International Games Site Journalist Points Out Issue in Industry: The Old Capitalism

Microsoft’s Mass Layoffs: A Pattern in Video Game Industry Instability

Vitor Conceição, a journalist from IGN Brazil, recently published a reflective article addressing the current state of the video game industry. His text highlights a period of significant inconsistency in the Western industry, particularly among U.S.-based studios, marked by extensive layoffs. This instability was underscored by Microsoft’s latest actions on Wednesday (2), when the company conducted a mass layoff within its Xbox gaming division. This round of cuts impacted various studios, led to project cancellations, and resulted in employee terminations. These moves are part of Microsoft’s stated organizational changes aimed at thriving in a fast-paced market. The company indicated that these reductions would affect approximately 4% of its workforce compared to a year ago. This recent event follows a pattern of large-scale workforce reductions at Microsoft. The company initiated its most significant layoff of the year in May, impacting roughly 6,000 employees. Overall, Microsoft has laid off over 20,000 employees since early 2023. These downsizing efforts occur even as Microsoft continues to invest heavily in data centers, custom computer chips, and other infrastructure supporting its AI objectives.

Xbox Strategy Criticism Amidst Sales Lag and Competitor Advancements

The Xbox brand faces a mixed strategic landscape. While Microsoft’s Game Pass subscription service has achieved considerable success, the Xbox Series X|S consoles have significantly lagged behind the PS5 in sales, with PlayStation outperforming Xbox by nearly a 5-to-1 ratio through most of last year. Although Xbox has received mid-gen updates—primarily cosmetic changes and internal improvements like a redesigned motherboard with a smaller system-on-chip and enhanced cooling—its overall strategy has drawn criticism. For instance, the Xbox Series S gained a matte black finish and 1 TB storage in September 2023, and both Series S and Series X received new white 1 TB versions and a black 2 TB Xbox Series X in October 2024. Despite these updates, former Xbox team member Fryer voiced a strong opinion that “Xbox hardware is dead,” citing a lack of clear strategy or new Xbox hits and describing the current state of Xbox as “chaos.” Meanwhile, the competitor landscape is evolving, with the PS5 Pro boasting a GPU 45% faster than the base PS5’s and advanced image upscaling technology, alongside circulating rumors about the PlayStation 6.

Impact of Layoffs and AI Suggestions on Xbox Studios Amidst Market Challenges and Price Hikes

Amidst these layoffs, Matt Turnbull, an executive producer behind Xbox games like Crackdown 3, State of Decay 2, and Forza Motorsport, drew backlash after suggesting on LinkedIn that affected employees seek aid from AI, specifically mentioning the “Xbox Ally,” which is based on the Asus ROG Ally X. Microsoft is also collaborating with AMD for its upcoming console generation. These recent layoffs are concentrated in slower-growth business areas, affecting numerous game studios across North America and Europe. This practice of mass layoffs, unfortunately, has become common in the industry in recent months. In contrast, PlayStation has announced continued price increases for its PS Plus subscription service. In Brazil, PlayStation Studios and other publishers have also suddenly increased game prices, citing adverse market conditions, despite the platform enjoying its most profitable period in history and having a well-established user base on the PS5.

Game Developers Speak Out on Profit-Over-People Trend in Western Video Game Industry

Game developers have been vocal on social media about the ongoing turmoil, expressing solidarity and concern for their colleagues. Eric Neustadter, former Xbox Live operations manager and current VP of technology at The Pokémon Company, believes the rewards in the video game industry are disproportionate. John Epler, a veteran at BioWare and current Skate narrative director, expressed shock at further Microsoft layoffs. Rami Ismail, co-founder of Vlambeer, fears the gaming industry continues to cause widespread harm. Andrew Carl, a systems designer at Respawn, suggested Microsoft’s excessive investment in generative AI development, while Firaxis narrative director Cat Manning encapsulated the industry’s weariness by stating her desire to simply “create games that excite players.” As Conceição concludes, while success stories and broken records abound, the human element of the Western video game industry is often sacrificed for “exponential profit” driven by a capitalist agenda. He asserts that the industry, generally, prioritizes profit over fans, employees, quality, or even the console war enthusiasts engaged on social media. For a comprehensive understanding, readers can access Vitor Conceição’s full original text.