The game industry is broken – can we fix it?

The videogame industry is in a pronounced downturn: data from an industry layoff tracker shows more than 58,000 jobs lost from 2022-2026 with another ~14,500 projected this year, even as companies still hire 18,000-25,000 people annually. Losses are concentrated in traditional Western hubs - especially California, the UK and parts of Europe - while regions like Japan, eastern Europe and some emerging markets have been insulated. Major firms are not immune; Epic Games cut over 1,800 roles across two rounds. Leadership voices describe this as the worst disruption since the 1980s. Japanese firms stand out for near-97% staff retention, smaller, leaner teams, and far lower executive pay, offering a model that contrasts with bloated western studios.

The crisis is multi-causal: macroeconomic pressures plus internal dysfunctions, chief among them runaway triple-A development costs and relative customer spend. Research shows development costs rising roughly tenfold each decade - about $1M in the mid‑90s, $10M by 2005, $100M by 2015 - and today budgets approaching $250-400M. Meanwhile retail pricing has stagnated and players increasingly wait for sales, limiting revenue growth. Contributing factors include live‑service bloat, enormous teams, and “software is a gas” content creep. Recommended remedies are concrete: adopt leaner team structures and staffing practices, curb executive pay, and prioritize smaller, tightly constrained games that control content costs rather than chasing ever-larger audiences in an effectively saturated market.