2024 could be the end for many video game studios

In the video game industry, 2023 will not only be remembered for the high-quality games we were able to enjoy. And because many companies have carried out mass layoffs as part of the internal restructuring process. Unfortunately, everything indicates that this sad situation may continue this year. And be careful, we may also witness closure of various video game studios.

In an interview with GamesIndustry.bizFarhan Noor, Founder videogameslayoffs.comwebsite detailing the waves of layoffs the industry has experienced, 2024 promises to be even more challenging for video game studios.

According to them, about 10.5 thousand video game developers lost their jobs last year. But the 2024 statistics are even more worrying. About 3,000 people have already been laid off this year.

The same media interviewed the director of the distribution company, who wished to remain anonymous. His comment on this matter is alarming: he believes that 2024 will be a very difficult year for the labor sector that operates around the industry, as several video game studios may close their doors. This means, of course, that it’s not just the developers who will suffer. Also people who work in marketing, distribution and other services. That is, a domino effect will occur.

Why will we get to the point where some video game studios have to go out of business? The above states that There are many companies whose financial position is not healthy.. Their business model is not profitable, and sooner or later this situation leads to their destruction, since the income does not cover the huge costs associated with developing the game.

“If 2023 was the year of layoffs, then 2024 will be the year of closures. Not only developers, but also publishers, media and service companies. There are too many unprofitable businesses in the video game sector.”

The pandemic is the root of the problem for video game studios

It is obvious that everything has a reason, and in this situation it is inevitable to talk about pandemic. The health crisis has certainly boosted video game revenues to previously unseen levels. But not everything was so rosy, because studios had to stop developing future releases because it was not possible to continue normal activities. At least not at the pace they were used to.

This meant that, years into the pandemic, they were unable to release enough games to keep their business healthy. So we’ve reached 2024 and things look like they’re about to explode – or have already exploded.

Many video games have been greenlit in 2020 and 2021. We need to get to pre-pandemic levels in terms of release schedule, and that will probably take two years. You can already see that publishers are releasing fewer games. This happens everywhere. Stores are overcrowded, not just Steam, and games simply don’t offer levels [de calidad] what they had before.”

Thus, this decline in quality, coupled with the fact that people are spending less money on video games due to the financial uncertainty seen around the world, has led to a significant decline in revenue for video game studios and publishers. Nevertheless, Expenses remain the sametherefore, there will come a time when they will be forced to cut costs or, in the worst case, close the company.

“During the pandemic, studios have grown very quickly, and people are spending less money on video games during the crisis. Unfortunately, the bubble bursts. I hope that new companies will emerge that will revolutionize the way we develop games and set a precedent for larger studios to follow. Keep an eye out,” concluded another interlocutor.