One CEO of a public company told us: “If 2023 was the year of layoffs, 2024 will be the year of closures. Not just developers, but publishers, media, service companies… There are just too many unprofitable businesses in video games. We’re looking at up to two years of pain.”

This article was written Jan 22, 2024 – and was spot on. 2024 was a bloodbath of studio layoffs and closures. While it slowed towards the end of 2024, studio closures and cancelations have been steady.

The VC commenters were also spot on:

1. “Too many games were green lit in 2020 and 2021,” one publisher boss said. “We need to get to pre-pandemic levels in terms of the release schedule, and that’s probably going to take two years. You can already see publishers signing fewer games. That’s happening everywhere. The stores are saturated, not just Steam, and the games just aren’t delivering the levels they were. “
2. Another said: “The expansion and investment over COVID has left engagement-based businesses, not just video games, spread too thin. We’re doing too many things that aren’t delivering.”
3. The VC added: “Competition isn’t the biggest factor [in this current situation], but it is a challenge, especially when you consider how much disposable income people have at the moment. It’s also not just the number of new games you’re competing with, but all the old games and live service games that are there and doing huge numbers.”

The solution?

“Focus isn’t exciting, but getting back to basics, back to those foundations, and building back up is needed” The other observation is that they needed to return to pre-covid era levels of development to stay afloat.

Articles:

• https://www.gamesindustry.biz/games-industry-leaders-braced-for-up-to-two-years-of-pain
• https://www.gamesindustry.biz/cheap-money-and-bad-bets-how-the-games-industry-turned-pandemic-success-into-disaster