On a May morning in Rhode Island two years ago, a reporter for the Providence Journal stood outside the doors of 38 Studios, the video game company formed by baseball player Curt Schilling.
As employees walked into work, the reporter asked if they knew why they werenât getting paid. For a few 38 staffers, this was news. They werenât getting paid? Really? Was this some sort of mistake? A clerical error? The end of the world? What the hell was going on?
Within the next week, Schilling would tell his staff they didnât have to come into work anymore, and by the end of May, 38 Studios would be gone. Employees all had to find new jobs, while a dejected, bankrupt Schilling found himself entangled in lawsuits that carry on even today.
Over the past few years, weâve heard a litany of gloomy stories like that one. THQ going bankrupt. Disney shutting down LucasArts. Major studios like Irrational (BioShock), Junction Point (Epic Mickey), and Team Bondi (L.A. Noire) closing. Waves of layoffs at independent developers big and small. Even mega-publishers like Electronic Arts and Activision regularly downsize, shutting down studios and laying off staff on what seems to be a cyclical basis. EAâs headcount, for example, dropped from 9,300 in March 2013 to 8,300 in March 2014, according to SEC filings, and though we donât know exactly how many people they hired or fired in the past year, the headlines have been grim.
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And it happens all the time. Just last week we saw big layoffs at Rock Band creator Harmonix and a total shutdown at Mythic, the longrunning studio best known for developing Dark Age of Camelot. Today there were layoffs at EVE developer CCP. Every other day it seems like thereâs a new story about game companies showing their employees the door. Estimates from the website GameJobWatch peg 2013âs layoff count at over 3,400, and that leaves out job losses that werenât reported by the press.
Yet, paradoxically, the video game industry is booming. Americans spent $21.53 billion on games and hardware last year, according to the Entertainment Software Association, and sales of the new-gen PS4 and Xbox One have exceeded most punditsâ expectations.
So why are layoffs such a common occurrence? Why are so many video game studios closing? Why do we hear so many stories about layoff cycles and âreorganizationsâ that leave even the most successful developers out of jobs? Why does it feel like the people who make video games are always on the hook?
Over the past few weeks, Iâve been in touch with some 50 people who have worked in various fields of game development, from QA to publishing. Speaking under condition of anonymity in the interest of protecting their careers, these developers and publishers told me stories about their experiences in what has become one of the most volatile industries around.
âLayoffs are more than just losing a job; theyâre gaining a mountain of uncertainty, stress and financial concerns,â one developer told me. âI have moved my family more than seven times over the last 16 years, across the country and up and down the west coast. Iâm a pro at living with very few material possessions, as I grew tired of lugging them around. As you can imagine all those moves put an enormous stress on relationships, both personal and professional. Your circle of immediate friends shrinks to zero with every move.â
âIf you havenât been there yourself,â said another developer, âitâs hard to explain how it feels to suddenly have no real idea how youâre going to pay for gas, or rent, or food or any of the other things youâve taken for granted since getting a ârealâ job.â
âIn general I wish there was a lot more job security in this industry, and a focus on allowing actual lives to be lived for employees,â a third developer said in an e-mail. âLaying off near-entire teams simply because projects end is MESSED UP.â
Why does this happen so often?
Say you work for a video game studio. You and your team have just released a new game, and youâre damned proud of what youâve just put out. Itâs not perfect, but you did the best you could do with the budget and time constraints you had, and now youâre excited to take a nice long vacation.
One day, you get called into a meeting. The company has to cut costs and will be âreducing headcount.â Youâalong with 20 other peopleâare no longer employed. This wasnât for incompetence, or negligence, or anything else that you could control. You did nothing wrong. Your name just happened to be on the wrong list at the wrong time.
Get drinks with someone who works in the video game industry and youâre bound to hear at least one story like this. In gaming, layoffs are routine.
âThe ideal situation for a big studio is to have multiple projects running at once so that team members can cycle on and off as needed,â said Holden Link, a game developer who runs the layoff-tracking website GameJobsWatch. âEvery time one project ships, the next one should be âramping up.â The âseasonal layoffsâ happen when things in that cycle donât go as planned. Maybe one of the projects got cancelled. Maybe it simply got delayed. Any change of plans like that can lead to layoffs.â
For an independent studio with no big financial backers, poor planning or just bad luck can leave the people in charge unable to pay their staff.
