- About 20,000 people were laid off between January 2023 and May 2024.
- In 2023, estimated layoffs were 10,500 and approximately 60 per cent of studios affected by layoffs were owned by a larger company, down from the 64 per cent in 2022.
- The estimated total for layoffs in 2024 is expected to be 9,500.
Sony’s gaming sector performed the most with 17 per cent year on year increase to $27.4 billion in fiscal year 2023.
The Japanese giant shipped 20.8 million PlayStation 5 consoles and this number was significantly downgraded from the original target of 25 million set in April 2023.
For the upcoming fiscal year, the company expects a drop in gaming-related revenue by $440 million due to the lack of major exclusive titles and waning interest in the current iteration of the PlayStation 5.
The Chinese company – Tencent – came in second with $25 billion revenue. International and domestic games revenue accounted for about 29 per cent of Tencent’s total revenue.
However, Microsoft, company behind Xbox, could not catch up with Sony’s and Tencent’s revenues. The US giant reported $15.5 billion, down $700 million compared to a year ago.
Ray of hope for Microsoft
If the revenue generated by Activision Blizzard, which Microsoft finalised its acquisition of this past October, between July 2022 and June 2023 is any indicator, it could muscle past its Chinese rival Tencent.
This also depends on whether Xbox’s plans for its Game Pass subscription service pan out. Drastic cost-cutting by closing critically acclaimed studios like Tango Gameworks, whose latest games Hi-Fi Rush and Ghostwire: Tokyo reportedly attracted upwards of one million players each, suggests that the subscription-to-purchase pipeline doesn’t yet work as envisioned.
The Big 3 in the video gaming industry are Nintendo, Microsoft, and Sony. These three companies are major video gaming hardware makers and currently dominate the console gaming market. Due to this infrastructure advantage, the Big 3 are the biggest video game publishers worldwide, making billion of US dollars from video games every year.
Microsoft is not the only company with a major stake in gaming that’s closing studios or cutting down its workforce.
Missing projections
According to crowd-sourced database Game Industry Layoffs, about 20,000 people in the games industry were laid off between January 2023 and May 2024.
In 2023, estimated layoffs were 10,500 and approximately 60 per cent of studios affected by layoffs were owned by a larger company, down from the 64 per cent in 2022. The recorded data suggests that 2023 has seen roughly a 22 per cent increase in global layoffs.
28 studios shut down in 2023, the biggest being Volition Games (Embracer Group) – the smallest being Dang! Indie studios made up a little over 40 per cent of closures, with Asian and Swedish owned studios accounting for roughly 20 per cent each.
The estimated total for layoffs in 2024 is expected to be 9,500.
So while Xbox Game Pass lagging behind expectations is one factor to consider, the state of the games industry as a whole, missing projections and having overestimated growth potentials driven by the coronavirus pandemic, continues to be fragile.