Gaming in general and AAA gaming in particular are going through a rough patch. While 2023 was a stellar year when it came to well-received AAA releases, the constant rise of game budgets (with Marvel’s Spider-Man 2 rumored to have cost $300 million to make) is literally eating into the margins of publishers and developers alike. In February 2024, Sony Chief Operating Officer (COO) and SIE interim Chairman Hiroki Totoki explicitly said a more aggressive multiplatform release plan on PC would have to be enacted to improve the operating profit.
For its part, Microsoft, through Gaming CEO Phil Spencer, has stated that the industry needs to find new customers and get back on a growth trajectory. Meanwhile, Microsoft has started releasing some of its exclusive games on PlayStation and Nintendo Switch consoles, with more possibly on the way.
Amidst all these shifts, the hardest part has been witnessing the record-breaking number of layoffs in 2024. AAA developers like Riot, Microsoft, Sony, Electronic Arts, Take-Two, SEGA, and, of course, the Embracer Group have laid off many thousands of employees to reduce costs. Most recently, Microsoft also closed three internal Bethesda studios: Arkane Austin, Tango Gameworks, and Alpha Dog Games.
We recently had the chance to interview Jake Solomon, who worked for over 22 years at Firaxis Games on AAA franchises like Sid Meier’s Civilization, XCOM, and Marvel’s Midnight Suns. While the main topic was his new studio, which is working on a narrative-driven life simulation game, we also asked his opinion on what’s happening in the industry.
What do you think about the state of the industry following all the layoffs? Is the doom and gloom warranted?
Honestly, it’s terrible. Too many people have lost their jobs, and it’s incredibly frustrating. It’s been nice to actually hire folks these last few months. The last few months have been terrible for a lot of folks, and hopefully, as Midsummer grows, we can provide a great studio home for some of them.
It’s a tough market right now. There are these incredible, over-the-top AAAA games that are impossible to follow. You also see amazing AA niche games that are more focused and successful. AAA sits in this awkward middle ground where it’s very expensive but hard to cover costs.
In many cases, we’ve seen budgets double or triple between one installment and the next one in a series. Should developers and publishers rein in budgets to avoid these mass layoffs?
I’m wary of telling other folks how to run their business. But I can tell you what we’re doing at
Midsummer. We want to make games in a small, collaborative atmosphere. We want to remain
independent. All of those things require that we stay relatively small, act and spend our money
in a sustainable manner, and make careful decisions on how we produce our games.
Do you believe AAA gaming to be in real trouble, or is this just a temporary phase? Let us know in the comments and through the poll below.
