The Video Games Collapse is Here…

The Video Games Collapse is Here…

AI-Generated Summary

The Western games industry is facing a crisis, highlighted by widespread layoffs and studio closures, particularly at Xbox. Microsoft has cut 9,000 jobs, including 6,000 in gaming over two years, leading to the cancellation of at least five games. Studios like The Initiative (Perfect Dark), Turn 10 (Forza), and Zenimax have been heavily impacted, with even cash cow companies like King (Candy Crush) seeing layoffs. The industry’s shift towards live services, Game Pass, and AI tools, combined with unsustainable growth expectations, has created instability. This trend, driven by publicly traded companies’ pursuit of infinite profit, threatens the future of game development, as talent may abandon the industry due to lack of job security, risking a collapse in creativity and innovation.

📜 Full Transcript

The Western games business is basically collapsing. I’ve talked a lot on the channel about the video game crash and how it’s basically happening. But if you needed any more proof that the system just doesn’t work anymore, it’s the latest headlines over at Xbox that really confirm it. Microsoft laid off about 4% of their workforce, which is 9,000 people, many of which were over at Xbox. But if we want to focus on the gaming side of things, which to keep it in perspective, remember Microsoft and how much they care about Xbox is really up in the air doesn’t seem like too much honestly. But just talking about Xbox, in the last 2 years, we’ve seen over 6,000 people lose their jobs. This latest series of layoffs doesn’t come as a surprise. This just comes as the standard for what is happening over at Xbox, but also across the gaming industry, just a little bit more concentrated on a lot of Western studios. And yes, you guessed it, publicly traded companies. At least five games that we know of have been cancelled as a result of these layoffs. And that’s pretty bad because not only will those games never see the light of day, but we’ll never get to play them. And the people who were making them have all of their work, I guess, is now nothing. But to me, one of the most important parts about the entire debacle is that a lot of the layoffs have happened in places that you wouldn’t expect. I think that normally we would assume that smaller scale projects, indie games, or more experimental things would be the ones that were harmed. And to be fair, the insistence on smaller teams that Microsoft has had after trying to buy every single studio that was available and consolidate everything is one of the very few highlights of Xbox in the last 7 to 8 years. But that isn’t where the layoffs are happening. It’s not over at Compulsion Games or at Inexile or at Double Fine. No, it’s at places like The Initiative, the studio that was created basically to make Perfect Dark, the first quadruple AAA studio. Turn 10, the team responsible for Forza, which has lost 50% of its team. And also, it seems possible that Forza is just not a thing anymore. Halo Studios has suffered Zenamax. Even King, the makers of Candy Crush, which are just a cash cow from the reports we’ve seen, have suffered over 200 layoffs. And yes, even Call of Duty studios have seen a lot of their employees now gone. And this is all coming at a time when Xbox and Microsoft’s strategy around gaming seems to be shifting rapidly in a market that is changing just as quickly. It seems that Xbox isn’t really a brand or in anything or a box anymore, and it’s more just trending towards Windows 11. With the current rumor mill spinning that Phil Spencer will leave after launching the next console which will be a Windows 11p powered console meaning that Microsoft isn’t getting out of the video game sector but they are indeed transitioning to a new multi-platform thing just I guess just supporting Windows as an operating system that you can play games on. With so much of the industry in what feels like a freef fall, the news of the last two years of layoffs over at Xbox are a harbinger of things to come. And in my opinion, they highlight a much, much bigger problem for the future of games. This isn’t just the video game market crashing today. This isn’t just about the pursuit of infinite profit and live services. This isn’t about any of that at this point. things go a lot deeper and they present problems that are just almost impossible to fix without very very considerable change. So, hi, I’m Mug and if you’re new here, welcome. And if you’re not new here, welcome back. You are looking fantastic. I just had to say it and that’s great to see because even when the news is dire, you got to look the best you can, keep our chin up and keep moving forward. And that’s what we’re going to do today. We’re going to look at these layoffs. We’re going to look at the surface news, all of the headlines in case you missed them. And if you didn’t miss them, you can check the timestamps down below because I think we need to talk about something that a lot of people aren’t talking about when it comes to the future of employment and just the ability to make video games. Let’s get into