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Why is the video game industry in crisis? (sh.itjust.works)

submitted 6 months ago by Zeppo@sh.itjust.works to c/outoftheloop@lemmy.world

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I keep hearing about layoffs, studios being closed and how the industry is troubled. Are companies losing money and sales are poor, or is it the same as Google and other companies laying off people just to pump their stock price and make money despite profitability?

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[–] MamboGator@lemmy.world 16 points 6 months ago

It's less about profit and more about sustained growth. During the COVID lockdowns publishers saw a big bump in cash flow due to increased sales and subsidies. That caused them to hire new employees en masse among other investments because in the corporate world there is no such thing as leaving money unspent. Money needs to earn more money because capitalism and shareholders.

After the lockdowns, that extra cash flow receded quickly. The response from publishers to keep their growth rate from also falling is to lay off employees and reduce risks.