“I entered the video game industry with a somewhat idyllic and naive image, but after these months and years of crisis I have come to consider changing sectors.” Arnau Aguilar is twenty-five years old and is a developer affected by the recent closure of Smilegate Barcelona, ??the division that until a few days ago this South Korean video game giant, creator of international hits such as Lost Ark or Crossfire, had in the city’s Torre Glòries. count. Since its founding in 2020, the Barcelona team had employed dozens of programmers, artists, designers and other professional profiles while they were shaping a new and 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, and the concern was twofold because we will never be able to speak openly or show the work done, and in this sector it is key to have a good portfolio.”
The words of this technical artist reflect the discomfort that many workers in the multidisciplinary and creative video game industry have been experiencing for more than a year. And, despite its large audience and turnover numbers, despite the fact that new titles continue to come out every week that leave players stunned, the sector is going through a wave of restructuring that is taking thousands of jobs and dozens of business closures around the world.
If in 2022 the video game studios cut more than 8,500 jobs, in 2023 the barrier of 10,000 layoffs has been surpassed. These figures have been compiled – and are perfectly documented – on the Game Industry Layoffs website and the figure it shows for so far in 2024 is not encouraging: in just over three months there have already been counted more than 8,000 layoffs and dozens of closed studios. Staff cuts have impacted large multinationals such as Epic Games, the creator of Fortnite, which laid off 830 workers in September of last year; at Microsoft, which announced the layoffs of 1,900 video game employees in January; or at Sony, which did the same in February by leaving 900 professionals from its electronic entertainment divisions on the streets. These are just three examples of an immense list of large companies with multimillion-dollar profits that have announced staff reductions, but the crisis that the sector is experiencing is also hitting medium and small companies hard.
One of the recent cases that has surprised the most among the Spanish and Catalan scene in this sector is that of the Barcelona-based Novarama, which in mid-March announced its closure after more than twenty years of activity and international successes such as InviZimals (2009). Despite the fact that in 2022 the Chinese entertainment giant Tencent entered its shareholding with a significant injection of capital, something that the company took advantage of to grow and expand its workforce to around seventy workers, its action game United 1944 has not managed to arouse interest. enough to keep the studio afloat. After a first reduction in staff at the end of last year, a few days ago the company was forced to enter bankruptcy as a result of the poor economic outlook.
“We have been fighting a tremendous battle in the last eight months, but the enemies we were facing were not made of pixels,” confessed the director of Novarama, Dani Sánchez-Crespo, in a video published shortly after the closure was announced. of the study. Asked by this newspaper about the causes of the crisis that the sector is experiencing, this video game designer points to the consequences of the pandemic: “The industry experienced an enormous expansion during Covid caused by confinements: video game consumption rose around forty percent. As a consequence, there was a wave of investment, especially aimed at certain types of multiplayer games for computer and console. This situation has caused a saturation of the market two years later, as many releases have coincided and have had to fight for the same space, and that has affected Novarama for making that type of games,” explains this designer.
The saturation of the market caused by the rebound in consumption and investment in video games is something that the academic director of the video game degrees at the Euneiz University of Vitoria-Gasteiz, Sandra Samper, also agrees on. “Many games in 2020, 2021 and 2022 were delayed and there was a pitching blockage last year. For consumers it was like a party, but for companies that were entering to compete in that scenario with so many competitors, it has been very complicated,” she says. For this doctor specialized in the video game business, “when the confinement ended and the population diversified the way they invested their leisure time, a recession began and many investors who came from abroad, including companies in the audiovisual world, began to back out,” she details. Samper.
Although there is significant tension within the video game sector at the moment, the industry’s economic results – although far from pre-pandemic growth – continue to point upward. This same week, the consulting firm Newzoo has published the latest edition of its annual report on the state of the industry, in this case dedicated to computer and console video games, which are the most affected by the restructuring, and one of its conclusions is that this sector grew by 2.6 percent in 2023, reaching a turnover of $93.5 billion. “Large corporations that have reduced costs at a time when they realize that too much product has been introduced into the market are going to continue to have historical highs,” says Samper, “they have taken measures to stop the hemorrhage before thinking about the long-term health of the industry.”
For Sánchez-Crespo “the situation that 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, she maintains, “are going to have a harder time finding clients and, if 2023 was a tough year, 2024 will still be tough,” he adds. This scenario will also affect the so-called independent studios, which are smaller companies with more creative games. In fact, almost half of the video game development studios in Catalonia (46%) and in Spain (49%) have fewer than five workers. The programmer and co-creator of the annual IndieDevDay festival, Laura González, knows their situation well: “The most difficult thing for these studios is to obtain financing; Getting a distributor interested in your project was already difficult before and now, with everything that is happening, many financing threads are being blocked or their capacity is being reduced, so studios need to fight even harder to move forward or they will end up directly. closing”.
In the last year several independent Spanish studios have had to carry out layoffs, as happened this week to the Valencian Digital Sun; or close directly, as happened last year to the Barcelona-based Lince Works. “The feeling of restlessness is in the air, but I think it is not something new for the indie industry, since unfortunately it has never had an easy time moving forward,” Gonzalez attests.
Despite the fierce competition, every time one of these studios announces its closure, there is a feeling of solidarity among the developer community. Luckily, many end up finding work in other studios, as is the case of Arnau Aguilar, but that does not mean that restlessness reigns among a large part of the sector. “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 difficult situation where younger professionals do not see a secure future in this industry,” he says.
