The absolute State of the games biz, 30/01/2025
Layoffs, generative AI dislike and funding thoughts dominate GDC industry report
GDC’s State of the Industry report provides a close look at what the heck is going on in games
Ubisoft studio closures top a tricky week for the embattled French publisher
Sniper Elite: Resistance fights to the top of the week’s releases
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Hello hello,
I’m kicking off proceedings with an update so efficient that people are calling it the DeepSeek of newsletter intros.
First, I was commissioned by the Playing for the Planet Alliance to write a series of posts reviewing half a decade of work by the organisation. The first and second posts are live here and here if you’d like to read (with a third due shortly).
Second, I also chatted with Arbuthnot Latham about my thoughts on what lies ahead in games in 2025 here. Given that these predictions were made before the end of 2024, do bear with me if some of them have been superseded by events…
Third, I’ll be in Brussels on Monday 10th February and Tuesday 11th February. If you’re in the European bubble and want to grab coffee or lunch, drop me an email.
Fourth, and finally, the first Debrief of 2025 is out tomorrow for VGIM Insiders with a brand new format to boot.
Gone is the three mini-essay newsletter you received last year.
In its place is a punchy five minute read that puts all of January’s biggest video games news stories, policy developments, market moving deals, deeply insightful data and cultural commentary in one accessible place.
If you’d like to receive The Debrief as well as other Insider perks like extra newsletter content, first access to events and discount on all VGIM stuff - including sponsorships - get 20% off membership here now.
Right, that’s the update over. Let’s go into a Big Read that has *gasps* slightly different formatting than usual.
The big read - The absolute State of the games biz
Developing knowledge: Last week saw the launch of Game Developer Conference’s (GDC) annual State of the Games Industry report. And after settling in for a deep read of it over the weekend, it paints a picture of a disrupted industry workforce seeking safe harbour after a tough year.
Lords of all they survey: As per usual, the report surveyed 3000 video games professionals working across a range of disciplines to find out how they work, what they think about a series of industry shaping trends and their overall vibe towards the sector.
America, f**k yeah!: Despite framing itself as a global report, and getting boffins in from Omdia to run the rule over its findings, the State of the Industry paper should really be called the States of the Industry paper given that 58% of its respondents are based in the United States (ho, ho, ho).
Choppy waters: But despite the comparative narrowness of the audience, the report remains one of the few bellwethers through which to measure industry morale. And while the precarious nature of the video games jobs market grabs the headlines, the paper shows how industry professionals are also having to adapt to the rise of generative AI, the poor health of live service games and an ever-changing funding landscape too.
Lay off the layoffs, will ya?
More than Decimated: As expected, a large chunk of games industry professionals reported that they were laid off last year. A little over one in ten (11%) of respondents to the State of the Industry survey were let go by their employers in the past 12 months. And another 4% reported that the studio they worked for closed during the period. Ouch.
Wider impact: But alongside those who were directly laid off, the State of the Industry survey showed how much of the sector was indirectly affected by the swathes of job losses. 47% of respondents reported that they had seen a colleague or team member in another department laid off, ensuring that the direct and indirect impact of layoffs hit well over half of the sector.
Where the axe fell: Narrative design was the discipline most affected by layoffs, with 19% of designers who responded to the survey reporting that they had fallen victim to cuts. Other fields that were badly affected included production and team management (16%), visual arts (16%) and programming and engineering (12%).
The numbers game: Interestingly, only 6% of people in Business and Finance reported being laid off in the past 12 months. Were they insulated from harm because they had to play a key role in delivering layoffs? Have they been retained to try to keep companies afloat in tough times? Or had they already fallen victim to the thousands of job cuts that affected the games biz in 2023? We can’t know.
Excuses, excuses: What we do know is that the main reasons provided by businesses for layoffs were economic issues. Of those laid off, 22% reported that their company said it was as a result of a restructure within the business, 18% due to declining revenue and 15% due to market changes.
Mistrust in the air: But those who were laid off didn’t necessarily agree with the reasons provided to them by their corporate overlords. A quarter of people who lost their jobs in the past 12 months blamed the end of the post-pandemic boom, while 13% of respondents suggested that managerial incompetence in the form of greed or overhiring was the cause of cuts. Yikes.
Reasons for concern: The result is a games industry workforce that is currently mistrustful of leadership. Despite swingeing cuts to headcounts across the sector, 58% of people surveyed remain concerned that more layoffs are in the pipeline. And given the job losses reported across the global industry over the past week, they’re unfortunately right to be worried.
The generative AI game
Demise of the robots: Given that mass games industry layoffs have coincided with the emergence of generative AI, you’d be forgiven for thinking that the games industry may have been an early victim of technological transformation. But despite games industry professionals expressing some serious misgivings over the controversial tech, they don’t blame it - yet - for causing job losses.
