I was born in the early ’90s, and thanks to a life marked by periodic socioeconomic turmoil, I’ve come to accept—as any reasonable person would—that blatant dysfunction is the hallmark of a healthy and developed economy. The free market doesn’t have seatbelts or brakes, and that’s why it works. If there’s any wreckage that might say otherwise, we’re driving too fast to see it.
But even though I’ve learned that business success looks indistinguishable from a runaway vehicle, the games industry’s current course feels like it’s careening so close to a cliff’s edge that I can’t help but wonder: Are we sure anyone actually remembers how to drive this thing? Are we sure anyone remembers how to drive anything?
(Image credit: Xbox Game Studios)
I know it’s impertinent of me to question those most devoted to their civic duty of delivering shareholder value, but I mean, can you blame me? Being engaged in videogames over the last decade has meant watching a cohort of publisher executives inherit an industry of products, professionals, and consumers they seem to actively resent for failing to produce instant, infinite profits—profits they only ever had a vague notion how to create.
Faulty service
Take Sony, for example. It committed years to abortive attempts at bottling live-service lightning: Concord burnt hundreds of millions of dollars just to suffer a launch-week euthanization. Blue Point, a studio that built its reputation on remasters, was placed on a live-service God of War spinoff project—a notion that should have been declared doomed before it left the board room, but instead dragged the developer into a February 2026 shuttering once Sony lost patience with its own plans.
And yet, even after cancelling eight of the 12 live-service projects it said it would launch by 2025, Sony’s spectacular streak of misguided endeavors somehow hasn’t dimmed its live-service ambitions. Last month, Sony Interactive Entertainment CEO and president Hideaki Nishino said the publisher wants to “continue to take on” live-service projects.
(Image credit: Bungie)
That commitment that would have been baffling enough to hear on its own, but it was made farcical by the fact that just days earlier, Sony laid off almost the entirety of Bungie’s Destiny 2 team after pulling the plug on its ongoing content development. Yes, years of studio mismanagement had taken a toll on Destiny 2’s output. But even though it was well past its peak, Destiny’s rank-and-file developers had just drawn in a massive surge of returning players for a final update, closing out almost a decade as one of the longest-running games in a market where most competitors, including Sony’s, suffer near-instant collapses.
If I wanted to give my next live-service swings the best chance of survival, having access to the Bungie engineers, designers, and artists who maintained one of the most successful games in the field seems like it would be a blessing. Instead, Sony culled that collective expertise to save on costs, investing Bungie’s remaining staff on Marathon, which—though it brings me no joy to say so—doesn’t seem to be thriving. (Its game director just quit.)
Meanwhile, Sony has announced the approaching end of its physical disc production, marking 2028 as the year it’ll start releasing new PlayStation games exclusively through digital distribution. And while that undoubtedly looks good on its quarterly balance sheet, it’s a decision that could quietly damage its future prospects: While the percentage of players buying discs has steadily decreased, ending their production means strangling whatever viability remains for reselling used games. Even among PC users who haven’t handled a game disc in years, some of us—myself included—would never have maintained the gaming hobby if reselling pieces of our used console libraries hadn’t been an option.
(Image credit: Bungie)
Maybe that won’t be an issue. But if Sony ever decides it’s dealt lasting harm to its user base—well, who knows whether the leadership responsible will still be around? That’s a problem for whoever happens to be answering the investor questions at the earnings call.
Bad reset
And then, of course, there’s Microsoft. In an industry that’s seemingly lost its ability to place any bets but bad ones, Xbox has spent the 2020s making the worst. With Phil Spencer at the helm, Microsoft’s gaming division sank tens of billions of dollars on an acquisition spree that put a sizable portion of the games industry under the Xbox umbrella, staking the futures of those studios as collateral for its all-in gamble on Game Pass.
That gamble failed. Hard. With Game Pass attracting tens of millions fewer subscribers than it needed to sustain itself, Microsoft floundered through misguided marketing campaigns, mismanaged release strategies, and recurring mass layoffs, studio closures, and project cancellations.
