If you’re a player or casual observer, the video game industry seems to have it all. Yet growth is now illusory, layoffs abundant, and game/studio shutdowns common. Why? And how might things change?
This is an over-simplification of the problem. The root is two things, shareholders and also, shareholders.
During pandemic some sectors saw massive growth and that caused shareholders to be very happy. But now we have normal growth, still growth, but normal non pandemic growth. Shareholders see that as a bad thing, you aren’t growing at the rate you were two years ago and that is causing us to make slightly less money now. This causes the executive team to miss their bonuses. (the microsoft CEO only got 48 million this year instead of the full 50 million)
The second part is that tech companies have learnt that when they lay off people, shares go up. There is no reasoning behind the vast majority of the layoffs aside from this - there isn’t really a money shortfall (everyone preaches massive profits after all), in-fact companies like Microsoft are struggling with retaining talent as evident by their creative output the last decade. But share prices go up if you announce firings. So if you can fire the workers, share prices go up covering the only 5% growth instead of 10% growth ‘fall’ and you get your bonus.
Then there are companies that exist solely on investment, high interest rates this past year has caused the investment market to die off. no one can get their next round to cover development so small companies or stupid companies that shouldn’t have ever existed (embracer) are struggling.
This is an over-simplification of the problem. The root is two things, shareholders and also, shareholders.
During pandemic some sectors saw massive growth and that caused shareholders to be very happy. But now we have normal growth, still growth, but normal non pandemic growth. Shareholders see that as a bad thing, you aren’t growing at the rate you were two years ago and that is causing us to make slightly less money now. This causes the executive team to miss their bonuses. (the microsoft CEO only got 48 million this year instead of the full 50 million)
The second part is that tech companies have learnt that when they lay off people, shares go up. There is no reasoning behind the vast majority of the layoffs aside from this - there isn’t really a money shortfall (everyone preaches massive profits after all), in-fact companies like Microsoft are struggling with retaining talent as evident by their creative output the last decade. But share prices go up if you announce firings. So if you can fire the workers, share prices go up covering the only 5% growth instead of 10% growth ‘fall’ and you get your bonus.
Then there are companies that exist solely on investment, high interest rates this past year has caused the investment market to die off. no one can get their next round to cover development so small companies or stupid companies that shouldn’t have ever existed (embracer) are struggling.