Negative perception: However, generative AI is getting an increasingly bad reputation amongst industry pros. In 2024’s State of the Industry report, 21% of respondents thought generative AI had a positive impact on games compared to 18% who believed it to be negative. In this year’s report, only 13% believe it’s having a positive effect on games compared to 30% who view it negatively. Eek.
Quick on the uptake: Interestingly, negative perception of generative AI has grown as more of the industry uses it. The majority of respondents to the survey reported that the technology is in use in their business (52%), with 36% of people admitting to using it within their personal work.
Dividing lines: But as with last year’s survey, there’s a crucial division in who is using generative AI. While developers, programmers and testers remain hesitant to plug into the tech, 51% of business and financial professionals, 41% of people working within production and 39% working in comms, marketing and community management admitting to dabbling in the generative arts.
Risky business: The cause of the divide appears to be the risk/reward calculus around the use of the tech. For professionals whose work relies on the generic production of simple content that follows a broadly agreed repeatable pattern - such as a business exec sending cold emails or a community manager being supported by a chatbot to screen questions - generative AI tools can fulfil a role in their workflow. But for developers and creatives who need to precisely use tools to achieve carefully authored ends (and avoid engulfing a company in legal risk around issues like IP infringement), generative AI is just too imprecise and risky to use effectively.
Whoop, whoop it’s the sound of policy: This is seen in the reluctance of games businesses to adopt policies to support the tech’s widespread use in their companies. A full 20% of respondents work in studios that either only allow them to use approved generative AI tools in their workflow (4%) or expressly forbid them from using them in any form (16%). In comparison, just 9% of workers in the games industry are mandated to use them in their day-to-day work by the powers that be.
Jobs lot: This may explain why few industry professionals responded to State of the Industry with the suggestion that generative AI whipped away their jobs. And given that the report says that those who were laid off were “no more likely” to blame generative AI for layoffs than those who kept their roles, it seems professional scepticism around generative AI in games extends to its impact on the jobs market.
On live service support?
Unalive services: So where does the industry think that there are issues in the games sector? The miserable state of live service games was one area that was front and centre in the minds of many games industry professionals.
Saturation point: While some developers extolled the virtues of live service games as a source of consistent revenue and a sphere in which to iterate on designs, most were scathing. State of the Industry reported widespread concerns amongst professionals that a combination of market oversaturation, increasing competition and overly predatory monetisation practices were taking the wind out of live service sails - dragging the industry down with it.
Bringing your Triple A game: A big reason why live service game failures are worrying to industry professionals is that they are one of the biggest sources of employment in the industry. Overall, 16% of respondents to the survey said they worked on such a game in the past 12 months. But that number more than doubled to 33% for those working in the Triple A games space.
The harder they fall: This leads to an obvious question: if a large number of people in heavily staffed Triple A games businesses are working on live service games, then what happens when releases like like Suicide Squad: Kill the Justice League, Concord and XDefiant fail? The answer is that jobs come tumbling down, as evidenced by a 17% year-on-year decrease in the number of respondents reporting they worked in a Triple A company in the past 12 months (down from 18% to 15%).
Platform battles: Unfortunately, State of the Industry doesn’t dig too much further into the topic. But with Newzoo reporting last year that a handful of games already swallow up more than 25% of playtime on console and PC, it looks increasingly hard for new live service games to enter the market successfully. And if that’s the case, it’ll be hard for games companies to staff up as extensively as they have done so - leaving talent to find other ways to work in the business.
Funding the fun
Easy access finance?: At the moment, one of the principal ways that ex-employees are looking to secure their place in games is by setting up their own businesses. But where are they getting their cash to run them from? For now, the answer appears to be by leaning into comparatively more secure, more reliable but smaller sources of cash - likely at the cost of superscaling ambition.
Not capitalising: A mistrust of over-growth can be seen in respondent attitudes towards the effectiveness of VC funding. Of the five most common funding sources used by respondents to try to fund their game projects, 32% deemed VC cash as “not at all” useful due to perceived cultural misalignments between the expectation of investors and most games creators (note: something that’s not massively surprising, given that there were a lot of indie developers in the survey sample).
Press publishers: Publishing cash was also viewed with some scepticism, with 25% also claiming it was “not at all useful”. But given that 36% of respondents said that it was a “very successful” source of funding - the second highest total recorded for the five most popular ways of scoring cash - dissatisfaction with publishing money is likely to reflect the difficulty in securing it rather than the actual value of its support.
DIY Game Dev: Perhaps unsurprisingly, the main sources of funding that developers approved of were those that they had at least some control of. Self-funding had the joint highest upside of preferred funding routes, with 89% of those who chose the option saying it provided some success or was very successful for their business. But given that there is comparatively little risk in directing a small pile of your own cash towards a project, we should treat that positivity with a pinch of salt.
Together, forever: Arguably the best blend of fun and funding came from working on co-development projects. As with self-funding, 89% of professionals said that taking cash to work on a project in partnership with another business was somewhat successful or very successful for them. But given that 37% of respondents chose the latter option - the highest “very successful” total of all five popular funding sources - co-dev appears to offer developers a winning blend of success and security.