Take the case of Ready At Dawn, the video game studio working on the upcoming PlayStation 4 game The Order: 1866 Though the studio had found some success making God of War games for the PSP, they had trouble convincing publishers to buy their other prototypes, according to a person who worked there. And in July of 2010, as the studio finished off God of War: Ghost of Sparta and prepared to move onto The Order, the folks at Ready At Dawn laid off 13 peopleâonly to re-fill those same positions back six months later. (Ready At Dawn declined to comment for this article.)
Itâs common for publishers to not want to pay for developers who arenât needed, and the ex-RAD employee says that was the case here. Without Sonyâs checks, Ready At Dawn couldnât afford to keep paying those people during pre-production. Months later, when The Order: 1866 entered full production, Sonyâs budget allowed Ready At Dawn to hire back for those same positions.
âItâs weirdly common to hear about people getting laid off from the same company more than onceâi.e., they get laid off, rehired, and laid off again in a span of two or three years, often without a different job in between,â said Link. âThose scenarios are a vivid illustration of these kind of layoffsâthe company didnât need someone for a few months, then decided they needed them full time again until something else went wrong.â
Some developers have grown resentful of publishers because of these kind of arrangements.
âItâs just business to [publishers],â said an ex-Ready at Dawn employee. âItâs really impersonal, and they just want to put a price tag on pre-production. The same thing happens for the end of the project. You can always see concept artists get really worried towards the end, like, âWhen are we going to sign a DLC contract?'â
A deadlineâs coming upâŠ
In the video game industry, layoffs usually hit either A) after a game is finished; or B) once a game is cancelled. Reason B at least makes logical sense: it stands that if a company no longer has funds to make a game, theyâll no longer be able to afford the staff who were working on it.
But why do so many studios bring down the axe when a game is completed and everyone should be celebrating?
The problem in big-budget game development, developers say, is over-saturation. In order to maximize sales, a publisher will often set a hard release date for a game. In order to hit all the deadlines and make that date, a development studio will often hire as many people as possible. Once the game is done, a studio could find itself bigger than it can ever really afford to be.
âIn the console industry, every year [is] a grind to get ready for the Christmas season, or to some other release date,â said one person who has worked for several major publishers. âSince hitting dates is top priority, thereâs always over-hiring in order to make sure the work gets done.â
What about the big guys?
Though the major publishers are publicly-traded companies with massive bank accounts, even top dogs like EA and Activision let go of staff on a regular basis.
Priority number one for public companies is keeping shareholders happy, which means showing big numbers on their earnings reports every quarter. When those spreadsheets start looking sickly, a publisher can save money by cutting one of their biggest costs: people. (The average yearly salary for game developers, according to a Gamasutra study, was $84,000 in 2013. That means firing ten people could save a big publisher $840,000 per year, not counting whatever they save on benefits and other expenses.)
These cuts are often coupled with robotic corporate-speak like âshifting resourcesâ and âlowering expenses.â One person who worked at an EA studio during a major wave of layoffs said he was stunned hearing the language in EAâs most recent financial report.
âIt was probably one of the most heartbreaking things I had ever experienced,â that ex-EA employee said. âWhen Blake Jorgenson, EAâs CFO, spoke out at the fiscal year reports and said, âWhile navigating through a year of tremendous change in the industry, which included a challenging console transition, we were able to exceed revenue guidance, lower our operating expenses, double operating cash flows and invest in new products and services for the future,â I barfed a little in my mouth because that bit regarding lowering operating expenses is corporate PR talk for axing studios and employees.â
Though itâs easy to think of publishers as big heartless corporations, several former EA employees noted that the company made efforts to give new, relocated jobs to people who were laid off. âI donât think thereâs a 100% amazing way to end somebodyâs employment,â said one person who worked at EA, âbut I do believe that EA went much further than they had to in helping the outgoing employees.â
Ex-EA staff say the company would offer âabove industry standardâ severance practices and often try to get laid-off employees positions in their other studios. âThere was normally a genuine attempt to help former employees find employment either within another part of EA or elsewhere,â said another person who worked for the publisher. EA declined to comment for this article.