it. All right, so the big headlines and cancellations that have happened over at Xbox are pretty much as follows. Perfect Dark and The Initiative have just disappeared now. That entire studio has been shuttered. There have been layoffs at Rare, including the cancellation of Ever Wild, their very long development project, I believe, since 2014, and the departure of Greg Males, which was a director over on Banjo Kazoui, as well as Sea of Thieves. Forza seems to have just been canned completely. Zenamax Online Studios has seen the cancellation of Project Blackbird, a game that many people have said was really good, even if it is a live service. There’s really good live services sometimes, rarely, but they do exist. But that was the team from Elder Scrolls Online having their own take on a different sort of game, as well as a bunch of Call of Duty studios and of course, as I mentioned before, King and also Blizzard with Warcraft Rumble being put into maintenance mode. The other very interesting cancellation is Romero Games nexterson shooter. That being the studio founded by George Romero, the very famous level designer all the way back from Doom, which put out a kind of mediocre game, I think around 2017. But then they worked on two campaigns for Doom Remastered among some other stuff. And that even ended up in the Nightdive Studios version of Doom. And people were kind of excited to see that Romero and his studio were putting out just excellently designed firstperson shooter levels and hopefully their big project was going to carry that over and be something to be excited for. Turns out that Microsoft was publishing and funding that project and Romero met with Xbox just the day before the layoffs happened. The next day he found out that there was no longer a deal there. It is very bad and I don’t know how I’m supposed to say it anymore, but people keep losing their jobs in game development. Studios keep closing and it seems just harder and harder for people to have a stable job and projects to come out. And yes, a lot of that has to do with the infinite growth and the competition and even things like Game Pass affecting expectations and sales of things with Game Pass probably being the only reason that Microsoft is not doing any layoffs over at these smaller studios because they probably want to keep a pretty diverse and constant amount of games out on Game Pass, including those smaller titles to kind of present to people new stuff all the time. And look, Game Pass is a very complicated topic and one that in my personal opinion, while it is a benefit to the customer right now, is a pretty slippery slope that we have yet to see exactly what it’s going to do in the future, how it’s going to work. But it doesn’t it doesn’t look very good. But it is looking at the entirety of the video game landscape, not just Xbox, but also things like Electronic Arts and Ubisoft and PlayStation, that we get a very clear vision, a very solid picture of just how bad things currently are. the video game bubble that really exploded somewhere around 2017 and then went into overdrive during the pandemic and the promise of infinite growth and just being the biggest thing in entertainment capable of producing amounts of money that you could only dream of accelerated every single company into a world where they started developing more and more games and aiming for every game to have return on investment that was not possible. thinking that everything they were doing was going to give them Genchin Impact money or something. And it wasn’t just the live service bubble popping. It’s the entire games industry bubble popping. It’s prices rising and cost of living rising and people having different priorities with their free time and where they spend their money. All combined with the fact that video games are becoming less accessible to people mostly because all of them are demanding all of your time and all of your money. And that is because that promise of infinite growth and ridiculous return on investment can’t be fulfilled. But now that those promises have been made, cuts have to be done. And different avenues need to be found when it comes to reporting that much growth, which Microsoft seems convinced is going to be the $86 billion that they are investing this year into artificial intelligence development tools, which I’m sure is going to go very, very well. Let me be clear here. I know that some people out there believe that artificial intelligence for game development will actually save games because it will allow smaller groups of people to get better work done. And I just wanted to remind people that we as gamers, we’re the bunch of people that complain that games are on Unreal Engine 5. We spot the same asset or the same just vibe of a game and we look at it and we’re like, “Oh, that’s an Unreal Engine game.” And we get kind of mad about it. Just wait until everything is designed with the same AI tools. how quickly people are going to look at every game and just hate it. But these are all just ways that the big companies are trying to find more money. They are digging for gold. And the problem is that for