BIG SALES — AND BIG LAYOFFS. WHAT’S ROILING THE VIDEO GAME INDUSTRY?

A story about the daughter of a primordial evil trying to conquer humanity made more than $900 million in one week and was the company’s fastest-selling video game ever, according to the studio that made it.

A game that lets you explore the same school Harry Potter attended and learn the same spells and secrets sold 22 million copies last year, the company president says.

And Disney just paid $2 billion to own part of the company that created Fortnite, the allegedly "addictive" video game that lets Peter Griffin fire an automatic rifle at Iron Man.

Last year was a remarkable one for the video game industry, marked by massive games and record sales.

But it was a year that also saw game studios firing thousands of employees and sometimes shedding as much as nine per cent of their workforce in one fell swoop, including in Canada.

A developer and an industry watcher are warning that the factors that lead to the roaring success and significant layoffs could drain the industry of talent needed to keep producing games.

“It comes with so many challenges where the employment, job security is very fragile at times, especially right now,” Kevin Brunt said.

Brunt is an environmental artist who designs the worlds that video games take place in and is a chairholder of International Game Developers Association, a game-maker group.

Speaking from Vancouver, a growing hub of video game companies in Canada, he told Global News he has kept his job but knows many, many others who haven’t.

“There is a lot of tribal knowledge (lost) and just really good developers leave the industry. And as a result, we get worse games for consumers,” he said.

Ubisoft, which makes the popular Assassin's Creed games that has major hubs in Quebec, fired about 100 Canadians last November as part of the same wave of industry belt-tightening.

Previous job pressures also led some Canadian video game employees in Alberta to form the country's first union in 2022.

After spending more than $93 billion and fighting anti-monopoly regulators for 22 months, Microsoft bought the studio that created the demonic-themed Diablo IV (among many others) and then fired nearly 2,000 employees in October 2023.

Epic Games, the creator of Fortnite, where popular characters from different franchises attack each other, laid off more than 800 people, also in October.

It's part of a wave of job losses in an industry that shed nearly 11,000 jobs in 2023 with about 5,000 more in January 2024, according to Joost van Dreunen, a New York University business professor who studies the sector, and a former employee tracking the cuts.

Brunt said the video games industry has always been cyclical and precarious. Studios hire developers to make a game and fire them when it’s done. He told Global News he knows many people who seem to alternate between three-month periods of having and not having a job.

And with studios heavily focusing on building and maintaining just a single or handful of projects at once, Brunt said studios will start to shed jobs if the titles fail to make money right away.

“It's a very splash-or-sink industry in that sense,” he said.

Part of that cyclicality, van Dreunen said, comes from gamers focusing on a few or even one game or genre at a time.

“Your mother playing Candy Crush is deeply unlikely to switch over to Call of Duty any time soon, and vice versa,”  van Dreunen said.

That means rival studios like to stagger releases, enticing gamers who like first-person shooters like Call of Duty or its rival Battlefield only after they’ve had months to play the other one.

He compared big studio game releases to blockbuster movie premieres and shared movie franchises like the Marvel Cinematic Universe, where one title just “takes the cake and everyone else gets a lot less, if anything at all.”

The forthcoming Grand Theft Auto VI “is apparently going to cost $1 billion to make,” he said, predicting it would also likely make $1 billion within the first three days.

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“These are these spectacular numbers and just going to grab so much market attention that those live services games are going to see a lot of their players disappear for a week or two while they go play this premium release.”

But that game’s developer has the release scheduled roughly for 2025 or 2026 – a long way off.

Meanwhile, both van Dreunen and Brunt said the industry is currently seeing the worst downturn since the 2008 financial crisis.

Video: 2024 marks a year of “funflation” for Canadians

Van Dreunen, speaking from Brooklyn, N.Y., said other spending and consumer patterns over the last several years are exacerbating the regular industry cycle of hiring and firing.

“We were all studying at home and working remotely” during the height of the pandemic, “so socializing in online worlds suddenly didn't seem so weird anymore and that led to improved sales,” he said.

The Entertainment Software Association of Canada, a developers group, said video games contributed $5.5 billion to Canada's economy in 2021.

Fewer people staying at home as restrictions lifted and life returned to more normal rhythms means less spending on video games, which means developers need fewer staff to build and maintain games.

Van Dreunen said studios are likely waiting for the next generation of consoles. He told Global News Sony, Microsoft and Nintendo are all likely planning to replace the PlayStation 5, Xbox X and S and Switch in less than 18 months.

“Everything points towards the release of a Switch 2 and a new console generation coming up in the next year or two,” he said.

Van Dreunen said game publishers are waiting because players tend to spend less at the end of a console’s lifecycle, and “they're not going to want to experiment and lose any money on some new titles” they can’t play on new platforms.

But he cautioned shedding so many other developer jobs could harm the industry, even if studios start hiring again within the next 18 months ahead of new consoles and releases.

“I get it, you got shareholders, it's fine,” he said.

“But it creates incredible risk and destruction of value” that also “discourages the talent.”

Brunt said the current downturn is taking a toll on workers. And whereas many people could sustain a few months of unemployment, this cycle is longer and forcing people -- many with high-tech, highly skilled computer and design skills -- out of the industry.

“We're just replaceable. Like, that's what makes us feel like,” he said.

— with files from The Associated Press and Reuters

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