Activision, the mega-publisher behind Call of Duty and Skylanders, grew by 200 employees from 2012 to 2013, jumping in headcount from 6,700 to 6,900, according to their SEC filings. This growth comes despite layoffs at the Activision-owned Treyarch among other studios in 2013.
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Finding a new job
Developer hires donât often make Kotaku headlines, but itâd be unfair to talk about layoffs without mentioning that game studios are frequently employing new people. Studio websites are always full of listings for positions of varying levels and backgrounds, and it seems like there are always companies looking to staff up for their next big game.
When Take-Two shut down the Boston-based Irrational Games earlier this year, for example, they held a big job fair, and recruiters from all around the country came to hunt down new talent. Ex-Irrational employees found new work at studios like Blizzard (Irvine, CA), 343 (Seattle, WA), Arkane (Austin, TX), and various other development companies across the world.
But for many developers, a life of constant relocation just isnât practical. How many peopleâespecially those with familiesâcan just uproot and move across the country every time someone above them decides that layoffs are necessary?
Over the past few weeks, many developers have told me stories about packing up their lives and moving across the country, or struggling for months while looking for a new opportunity after âroutineâ layoffs. For some, ditching the dream of making video games has been the only practical option.
âLet me tell you,â said one former AAA developer who has switched careers, âa honeymoon is much more fun when you know that when you get back, youâre going home to a job and not to an unemployment check.â
Not every game developer who has moved to another field is happy with the career shift, of course. One quality assurance tester who has been laid off from two different gaming companies told me heâs now reviewing content for an adult entertainment website, and miserable about it.
âThis is really not what I want to do,â that person said. âThere is me and another QA games tester and between us we have over 12 years QA games experience but we watch porn all day.â
One high-ranking employee at a major publisher told me he doesnât expect to see the current status quo change without some sort of miraculous shift in both studio management and publisher expectations.
âPart of the reason is studio heads and even publishers donât wish to accept that the current âboxedâ/premium model of developmentâwhere the perceived need to engage in a technological arms race with their peers occupies as much time as creativity in executionârailroads them towards having to wield the axe as a game ships,â that person said in an e-mail.
âBecause thereâs so much money tied up, hitting dates to hopefully land in a favorable spot and recoup their investment becomes paramount. That in turn necessitates crunch, which spawns a bunch of challenges in itself.â
This cycle of over-hiring staff just to fire them later isnât just toxic for them and their families. Imagine youâre a game developer, and youâre crunchingâworking 14 to 16-hour daysâfor a video game studio that you know could axe you as soon as the game is done. How much incentive do you really have to give it all your best effort? Will you really care if that game turns out to be any good? Are you really going to be able to make great art with the cloud of layoffs hanging over your head?
âItâs an unacceptable state of affairs where a studio can have a bona fide hit and then need to lay people offâsomething that increasingly appears to be the status quo,â said the employee of a major publisher.
âIndie development may not be the cure-all some people believe, but itâs hopefully driving a more pragmatic approach to using more off the shelf tools and some (very) polished packages to make great games vs always needing to build your own edifice from scratch.â
Some studios do things differentlyâŠ
Over the past few years, some game companies have figured out how to avoid layoff cycles. One Ubisoft Montreal employee reached out to assure me that in ten years at the studio, heâs never seen layoffs. (He estimated that the studio employs a whopping 2,700 people, which by Ubisoftâs criteria is enough to make about three games.)
Other companies have also been open about their emphasis on staff retainment, like the studio 5th Cell, whose executives have bragged about hiring employees âfor life.â Employees of some game studios, like Civilization developer Firaxis Games, have nothing but positive things to say about their experiences there, though even Firaxis, like just about every other developer on the planet, has gone through waves of layoffs. (A 2010 statement from Firaxis parent company Take-Two was as robotic as it gets: âFiraxis has realigned its development resources in order to streamline its development process, reduce costs and maximize the overall performance the studio.â)
One big exception is Nintendoâthe folks behind Mario and Zelda never go through layoffs, and CEO Satoru Iwataâs explanation in a 2013 Q&A makes you wonder why other companies havenât followed their lead (emphasis mine):
Regarding why we have not reduced the number of the personnel, it is true that our business has its ups and downs every few years, and of course, our ideal situation is to make a profit even in the low periods, return these profits to investors and maintain a high share price. I believe we should continue working toward this ideal. If we reduce the number of employees for better short-term financial results, however, employee morale will decrease, and I sincerely doubt employees who fear that they may be laid off will be able to develop software titles that could impress people around the world.
