While many media companies are recognizing the value of video gaming, the traditional gaming industry itself is experiencing growing challenges that have led to layoffs across the sector. So far this year, over 7,000 gaming jobs have been cut at companies like Twitch, Activision Blizzard (ATVI) and Riot Games. Today (Feb. 27), Sony’s Interactive Entertainment unit, which produces PlayStation game consoles, laid off 900 staffers, or 8 percent of the team, and closed its gaming studio in London.
“Rapid change, excessive hiring, cost hikes and more access to creation tools” are all factors affecting the gaming industry right now,” Cathy Hackl, an entrepreneur consulting Fortune 500 companies including Nike and Walmart on strategies involving gaming, artificial intelligence (A.I.) and virtual reality (V.R.), told Observer in an email.
“We will continue to see layoffs in the gaming space this year,” Hackle added. “I think many companies that have done layoffs have seen a positive response to the layoffs from shareholders, so they will continue to sadly conduct more layoffs.”
In terms of A.I., every industry is trying to adapt to the new technology, and gaming is no exception as key hardware suppliers like Nvidia shift to developing chips for training A.I. models instead when its priority used to be making graphics cards for video games. According to Hackl, some gaming companies and executives are waiting cautiously to see how generative A.I. will impact the industry.
Media giants are pouring money into gaming
On the other hand, the media industry is leaning into gaming more than ever. The Walt Disney Company, Netflix and Warner Bros. Discovery (WBD) are just some of the companies that are investing in original games, as well as licensing and extending their IP into gaming.
“All these companies are finally recognizing that gaming as an industry is bigger than film and music combined. That recognition was long overdue,” Hackl said. “Just like in the 2010s, we saw most companies start to embrace being tech companies, even though many were not tech companies (like WeWork); we’re seeing companies start to, in some ways, mirror this and become gaming companies.”
Hackle pointed to mobile games as a promising area, where TikTok and Netflix (NFLX) are claiming stakes as non-gaming platforms. She is also bullish on platforms that focus on incorporating user-generated content in gaming, like Roblox. She said media companies that are investing in gaming are making a smart move, but only if they hire experienced gaming leaders rather than relying on traditional media executives. A good example is Netflix hiring Mike Verdu, Meta’s former head of AR/VR content, as head of gaming in 2021.
“Some of the companies that are jumping into gaming might have executives who are ill-suited to run gaming companies, are not gamers, or don’t understand the culture of gaming,” Hackl said. “That is a recipe for disaster, and for more layoffs, they think the traditional media ways work in gaming.”
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