cost to make. Given that most of the information we have about budgets from big AAA games recently comes from leaked, internal documents, that seems pretty unlikely. Quote Link to comment Share on other sites More sharing options...
skillzdadirecta Posted February 15 Share Posted February 15 3 hours ago, Spawn_of_Apathy said: So youre telling me when Hollywood calculates the cost of overhead to factor into a movie’s budget theyre 100% honest? Like they never say… bill a production for their own movie in their own studio for the use of cameras and equipment that has already been paid for by past productions? I'm not saying they're 100% honest. A lot of times they downplay how much a project has gone overbudget to protect their jobs (producers and executives) and to project the illusion of profitability. Or they'll take the profits from a hit movie and "divide" them across a slate of other underperforming films in order to make a studio's slate seem more financially successful than it actually is. There's PLENTY of ways they get creative with accounting and it doesn't just boil down to ripping the studio (themselves) off. They have to show a profit and they can't do that by stealing from themselves. Disney for example has been... downplaying how much they've spent on Disney+ VS how much revenue it's generated for awhile now. Bunch of shareholders had to actually take them to court to get the numbers. The way you stated it in regards to videogame companies was an oversimplification of what acutally happens. That's all I was saying I'm not even sure what you're saying here regarding cameras and equipment... they bill the production for the costs of cameras, sets and equipment the studios owns at a RENTAL rate. Probably cheaper than the ongoing rate from outside the studio. A good friend of mine was a production accountant for HBO during the Game of Thrones years and her brother is an accountant at Disney. That shit is complicated as hell. Quote Link to comment Share on other sites More sharing options...
Remarkableriots Posted March 5 Share Posted March 5 Sony to lay off 900 PlayStation employees | CNN Business WWW.CNN.COM Paula Newton speaks to Christopher Dring, head of GamesIndustry.biz, about recent layoffs in the video games industry. Quote Link to comment Share on other sites More sharing options...
Remarkableriots Posted March 5 Share Posted March 5 Hollywood’s absolutely bizarre accounting tactics are under renewed scrutiny | CNN Business WWW.GOOGLE.COM “Forrest Gump” has never made a single penny for the studio that made it, despite selling over $300 million worth of tickets at the box office. “Return of the Jedi” was a... Quote One oft-cited example is the 1997 hit “Men In Black,” starring Tommy Lee Jones and Will Smith. The movie grossed nearly $600 million on a budget of just $90 million. It was such a box-office winner, the movie spawned three sequels. And yet Sony Pictures, the studio behind it, claims the film has never broken even. The movie’s screenwriter, Ed Solomon, has spoken out about the accounting shenanigans that make that possible. “The studios ARE losing money, just as they say,” he said recently in a deeply sarcastic tweet. “My recent Men in Black profit statement proves that the film, though having generated over $595 million in revenue, has actually *cost* Sony over $598 million. SO close, too: off by just .02%/yr.” Sony, Solomon says, is artificially keeping the movie in the red to avoid big payouts. “I think the profit statement is actually better science fiction than the film itself,” he joked in a 2019 tweet. Quote “There are a lot of different tricks,” said Stephen Glaeser, an associate professor of accounting at the University of North Carolina at Chapel Hill. But the most basic version of Hollywood accounting goes like this: A studio sets up a subsidiary for each movie it wants to make, and agrees to pay the actors based on that subsidiary’s profits. To actually make the movie, the subsidiary inevitably takes on expenses — crew wages, craft services, set design, props etc. When the movie comes out, the subsidiary brings in revenue from ticket sales. Like in any business, the studio takes the revenue, subtracts the costs, et voilà, there’s your profit (or loss). This is where it gets weird. If the movie-making subsidiary makes a profit, the studio then charges the subsidiary — as in, the little company the big company owns, operates, and entirely controls — fees for distribution, advertising, and whatever else, Glaeser told me. And, of course, the subsidiary “agrees” to the new fees. Because it must. The profits then go straight to the studio in the form of fee payments, so that, on paper, the subsidiary never makes any profit. But that feels a little absurd, doesn’t it? Why would a red-blooded American corporation not be interested in making a profit? Because actors and other creatives involved in making it have profit-sharing deals in their contracts. If there’s no profit, the studios don’t have to pay them out. Quote Link to comment Share on other sites More sharing options...
Remarkableriots Posted March 5 Share Posted March 5 How Hollywood Studios Manage to Officially Lose Money on Movies That Make a Billion Dollars WWW.TODAYIFOUNDOUT.COM One of our Patrons, DJ, asks: What’s the deal with Hollywood Accounting? Here’s a fun fact for you to mull over, despite having a clause in his contract that entitled... Quote Notable examples of this bastion of pencil pusher ingenuity include the Lord of the Rings trilogy, which New Line Cinema asserts was a “horrendous loss” for the studio despite it grossing some $3 billion worldwide in theaters off a combined budget of just $281 million, let alone all the money made after in DVD/Blu-Ray sales, streaming rights, games, and other merchandise. Moving on to Harry Potter and the Order of the Phoenix, this one apparently lost Warner Bros $167 million while simultaneously being one of the most successful films the studio has ever released, grossing just under a billion dollars. In yet another case, the 2002 surprise blockbuster My Big Fat Greek wedding managed to bring in $370 million (about $536 million) off a production budget of a mere $5 million, yet somehow managed to lose the studio $20 million… So, yes, they apparently lost four times the production budget itself. This means, if the studio is to be believed, they’d have been better off throwing the film in the trash after spending the $5 million for filming and producing the film, rather than earn their cut of that $370 million in ticket sales and all the revenue streams that came after. Quote Link to comment Share on other sites More sharing options...
Remarkableriots Posted March 9 Share Posted March 9 PlayStation-backed Deviation Games closes WWW.GAMESINDUSTRY.BIZ New AAA game developer Deviation Games is closing, the studio announced.It was formed in 2020 by Jason Blundell and Dav… Quote Link to comment Share on other sites More sharing options...
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