The developers it had diligently collected were tossed, even as the company boasted about their work: Tango Gameworks was axed during a mass downsizing in 2024, a year after Microsoft said the studio’s Hi-Fi Rush had exceeded “all key measurements and expectations.” In 2025, Spencer insisted that Xbox’s “platform, hardware, and game roadmap have never looked stronger” in the same memo that informed employees of another wave of Microsoft layoffs and closures. Those cuts included a ZeniMax team that spent seven years developing an MMO which Spencer reportedly enjoyed so much that the controller had to be physically removed from his hands during an internal demo.
(Image credit: ZeniMax Online Studios)
Given Xbox leadership’s bold strategy of achieving very little as expensively as possible, some amount of continuing fallout seemed inevitable even after Spencer’s departure in February. The havoc unleashed this month under the regime of new CEO Asha Sharma, however, is an abandonment of any pretense of good-faith stewardship over the fiefdom Microsoft claimed within the industry.
It isn’t obvious that these cuts are cunning and calculated to any greater degree than the acquisitions that led to them.
On July 6, 1,600 Xbox employees were put out of work, with the axe still looming over another 1,600 workers set to lose their jobs before the end of Microsoft’s 2027 fiscal year. The cuts are borderline nonsensical in scope and intent, hitting Bethesda, ZeniMax, Blizzard, King, Mojang, and Xbox Game Studios alike, with King and Mojang now reporting directly to Sharma as part of an organizational restructuring meant to help Xbox become “one of the few companies that entertains more than a billion people each day.”
Any number of self-assured finance guys will happily tell you that all Xbox did was cut unprofitable employees from its payroll, but it isn’t obvious that these cuts are cunning and calculated to any greater degree than the acquisitions that led to them. ZeniMax Online Studios has been gutted of 213 employees, calling into question its ability to maintain The Elder Scrolls Online—a game which, as of 2024, had generated $2 billion in revenue across its lifetime, and had just been gaining promising momentum in the months leading up to the layoffs as it transitioned to a seasonal model.
(Image credit: id Software)
Maybe most galling are the heavy cuts to id Software, which slashed 136 employees from a studio with one of the most storied legacies in the history of videogames that had just delivered a record-breaking launch last year. Despite assurances to the contrary from Microsoft and id Software’s Hugo Martin, some of its laid off staff insist that even the studio’s proprietary id Tech engine—a technical achievement that powers not only id’s own games but also its sister studio’s projects at MachineGames—has been left with an uncertain future.
If Microsoft does have a coherent vision for its bloodletting beyond, potentially, improving Xbox’s books in advance of a spin-off or sale, I doubt it’s one we’ll like. Its new chief strategist, Matthew Ball, is a true believer in the metaverse and the co-founder of a “UGC game studio.” The company clearly has Roblox on its mind.
ZeniMax Online Studios founder Matt Firor, who left the company after Microsoft cancelled the studio’s upcoming MMO, said this year that “a giant successful videogame” is “not that stimulating” to Microsoft, which seeks a greater scale of profit. What it saw in the project, he reckons, was cost and risk: “We’re a number on a ledger, and if that number is large, it is ripe for analysis, shall we say.”
(Image credit: Bethesda)
For now, Microsoft is making a show of doubling down on big series like Fallout and The Elder Scrolls, even as it lays off many of the veteran developers making them. The confirmation that there’s a new Fallout in the works is slim consolation when it’s in the hands of an executive culture that’s so clearly disinterested in properly supporting the studios making its games and willing to toss out years of work when it decides to change course.
Deep cuts
Launching a successful game isn’t as simple as providing game developers with job security; I won’t dispute that. But it’s been made abundantly, repeatedly clear that layoffs and employment uncertainty during a game’s development don’t help.
Whatever short-term gains those layoffs provide only intensify the long-standing difficulties driving the industry towards an existential crisis. Overlong production cycles and exponential budget increases are worsened every time a studio is forced to reassemble its detonated workflow to account for the institutional knowledge lost whenever a dev is cut loose. Even if a replacement is eventually hired, proficiency with studio-specific tools, conventions, and workplace dynamics doesn’t come immediately—and that lost time isn’t free.
