Microsoft recently announced plans to cut 8% of employees at its gaming division…

In a message sent to staff when the job cuts were announced, Spencer said the decision was taken after Microsoft and Activision’s leadership teams “set priorities, identified areas of overlap, and ensured that we’re all aligned on the best opportunities for growth”.

Reflecting on the layoffs in a new interview with Polygon, Spencer said a lack of industry growth was forcing publicly traded companies across the industry to cut costs.

  • loobkoob@kbin.social
    15·
    7 months ago

    That’s not even the big reason; microtransactions are often very lucrative (as much as I tend to dislike them). The main thing is just the COVID hangover and general economic downturn the world has seen.

    • during the height of COVID, people had more time and money to spend on gaming. While brick and mortar stores and quite a few service industries suffered, the gaming sector was seeing record profits and growth.
    • investors were also investing a lot. Crypto was booming, interest rates were really low, and a lot of investment companies were just throwing money around as a result. With gaming companies not only not being hit too hard by COVID, but also thriving during it, gaming-related investment shot up. See Embracer Group for the prime example in gaming.
    • like good little capitalists, these companies saw all the extra money coming in and tried to grow their companies - more staff, bigger projects, etc. They scaled up to levels that were sustainable for their newfound income and investments.

    Now, not only have all of those factors been reduced, they’ve actually gone the other way. Consumers have less disposable income than they did pre-COVID due to rising cost of living. Investment companies can’t just throw their money at absolutely anything and still turn a profit because the interest rates are much higher. And the companies all found their expenditure and growth unsustainable once the money dried up, which is why we’ve seen so many layoffs in gaming already this year.

    On top of all that, we’ve seen game budgets just go up and up and up, to the point where some games are costing upwards of $200M to make. The price of games hasn’t really budged that much, which means the only way for the increasing budgets to be sustainable is for sales and microtransaction spending to keep increasing. Obviously that’s not happening, and until some novel tech comes along that draws in new gamers - like the Wii did, where people who didn’t care about games at all were interested in getting the Wii for Wii Sports, Wii Fit, etc - I think gaming’s not likely to attract too many new people.

    Microtransaction scandals and less and less innovation in the AAA(A) space obviously don’t help, but they’re not the big reasons why the industry has hit hard times.

    • Raiderkev@lemmy.worldEnglish
      2·
      7 months ago

      Makes sense. Imo little of column A, little column B. I used to be a super active gamer and played online a ton. At a certain point, online gaming just wasn’t fun anymore. It felt like what was once a level playing field got obliterated by micro transactions and loot crates. The last game I really played online was Halo 4 I believe, and I kinda stopped after that. Had a couple of kids n now I’ll play switch with them, but if I’m playing by myself I look for a good single player campaign game over any kind of multiplayer. I don’t even bother with them anymore.