Why are thousands of video game workers losing their jobs?

“I had just woken up and I got an email that said, ‘We’re going to have a company-wide meeting’. I knew right away.”

James, not his real name, was visiting his family earlier this year when he saw the message.

“I started thinking about everything I was set to lose.”

He had worked as a game designer at one of the UK’s biggest video game studios for nearly a decade. It was a job he loved and had dreamt of since he was nine years old. But recently he had been worried.

All around him, friends in the gaming industry were being let go.

“My mind was racing, what could I do? I wasn’t going to be the only one job-seeking at the moment because there were so many layoffs. They all happened at the same time.”

He went to the meeting, where his worst fears were confirmed. The company’s chief executive said around 25% of people at the studio would be cut. James was one of them.

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“It was rough,” he said, shaking his head.

Gaming is an anxious world right now. There’s been more than 8,000 jobs cut globally since the start of this year and in March, the number of available jobs in the UK hit a record low, according to the report Games Jobs Live.

But in London, as the BAFTA Games Awards 2024 rolled around last week, gamers could just enjoy themselves.

It was a night of glitz and glam with a black-tie dress code. The red carpet was laid along London’s South Bank and hundreds of gaming’s elite turned out.

The team behind Baldur’s Gate 3, the dungeons and dragons hit that went on to scoop Best Game, wandered the carpet taking selfies.

Nadji Jeter, the actor who played Spiderman in the latest game version of the comics, had come to London for the first time for the event.

“Oh my God, I’m so nervous,” he told Sky News, before going on to win the leading role trophy for his performance.

Comedian Phil Wang, who was hosting the night, swooned over legends whose games he’d played as a child.

‘Seeing people I adore struggling is rough’

But the gaming world is tight-knit. Workers often have to move to new cities and towns for jobs, so colleagues can form a huge part of people’s social circles. The redundancies weren’t far from people’s minds.

“Seeing people in the industry that I adore, who work hard and are damn talented, seeing them struggling is really rough,” said Baldur’s Gate 3 narrator Amelia Tyler.

“I think we’ll pull ourselves out of it, but it’s going to take a while.”

Mass redundancies have hit the industry hard for the last two years. More than 10,500 people working in video games around the world lost their jobs in 2023. More than 8,500 jobs went in 2022.

People hoped things would improve in 2024 but four months into the year, another 8,000 jobs have gone, and the UK is far from immune.

‘So much institutional knowledge lost’

Around 1,000 people across the country have lost their jobs since the cull began, according to Ukie, the industry trade body. That means more than one in 30 people working in video games in the UK is affected.

Swen Vincke, the founder of the studio that made Baldur’s Gate 3, didn’t pull any punches.

“It’s a stupid thing to do. There’s so much institutional knowledge that’s being lost and it just doesn’t make sense because it’s a thriving industry.

“There are more and more people that play games, so you should cherish the developers that are working in it.”

He’s got a point. Over 40 million people regularly play video games in the UK alone, and the UK industry is growing – it’s now worth £7.82bn to the economy.

So what’s going on?

One expert, George Osborn, who writes the Video Games Industry Memo, said there are three problems at play; COVID, delays in publishing games, and the cost of living crisis.

“The video games industry has been hit by the COVID effect later than everyone else,” he said.

During COVID, when people were shut in their houses with nothing to do, video game sales soared. In just one year, the industry brought in 21% more money around the world, raking in £27.6bn more in 2020 than 2019, according to the global accounting firm PwC.

In response, the industry swelled. Games studios grew rapidly and hired more staff.

“That created a bubble in the industry and there was an overinvestment into games by investors who have since been burned because the market hadn’t been quite set,” said Osborn.

Lockdowns ended, people stopped buying

The lockdowns ended, people went back outside and they stopped buying as many games to fill their time.

Then there came the delays. At least 60 major games had their release dates delayed in 2021.

Most didn’t explain why but developers have since talked about the difficulty of working on these kinds of games remotely and in lockdown. When the games did start to get released, they flooded the market and made it harder for smaller games to get seen.

In 2023, blockbusters The Legend of Zelda: Tears of the Kingdom, Alan Wake 2, Resident Evil 4 and Super Mario Bros. Wonder all came out, selling millions of copies each. It was a good year for the big games but much harder for everyone else.

James, the developer who was made redundant, said there was an expectation from his bosses that sales would remain at the same level as during COVID.

“It felt to me like the industry is still growing. It just wasn’t growing as much as they would like it to.”

Like the rest of the world, gaming is also being hit by the cost of living crisis.

“Video game prices haven’t changed very much in the past five years,” said Osborn.

“That’s meant the cost of making games has gone up quite a lot while the market has softened, so even though the industry did really well last year, it wasn’t enough.”

Things might be looking up…

But there may be light at the end of the tunnel. Ukie has released figures that suggest the industry is growing again.

It hasn’t reached pandemic levels of growth, where double digits were the norm, but last year, 4.4% of value was added. Ukie’s chief executive Nick Poole, was keen to send an optimistic message.

“When you look at the way games are crossing over into other parts of our culture, what we’re seeing is an industry that’s come of age.”

And for James, there was good news too. Although he lost the job he had thought was stable, he has found a new studio to work at in a city where he has friends. For the first time ever, he asked about the company’s finances in his job interview.

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“Maybe I was a little bit naive but I started in this industry in a booming time, so every job felt secure, it was just about what they could offer you. Now it doesn’t feel the same,” he said.

Sam Lake, creator of Max Payne and Alan Wake, had some wisdom to share after over 30 years of work.

“I would like to be hopeful. In my experience, with all these things, it’s a pendulum swing. Things get worse and more troubled, or financially we struggle, but so far at least, we have always swung back.”

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