that gold to exist, you need people’s time and money. And it seems that the river has gone dry and that customer taste is going in a different direction. and how much the customer is just willing to be treated like garbage over and over again has changed as time has gone on. And before we really jump into the doom and gloom section of this news, some of the harsher things that have happened, I always like to remind people this doesn’t mean video games are going anywhere. This means that the companies that have promised their shareholders infinite growth, the companies that are there exclusively to make money, the companies whose infrastructure isn’t designed to be sustainable cannot survive. The companies that are out there with much more logical growth plans or the companies that are just looking to stay stable are probably going to be fine. companies that just want to make more money from every game they sell than what it cost for them to develop it. Those will continue to be successful as long as they put out good games. And a lot of them are really trying to and are doing so. We have great games all of the time. Some of them coming from Xbox, but Xbox being the beast that it is has to report certain profits that aren’t those smaller single player games that can be sustainable. No, they have this grand vision. They have Game Pass. They have to make a ton of money, similar to other companies like EA and Ubisoft. And so, we turn to a new crop, a new generation of companies that can afford to just be smaller in scale, to propose a project with a set budget, and they just need to make more than that back. The problem is, will that happen? The elephant in the room for me with this entire thing is that I don’t know if there’s going to be people who want to make games anymore. And in case you hadn’t figured it out, if if we don’t have people to come up with great games and great ideas and people to work on it and execute it down to the smallest detail, we don’t get more video games. And that sucks because then we don’t have new cooler video games to play. And sure, while indies are thriving, there is a lot of problems with that idea and with that as a sustainable business model as well. And most people don’t want to set out and create their unique vision by themselves or with a team of three friends. Most people go to school, study something specific that they like doing, that they’re good at, and they want to contribute to a project. And I do believe that most people who go into game development do it because they want to make games, not because they want to own a Ferrari. So, picture this. You’re a person that’s studying something regarding game development. And as you’re studying, the only news that you ever hear is that the people in the best performing studios, the people who work making Call of Duty, don’t know if the following day they will have a job. Because that is, according to a lot of insider reports, how a lot of people found out. There wasn’t even an email that went out to say, “Hey, uh, you’re fired.” No, they just woke up and they had a ping on Slack and they were locked out of their corporate accounts and couldn’t get into the building and you’re over there comfortably studying with all the passion in your heart to go work at a studio for whatever to make models for guns in Call of Duty to be an artist on the next perfect dark to be on the engineering side of Forza to make the engineering of the cars as realistic as possible. And the only thing that you hear from the people that are there is that they have no safety. No guarantee that they have a job tomorrow. And sure, you want to work on the thing that you’re passionate about. You want to make video games, and that’s awesome. But you also probably want to afford rent and not end up homeless. You probably want to have a comfortable enough life that allows you to maybe even form a family or, god forbid, buy a property. have a mortgage. And the truth is that this industry doesn’t allow for that life anymore for the people who are there at every level working on it. And sure, I would love to believe that the people who have been fired are all truly redundant people who did nothing and just wasted resources, but we know that’s not true. We know that a lot of it are just the soldiers, are the people going in every day and turning every little knob and working together to make something incredible that’s going to make a ton of money, but more importantly is going to make a lot of people happy. Also, they can be substituted by AI or outsourced to a different country. And I already know some people are going to say, well, they got paid for the time they were there and they probably have a decent severance plan and they’ll get back on their feet. But is that true anymore? Those people, maybe they have 6 months to find a job where they still have some economic stability. Maybe in those 6 months, where else are they going to find a job in an industry that just has more and more layoffs day after day? And sure, some people will say, well, if you are truly that good, you will find a job elsewhere. But at this point, being good