States of play: Lastly, it is worth noting the popularity of government funding for supporting games projects. 79% of those who qualified for government grants found them to be at least somewhat successful in securing funding for their projects. And with 31% of respondents saying that government money was “very successful” in keeping their business going, it is clear that public cash in whatever size it comes gives the industry a useful foundation to build from.
Wrapping up
Uncertainty continues: These aren’t the only findings from the state of the industry survey, of course. It also offers an interesting look at what industry professionals think of DEI initiatives (they like them), which engines they use to do their jobs and more detail about the business models their companies use.
Safety first: But across the parts of the report I explored, the big conclusion I drew is that industry workers are craving safety and security. If 2024 was a year where people and businesses fought to survive, then it looks like 2025 is a year where professionals are hoping for quiet recuperation.
Shifting sands: The question is whether business leaders attempting to navigate shifts in the wider industry landscape - and challenging economic circumstances in their own companies - are able to offer that to a battered and bruised workforce.
News in brief
Ubisoft layoffs strike again: Ubisoft has been hit by a fresh wave of layoffs. The company has announced the closure of its studio in Leamington Spa and a reduction in headcount in its offices in Dusseldorf, Stockholm and Newcastle as it continues to fight for its financial life. This follows the company’s decision to close its San Francisco studio after the failure of XDefiant last year.
Savvy DLC investment?: In almost certainly related news, Ubisoft has issued a non-denial over reports that it is considering creating a tranche of DLC for Assassin’s Creed Mirage with the support of Saudi government backed Savvy Games. Ubisoft declined to comment on the matter when approached by Eurogamer, after reports emerged at the weekend over a possible partnership. I’m keeping an eye on this one…
Computer says no: Dr Tommy Thompson from AI and Games has delivered his verdict on the UK’s consultation on copyright changes regarding artificial intelligence and described it as “a bad deal for creatives”. Tommy outlines how the current consultation risks handing the likes of OpenAI carte blanche to scrape content from games, before criticising policy makers for credulously believing that such businesses shouldn’t have to stump up cash for plundering other company’s intellectual property. Well worth a read.
Half a billion dollars baby: Microsoft generated nearly half a billion dollars of revenue across its games business in December 2024, making it the biggest games publisher in the world. Data from Ampere Analysis reported in Video Games Chronicle suggests that Call of Duty’s cross platform success was the main driver behind Microsoft’s massive month, with Indiana Jones and The Great Circle chipping in to help it along the way.
Assuming direct controllers: The EU is planning to ban the sale of video game hardware to Russia to prevent it from repurposing devices for use in its war against Ukraine, according to The Financial Times. The major games consoles haven’t been available for sale in the country since the early days of the conflict in 2022. But by formally banning sales of any games kit to the territory, the EU hopes to stem the flow of any hardware that can be adapted for use in war (e.g. controllers that power drones) into the territory.
Moving on
Hiroki Totoki is now sole CEO of Sony Interactive Entertainment. Herman Hulst remains CEO of PlayStation Studios…Nika Pari Nour has been handed the role of Senior Vice President of International Business Development at Savvy Games…David Burroughs has been promoted to Senior Marketing Manager at nDreams…Issy van der Velde has taken up the role of News Writer at GamesRadar…Mark Feldman is the new SVP of Corporate Development and Strategic Partnerships at Unity…And David Haddad, President of Warner Bros’ games division, is stepping down after 12 years at the top…
Jobs ahoy
The Entertainment Software Association of Canada is hiring a Director, Policy & Government Relations for anyone who fancies living it up in Ontario…Epic Games is seeking a Knowledge Manager, which is a sensational job title…Supercell wants a new Director of Strategic Partnerships to work out of its London office…Naughty Dog is looking for a Senior Communications Manager in Santa Monica…And Gameloft Brisbane is recruiting a Creative Agency Lead…
Events and conferences
Yorkshire Games Fest, Bradford - 10th-25th February
DICE Summit, Las Vegas - 11th-13th February
Guildford Games Summit, Guildford - 14th February
devcomm leadership summit, Lisbon - 19th-21st February
Game Developers Conference, San Francisco - 17th-21st March
Games of the week
Sniper Elite: Resistance - Pop Nazi heads with long distance headshots in the latest entry in Rebellion’s sniping series.
Orcs Must Die! Deathtrap - A tower defence game featuring orcs and co-op third person shooting action? Go on…
Phantom Brave: The Lost Hero - A game that features a “stirring story about the bonds between people and phantoms, the souls of the dead.” Apparently.
Before you go…
Does appearing on the front cover of one of EA’s Madden games spell disaster for your professional career?
How Stuff Works has dropped an almost absurdly detailed guide to the so-called “Madden Curse” which has allegedly afflicted many of the game’s cover stars since the late 1990s.