The video games industry is sadly going through a bit of a rough patch right now. There’s been almost 36,000 job losses across the sector since 2022 and no company is seemingly safe, with redundancies being made by big house-hold name platform holders and publishers all the way through to small indie studios and live service game operators. Just last week, Microsoft announced a further large round of layoffs, studio closures and project cancellations that has left many to question if this period of uncertainty will ever end.

Despite this, many games are still generating substantial commercial success. The latest Assassins Creed flew off the (digital) shelves for Ubisoft, Microsoft itself has had considerable success of late with the likes of Indiana Jones, Doom: The Dark Ages and the new Oblivion remaster, less mainstream titles like the Death Stranding sequel and the fantastic Clair Obscur: Expedition 33 have reaped critical and commercial joys, whilst NetEase have managed to navigate the risky live-service tightrope with Marvel Rivals, quickly reaching significant concurrent player numbers upon launch (although those numbers have dwindled a little of late).

This piece isn’t intended to explore the many complex reasons behind why so many seemingly successful games companies are making so many staff redundant. Instead, it looks at the topic through the lens of how games studios typically engage their workforce and how this differs compared to another successful creative industry, Film and TV. Are there any learnings the games industry can make from here?

Marvel Rivals was a huge commercial hit on release earlier this year, hitting player numbers most new live-service games dream of. But despite this success, a number of staff working on the project were let go immediately after launch, with one of the game’s directors stating at the time: “This is such a weird industry…My stellar, talented team just helped deliver an incredibly successful new franchise in Marvel Rivals for NetEase Games…and were just laid off!”

Whilst there were some wider geo-political considerations at play in the NetEase example, this sort of story sadly isn’t uncommon these days. A number of teams associated with critical or commercial successes in recent years have been made redundant. We’ve also seen numerous job losses as a result of games from big, well-funded studios being cancelled mid-way through development in an effort to stem future costs. Regardless of the cause, there’s often much surprise or derision within the gaming community and press. From a human perspective, this reaction is understandable and something we can all empathise with. It must be a truly tough pill to swallow for someone who has worked so hard on bringing an, ultimately successful, project to life.

So why does this happen within games? Well, for games that do end up releasing, the reason in many cases is often fairly simple and obvious. The cost of the game’s production resource can no longer be justified once a game has shipped.

Games projects these days are often staffed by hundreds of developers, artists and designers. After a project goes gold and is released into the wild, there is naturally a pronounced reduction in ongoing resource needs, at least in the short to medium term. Whilst there may be some ongoing requirement for certain resource (such as development staff to patch and maintain live functionality or marketing staff to promote the title), the majority of a large team will actually be genuinely redundant upon a game’s release, unless the studio has an equally large project ready in waiting for the production staff to be deployed to. In other words, once the game’s out, there’s often less (or no) work for everyone who helped create it!

The reason is even more straightforward when games are canned mid-production. Unless there is something else for the staff working on such projects to do, their jobs are naturally going to be redundant.

Whilst some bemoan a lack of creativity in current games (particularly on the triple A side), there is in reality a significant diversity in the types of interactive entertainment that are available for gamers. Whether its small-scale indie games through to larger multi-platform console titles, or in-app funded mobile hits to user generated content, it is hard to claim that there is a typical production cycle for a video game these days.

Having said that, the production cycle for a game is generally considered to be a bit more of a rollercoaster when compared to a typical Film or TV project. In Film and TV, once a project has been greenlit by a commissioner and commences physical production, you often see fairly consistent resource levels being maintained through to wrap. The average video game on the other hand might be much more unpredictable. Whilst experiences vary depending on the title, it’s not uncommon for teams to remain quite small initially but ramp up in size considerably as development progresses, usually hitting a peak just before launch (the so called ‘crunch’ period). For a significant double or triple A title, the production periods are also far longer – regularly spanning 4 to 5 years as opposed to a Film or TV production which can often be completed in a year (including development and production).

What is consistent between the two sectors though is the lack of requirement for resource once a project wraps or releases. In games, this results in the aforementioned large-scale and publicly damaging redundancy exercises. In Film and TV, people readily appreciate the need to scope out and move on to their next project (usually following a celebratory wrap party). So, why the difference?