doesn’t matter cuz you’re going to find a job elsewhere at a place that is less safe than the one you were just fired from. And that’s just going to be the top 1% of those people. So, let’s head back to that initial question. If you were right now studying to work in gamedev, would you not pivot to pretty much anything else? How would you feel confident that you’re making a good decision by stepping into this sector when no job is guaranteed and the quality of your life will suffer from that? When all you hear from people in it are stories that might as well be nightmares. How are we fostering a future where more and more people wish to work in games and are emboldened and just have these great ideas that they want to put forward so that we can play amazing stuff when there is no path to safety and guarantees and sustainability in a lot of it. And listen, it’s not everywhere. A lot of places don’t do that, but a lot of the largest ones right now do. And normally those large ones can afford to take on the biggest most impressive projects at least before because they have that safety net and because they could offer that safety net to talent to gather it together and do something incredible. And now they have become companies that can’t risk anything because they need to make money back just to still fire people. And what’s sad about that is that when it comes to funding and publishing of larger projects, of actually giving people a chance and accumulating the resources, the talent necessary to make things, they just can’t do that anymore. And we’re going to have to turn to other places. And unfortunately, I don’t think we like a lot of those places cuz they’re mostly Tencent, Qatar, and Saudi Arabia, which have been spending ridiculous amounts of money into gaming. Hey, look, at least somebody’s funding games, and I’m not going to delve into it. I I have been uh studying on the subject for a while now. I’ll come back with my findings in the future regarding a lot of those investments, but it’s iffy. And it comes back to that monopolistic mentality of just concentrating all of the power and all of the money that goes into games into a very small group that could then eventually just turn it into whatever they want. And I don’t think any of us want that. But where else are you going to turn if you have a great idea, a great group of people that want to make it and no funding when Xbox isn’t going to do it? EA isn’t going to do it. A lot of the Asian and especially the Japanese publishers are still pretty scared to do it. They’re branching out slowly, but they are just now finding their footing of doing just a traditional business model for their games again, which they were smart to pivot to. Talking of companies like Capcom or Square Enix, but there is so much uncertainty that I’d be surprised if the next generation wants to work in games. I wouldn’t be surprised if everybody studying things adjacent to games or with the goal for games just says, “I’m going to do something else.” How is that not describing almost a complete collapse of video games? If there’s nobody there to make them, how is that ever going to be an industry? At the end of the day though, games will continue and great studios will appear and make great games and hopefully things will shake out positively eventually, but action needs to be taken and we need more awareness of just how severe this problem is and how difficult it is to solve. And these companies need to be held accountable for what they’re doing. And we as customers are capable of that accountability by not supporting them. And while I’m no longer as worried as I once was that having PlayStation kind of dominate the home console market would be bad for everything, mostly because I feel like the entire landscape is shifting and it’s very healthily divided between PC/ Windows machines or Steam OS machines. Mobile, Nintendo is taking up a big amount of the pie as well and PlayStation. I still think that the situation with Xbox is a curious one as to where we’re headed in the future. But it doesn’t bode well for what is the overall future of the industry because at the bottom level, it is about people and giving them what they need to make great games. To end this video though, my heart goes out to every person that lost their job this last week over at Xbox. I hope it’s clear from the video that I’m pretty aware from friends, from insiders, from people who tell me things that the situation is really bad and that the grand majority of you do not deserve this and you just had your life turned completely upside down. I know that it can sound like empty platitudes, but I hope you land on your feet and you get to do what you love once again. Don’t give up. Video games are beautiful and if you wanted to make a fantastic game, I hope you get to and I hope I get to play it. To everybody else watching, sure, go out there and enjoy some great video games. Just keep in mind that direction we’re heading and the video game crash, it’s not something that’s inevitable anymore. It’s something that’s actively happening. It’s just accelerating every day. A special thanks to the