I entered the video game industry with a somewhat idyllic and naive image, but after these months and years of crisis, I am thinking of changing sectors”. Arnau Aguilar is 25 years old and is a developer affected by the recent closure of Smilegate Barcelona, ??the division that until a few days ago had this South Korean video game giant, creator of international hits such as Lost Ark or Crossfire, in the Glòries tower . Since its foundation in 2020, the Barcelona team had employed dozens of programmers, artists, designers and other professional profiles while designing a promising video game that will probably never see the light of day.
“When the day came when they announced the cancellation of the game, the feeling was one of desolation, intensified because we cannot incorporate the work into our portfolio”, says Aguilar. This is the discomfort that many workers in the multidisciplinary and creative video game industry have been experiencing for more than a year. Despite the huge audience and turnover and despite the fact that new titles come out every week that leave players stunned, the sector is going through a wave of restructuring that affects thousands of jobs and dozens of company closures around the world.
In 2022 video game studios cut more than 8,500 jobs and in 2023 the 10,000 barrier was broken. These figures have been documented and collected on the Game industry layoffs website. This year there have already been 8,000 layoffs and dozens of closed studios. The workforce cuts have impacted large multinationals such as Epic Games, the creator of Fortnite, which laid off 830 workers in September; Microsoft, which announced the dismissal of 1,900 employees in January, or Sony, which did the same in February, leaving 900 professionals out of its electronic entertainment divisions. These are just three examples of an immense list of large companies with multimillion-dollar profits, but the crisis also punishes smaller companies.
One of the most surprising cases is that of Barcelona’s Novarama, which in mid-March announced its closure after more than 20 years of activity and international successes, such as InviZimals (2009). In 2022, the Chinese entertainment giant Tencent entered its shareholding with a significant capital injection, something that the company used to grow and expand the workforce to 70 employees. But its action game United 1944 failed to arouse enough interest and after a first cut in staff, at the end of 2023, it has entered bankruptcy.
“We have fought a tremendous battle in the last 8 months, but the enemies we were facing are not made of pixels,” revealed the director of Novarama, Dani Sánchez-Crespo, in a video published shortly after the closure of the study “The industry experienced a huge expansion during the confinement: the consumption of video games went up by 40%. As a result, there was a wave of investment, mostly aimed at a certain type of multiplayer games for PC and console. This situation has led to a saturation of the market two years later, since many premieres have coincided that have fought for the same space, and this has affected Novarama”, explains the designer.
The saturation of the market caused by the increase in consumption and investment in video games are also reasons argued by the academic director of video game degrees at the Euneiz University of Vitoria, Sandra Samper. “Many games in 2020, 2021 and 2022 were delayed and there was a cap on releases last year. For consumers it was like a party, but for companies, with so many competitors, it has been very complicated”, he says. According to Samper, “when the confinement ended and the population diversified the way they invested their leisure time, a recession began and many investors who came from outside, also companies from the audiovisual world, began to withdraw”. details
Despite these tensions, industry results continue to rise, although far from pre-pandemic growth. This week the Newzoo consultancy has published its annual report on the state of the sector, in this case dedicated to computer and console video games, the most affected by the restructuring, and one of its conclusions is that this sector grew a 2.6% in 2023, with sales of 93.5 billion dollars (86.248 billion euros). “Large companies that have reduced costs continue to have historic highs,” says Samper.
For Sánchez-Crespo “the situation the sector is experiencing is not only affecting game developers, but also distributors, who are reluctant to invest given the market situation”. Many Spanish studios, he says, will have difficulty finding clients. This scenario will also affect so-called independent studios, small companies that design creative games. In fact, almost half of the video game development studios in Catalonia and Spain have fewer than five employees.
Programmer and co-creator of the annual IndieDevDay festival, Laura González, believes the hardest part is getting funding. “Getting a distributor interested in your project was already difficult, but now with everything that’s going on, many funding streams are being blocked or reduced in capacity, so studios need to fight even harder to continue come in”. Or they end up closing.
In the last year, several Spanish independent studios have had to lay off staff, such as Valencia’s Digital Sun this week, or close down directly, such as Barcelona’s Lince Works. “The feeling of unease is in the atmosphere, but I think it’s not something new for the independent industry,” says González.
Despite the fierce competition, every time one of these studios announces its closure there is a sense of solidarity in the developer community. Fortunately, many end up finding work in another studio, as is the case of Arnau Aguilar. “It is very difficult not to have the feeling that all these layoffs are nothing more than maneuvers to please investors and large groups, it is a very tough situation in which younger professionals do not see a secure future in this industry,” he says.