It is, again, a fairly simple answer. Most people who work in the games industry – especially AAA – are hired as permanent employees. This means there is an expectation of regular work from the studio they work for and the staff enjoy the typical suite of employment benefits (which, depending on the studio, include regular salaries, bonuses, paid holiday, pension and insurance benefits). This likely has considerable benefits from a staff incentive and retention perspective. However, ‘permanent employment’ by its very nature suggests on ongoing need for resource which isn’t necessarily reflective of the way that creative businesses work (as touched on above). It therefore has the risk of creating expectations with staff that a genuinely well-meaning studio might struggle to meet.

Film and TV on the other hand is set up very differently. In this sector, almost everyone working on a production is a freelancer (often genuinely self-employed), whether they are behind the camera crew or talent / actors in front of camera. Whether working as a director, costume designer or camera operator, these professionals know from the outset that that they are engaged on a fixed term basis and are accustomed to marketing themselves externally and scoping out their next project once their current gig wraps. This is the nature of creative work in that sector. However, in most cases, this importantly doesn’t mean that the work is any less valued or lucrative. Many freelance Film and TV roles can often pay very well, with benefits such as pension and holiday pay now being customary across the industry. Some roles of course don’t attract huge fees, but generally speaking Film and TV is seen as an attractive industry to work in.

If Film and TV productions were structured differently and crew felt they being ‘laid off’ at the end of a project, the sector might face headlines similar to those seen in the gaming press in recent years. The flexibility of the staffing model and the general understanding and expectation of cast and crew, however, would appear to help avoid this. Could the games industry learn from any of this?

This is a question I’ve pondered many times over the last few years, particularly as we’ve moved from witnessing one high-profile redundancy round to the next.

So, is there scope for more games production to be resourced in a self-employed freelance capacity? Whilst there could possibly be some cases where such a model could be considered, this is unlikely to be viable or appropriate for the majority of games. As mentioned above, many game development projects can take years (far longer than making a hit Film or TV show) and studios understandably build long-term relationships with developers who have become experts on the games they’re making. There is therefore a significant talent retention need, with studios (rightfully) wanting to ensure they keep their teams together and incentivised to maintain continuity throughout the complex development process.

A self-employed freelance model would likely also not be legally viable for the games industry. Given the much longer development cycles, there would be a far greater risk of staff being deemed to be ‘employees’ at law if they were to challenge status in an employment or tax tribunal (particularly if they worked full time and largely regular hours).

Perhaps there might be a middle ground option though that could be considered. For example, freelance hires do not actually need to be ‘self-employed’. They can legitimately be designated as ‘workers’ (which is, incidentally, how status is handled for most Film and TV hires). Alternatively, more frequent use of ‘fixed-term’ employment contracts could establish similar expectations (as opposed to staff being employed on indefinite permanent employment contracts), whilst retaining the full suite of typical employment benefits. It seems possible that there could also be scope to budget for higher wage and incentive packages (such as bonuses triggered upon a game’s release or average review rating etc) if the employment or engagement was clearly established as fixed-term in nature.

If a games studio were clear with staff at the outset that they were engaged on a project-by-project basis, there would hopefully be a clearer expectation of ongoing resource needs. This might avoid overstaffing risks, better aligning the workforce with the specific resource requirements of each game. Provided teams felt properly rewarded and remunerated, it should be possible to maintain positive staff sentiment, with team members becoming more attuned to scoping out the next (hopefully exciting) project. Modelling resource in this way may understandably necessitate increased remuneration demands, but the financial impact of this could be budgeted for up front and would also potentially be mitigated considerably by reducing severance costs at the end of the project that can be harder for businesses to predictably quantify.

None of this means that permanent roles will (or should) disappear – they absolutely shouldn’t. They will always be suitable for many positions, being particularly beneficial for those in senior positions or roles that a studio doesn’t want to lose to a competitor. These can be catered for as needed, with more traditional contractual arrangements. But it would be sensible for studios to consider whether it can adopt more flexible alternatives for certain roles during the early planning stages for each project.

Changes like this are in reality quite subtle and should not be interpreted as a means of further impacting employment rights or opportunities in a sector that’s already suffering. This is also not just about ways to avoid bad press. The current trend of gaming job losses is not positive whichever side of the industry you’re on, so it’s important to look at the various ways that projects can be structured to ensure that the industry is as sustainable as possible for those both currently working in it and those who aspire to. For an industry that’s constantly on the lookout for new ways to play, why not also look at new ways to work?

Our employment and immigration lawyers are experts at advising on how the law applies to the specific circumstances facing the media, technology, games and sports sectors. Our specialists would be delighted to advise on any of the considerations touched on this piece. If you have any questions, please contact us here.