(Image credit: Tyler C. / BioWare)
The trend isn’t hard to identify: Destiny 2’s downward slide of expansion delays and disappointing launches followed back-to-back waves of layoffs as Bungie, under its new Sony ownership, tried to stem the bleeding of its leadership’s overexpansion. The prolonged and turbulent development of Dragon Age: Veilguard included a layoff of roughly 50 BioWare employees in 2023. In 2024, Ubisoft launched the infamously troubled Skull and Bones, the ill-fated XDefiant, and the underperforming Star Wars: Outlaws—three games whose development cycles coincided with company-wide cost-cutting measures the publisher initiated in 2022, which let it shed 2,000 jobs over the next two years through hiring freezes, redundancies, and studio closures.
Whatever short-term gains those layoffs provide only intensify the long-standing difficulties driving the industry towards an existential crisis.
Life is Strange: Double Exposure—multiple layoffs before launch. Civilization 7—30 layoffs in 2023 as part of a wider 2K restructuring. Name a game that didn’t have a stellar launch, and there’s a good chance there were layoffs at its studio or publisher that left its developers with damage to rebuild or doubts about their livelihoods.
Is it any surprise, then, that Capcom’s currently enjoying a multi-year hit streak after avoiding mass layoffs since 2018? Or that Larian, a studio with a strong history of employee retention, pulled off a generational breakout hit like Baldur’s Gate 3?
Crash course
Acknowledging the long-term damage that layoffs are causing, however, would mean returning to a framework the industry’s current leadership has largely abandoned since the ascent of games as services, as platforms, as forever games. Cost-cutting has been the primary economic activity of the games industry for years.
(Image credit: Epic)
The industry’s giants perform so many layoffs for short-term gains that the success of any traditional game launch feels like an oversight. And I’ll admit it’s not without reason: Data reported by analyst firms like Newzoo indicates that gamers are spending as much as two thirds of their collective playtime on games more than six years old, with a concentration on platforms like Roblox and Fortnite.
A major game publisher can’t simply choose to make their own Roblox because it’s not possible to choose to become a phenomenon.
But sales successes like Helldivers 2, Arc Raiders, Meccha Chameleon, and Resident Evil Requiem are proof that there remains a lasting hunger for quality, novelty, and variety in traditional, purchasable games. How many more games like those might players have enjoyed had industry giants not maintained a myopic obsession with creating an ex nihilo Roblox of their own? Why would you stop playing Fortnite when it’s felt like all anyone’s done in the last six years is try to gouge you for the privilege of playing Worse Fortnite?
Roblox and Fortnite didn’t become Roblox and Fortnite by choosing to become Roblox and Fortnite. Roblox and Fortnite happened. Neither was an overnight juggernaut: Roblox’s original launch was in 2006, almost three years earlier than the first public alpha release of Minecraft in 2009, and it steadily ballooned over two decades. Fortnite as we know it today was cobbled together in 2017 from the six-year-old bones of an entirely different product concept to offer a free-to-play alternative that could capitalize on the ascendant PUBG zeitgeist.
(Image credit: Roblox)
The Roblox and Fortnite we recognize today were created through the years-long accretion of strategic decisions unique to their time-and-date contexts. A major game publisher can’t simply choose to make their own Roblox because it’s not possible to choose to become a phenomenon.
But these attempts to conjure perpetual revenue platforms continue as companies seek to make more money with fewer employees, build new gig economies, and lobby the public to please, please just accept AI-generated art already. Just making good games isn’t an exponential growth opportunity—and those are the only growth opportunities we’re meant to care about.
And maybe they’re right. Maybe we can finally believe that something can be made without its makers. Maybe you can give the keys to someone who knows they won’t be harmed either way, no matter how close they get to the cliff. Maybe the line can keep going up.
Or maybe we could put someone else back in the driver’s seat before there’s a crash.