I believe we can become profitable with the current business structure in consideration of exchange rate trends and popularization of our platforms in the future. We should of course cut unnecessary costs and pursue efficient business operations. I also know that some employers publicize their restructuring plan to improve their financial performance by letting a number of their employees go, but at Nintendo, employees make valuable contributions in their respective fields, so I believe that laying off a group of employees will not help to strengthen Nintendoâs business in the long run.
UPDATE (6/6/2014): Sadly, just one day after we published this article, Nintendo announced that theyâd laid off 130 people and shut down one of their offices in Germany.
Speaking of moraleâŠ
Some companies might handle these layoffs well, but for many game developers, the process of getting laid off is totally degrading.
In 2007, at a studio in London, employees were summoned to the cantina and told that layoffs were coming, and that they could expect to hear within a week who would be affected, according to a person who was there. When they all got back to their desks, they found that the company had installed software in every computer that would tell the IT department when anyone attached an external USB drive, that ex-employee said.
âI guess [the studio] was worried that people would take the code and assets and release them on the internet,â said the employee. âIn reality that meant that people couldnât use assets for their portfolio (which is otherwise pretty common practice when changing jobs).â
And then thereâs the case of the telltale phones. A few years ago, when former game publisher THQ was facing financial difficulties following the flop of their uDraw tablets, the publisher started downsizing at their various studios across the world. At one of those studios, according to a person who worked there, then-THQ boss Danny Bilson flew out and called everyone into a meeting. THQ was doing layoffs, Bilson announced, and employees who were axed would receive an email letting them know.
Immediately, phones started buzzing throughout the room.
âAnyone who had their smart phone hooked up to company email knew instantly that theyâd been let go,â said a former THQ employee. âIt got ugly pretty quick.â
Iâve heard way too many stories full of these brutal details. Sometimes people are physically escorted from the building, as they were during various layoffs at LucasArts during the mid-2000s, according to a person who worked there. Once, at the failed publisher Midway, some employees were brought into a conference room and told âThose of you in here are not fired,â a former employee told me.
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Is this sustainable?
Several of the developers who contacted me for this story said they were fed up with layoff cycles and had left the video game industry entirely. Some told tales of endless relocations and unreasonable hours, and bragged that in their new fields, they were paid more to work less.
Many industry people agree on one thing: these regular layoffs are ultimately harmful to the designers, artists, programmers, musicians, testers, writers, and every other person who has some hand in making video games. Few people want to be forced into looking for new employment every year or two, and though there are no easy stats about burnout rates in the video game industry, many observers believe that talented developers are leaving in droves.
âItâs not fair for developers and their families to continue uprooting their lives over and over again, and itâs not good for the companies to be paying a game budgetâs worth of severance and re-hiring fees every year,â said GameJobWatchâs Holden Link. âItâs not emotionally or financially sustainable for anybody.â
But inertia is hard to fight. How do you convince a multi-billion-dollar industry to change practices that prioritize short-term profit over long-term morale?
Not everyone has a solution for the layoff problem, though some have suggested that game developers embrace unions, or the contract-only system for talent thatâs common in the film world. And it is a problemâat least if youâre interested in big-budget console and PC games with high production values like Call of Duty and Deus Ex. If these layoff cycles continue happening, talented people will leave the world of video games for more stable careers, and though we might not notice the effects of this right away, many of the developers Iâve spoken to over the past few months and years believe that somethingâs going to give.
Now how much can developer burnout really affect gamers and the games they play? Logic suggests that happier, more stable developers would make better games, though quality is subjective and impossible to measure. Nobody likes seeing their favorite game studios shut down, and from a moral perspective, itâd be nice to know that the games we play are created by satisfied people who are treated well. Ultimately, as developers continue to burn out and leave big-budget gaming, weâll keep seeing smaller, more creative projects, which for many video game fans is a good thing.
Weâll be sharing more gaming layoff stories in the days and weeks to come. If youâve got a story to share, reach out. All contact will be kept anonymous.
You can reach the author of this article at [email protected] or on Twitter at @jasonschreier
