Following studio closures and layoffs, Shawn Layden, once a high-ranking manager at Sony Interactive Entertainment, has spoken out about the triggers and consequences.
In the video game industry, there have been Mass layoffs and studio closuresIt is a topic that Shawn Layden, former CEO of Sony Interactive Entertainment America and Chairman of SIE Worldwide Studios, addressed in a Interview with Gamesindustry assumed.
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Layden believes the current situation in the industry is due to slow growth and rapidly rising costs, which at the same time leads to impatience among publishers when it comes to new ideas and concepts.
Great games, but not enough profit
A fresh and equally convincing concept was “Hi-Fi Rush”which was launched in early 2023 and initially delighted Xbox and PC gamers. A year later followed the launch for PS5The Sony console also achieved top ratings and initial placements in the sales charts.
Nevertheless, the developer Tango Gameworksa studio of the Zenimax/Bethesda division of Microsoft Gaming, closed after the acquisition of Activision Blizzard by Microsoft.
“That's the really frustrating thing, when you see people say: Look, here's a small studio that made a great game, that has really great promise, that created a completely new gaming experience. But we don't have the patience to play this thing out in a second or third part,” said Layden, who did not explicitly mention the Tango game.
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Even if such a game does not have a negative impact on the balance sheet, the hoped-for profit did not materialize. “So they simply stopped it and focused on established AAA IPs, sequels, sequels and things where you can draw a line from a financial perspective and say: If we produce this game, it will probably work like this in the market,” explained the former Sony manager.
According to Layden, the now works for Tencentthis approach has an impact on the entire industry. Publishers no longer have the patience for “completely new things that people have never seen before.” They feel that they need the big win now. And that is “a terrible situation in an entertainment and creative industry.”
According to Layden, the video game industry can only grow by creating new types of games. People who don't like first-person shooters or role-playing games are being appealed to with other types. As an example, Layden cited a “rhythm action game that's all about music, bright colors and fun,” which brings us full circle to the initial statements.
Small studios are suddenly the sacrificial lamb after billions of investments
Ultimately, publishers should show more patience in two ways: whether in developing new ideas or in what is happening on the market. Especially during the COVID-19 pandemic, many video game companies were in a kind of gold rush mood that turned into a gamble. Because when the pandemic ended, the double-digit growth rates also ended.
This strategy particularly affects the small studios that were acquired during the growth phase with big promises. “But as soon as money becomes tight across the entire company, the companies suddenly come back to all the studios and say: We are in a difficult situation, we are going to miss our profitability targets. So everyone has to make cuts,” Layden continued.
This is particularly incomprehensible for the small developers, since they were acquired for an equally small amount.
“You bought me for a little bit of money to give me a little bit of freedom to do what I do… I didn't tell you to spend tens of billions of dollars buying other things, which means we're suddenly going to be the sacrificial lamb because you have to make sure the balance sheet is right,” Layden said, describing the developers' perspective.
While the studio closures and layoffs have left many employees in the video game industry in financial difficulties, at least the management levels are set for life, as the The report linked here illustrates this using Electronic Arts.
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