Mass Layoffs, Mass Profits

In yet another round of mass layoffs at its gaming subsidiaries this year, Microsoft last week shuttered multiple studios in what one developer described as “a fucking gut stab.” From industry giants like Activision Blizzard and Ubisoft to smaller indie developers like Possibility Space, no studio seems immune to the ruthless mandate of corporate cost-cutting. The casualties of this profit maximization are the countless game developers who bring virtual worlds to life, only to find themselves discarded once the product is shipped, regardless of how well the game actually sells. Microsoft imposed these layoffs shortly after posting profits of $21.9 billion in the latest quarter, an increase of 20 percent over the previous year.

“What definitely changed over the past decades has been the introduction of layoffs to boost share prices,” Kai tells me. “That just wasn’t a thing early on.”

The industry as a whole holds the dubious distinction of having several of the most overpaid CEOs, with Bobby Kotick of Activision Blizzard (and known sexual-abuse enabler) reported to have a net worth of $7 billion. Kotick made $154 million in 2020 alone. At the same time, some of his employees were going hungry.

Despite the industry being immensely profitable, video game executives have lost any compunction when it comes to imposing astounding layoffs on their workforces, wielding tens of thousands of firings as a blunt instrument to appease shareholders and boost short-term profits. The mere announcement of mass layoffs can cause a significant jump in a company’s share prices, creating the perverse incentive to fire as many people as possible.

Tech companies often lay people off not because they are losing money but because they are simply growing at a slower rate than before. In 2019, Activision Blizzard fired eight hundred people after posting “record-setting” revenue. Microsoft, the world’s most valuable company, fired ten thousand in 2023 even though the company was still profitable and growing, just not as fast as the shareholders wanted.

Yet reports likely underestimate the carnage. The true number of layoffs is obscured by the practice of outsourcing employees and hiring temporary contractors, often with the promise of future work and benefits that never materialize. Once the contracts are over, companies simply cut ties with hundreds or even thousands of temporary workers and can say that it was just the end of their contracts, not a mass firing.

With the prioritization of stock prices, video game companies are following the same path toward the “enshittification,” as it has come to be known in the tech industry, of tech products. Kai points to the widespread detrimental consequences of cyclical layoffs not just on workers but on the companies themselves:

Bioware laid off a significant portion of their employees last fall, and they are now cold-messaging people on LinkedIn trying to hire for positions like short-term contract programming. . . . When a company lays off workers, they lose institutionalized knowledge and throw their remaining employees into fear-based instability, which affects performance, but they also clearly do so without thinking about how it’s going to impact their active development.

Companies often argue they need to cut jobs when an expensive project doesn’t sell as well as predicted. But workers aren’t buying this argument anymore. Regardless of whether or not a game that went through expensive development loses money, Kai argues, the burden should not be placed on developers. “These companies lay people off that they are going to need to do the work,” Kai says. “They don’t do it because of performance or costs; they do it because it pumps their stock price.”

“You Don’t Really Feel Like a Human Being”

“This industry took off so fucking fast,” Wayne Dayberry of ZeniMax Workers United told me. “I think the morality of it is catching up all of a sudden.” He says that the combination of a burgeoning, unregulated industry and the “pure passion” of many of the workers flocking to it created a perfect storm of exploitation. “It was just this money-producing thing. As long as everything was working, then why stop?”

Dayberry works in quality assurance (QA), the team tasked with testing games to identify bugs and systemic glitches before they get released. These workers are often the most exploited in the industry. Since QA is generally regarded as an entry-level department, many workers are paid minimum wage, six-day weeks are common, and burnout and turnover are high. “You have to get in somewhere,” Dayberry says. “We’re the thing that just gets replaced.”

Part of what contributes to that burnout is what’s known as “crunch,” or overwork, usually in the lead-up to a game’s release date. During crunch periods, people can work up to a hundred hours per week. Some have had heart attacks at work, lost their marriages, and been pressured to show up even when actively puking from the flu.

Workers call these “death marches,” and people who have nervous breakdowns are labeled “stress casualties.” “You don’t really feel like a human being,” Dayberry says.

There have been many high-profile stories in the video game press about the widespread abuse that employees suffer at the hands of development companies and publishers. And gamers are realizing that the end product from all this abuse is undercooked games that nickel and dime them in the form of microtransactions and recurring “battle passes.”

This profit maximization also distorts the kinds of games that developers are allowed to pursue. “Big companies will refuse to do small, cheap projects (think $1 million or less) that are almost guaranteed to make a profit, because they wouldn’t make enough money,” Kai says. “We’ve hit a point where if the profit isn’t eight or nine digits, it somehow doesn’t count.” The result is a hollowing out of the middle, as it were, where the only projects that get made are resource-intensive blockbusters or no-budget indie games.

But the video game industry — motivated chiefly by profit, run by amoral executives, and greased with the labor and passion of highly exploited and disempowered developers — is beginning to change.

There’s Power in a Union

Dayberry has been at ZeniMax for seven years and is one of the lead organizers with ZeniMax Workers United. A few years ago, he began reaching out to his fellow workers about their grievances and bringing those issues to HR. Those meetings went nowhere fast, and that’s when he started floating the idea of forming a union.

ZeniMax Workers United is currently bargaining their first contract with ZeniMax, recently acquired by Microsoft for $7.5 billion. The QA team has formed its union in the midst of several other successful drives in the industry, with QA workers at Raven Software, Blizzard Albany, and Keywords Studios also unionizing. It seems no accident that perhaps the most stepped-on department in video games is leading the charge.

Dayberry has been in contact with workers at other companies and sees widespread discontent. “The more we’ve had conversations with people in other studios, it’s all kind of the same issues,” he said. “Everybody has collectively reached a point where it’s not sustainable anymore.”

ZeniMax Workers United specifically is trying to change the mentality that keeps QA at the bottom of the barrel. “We’re trying to push toward this new idea of, why not retain skilled employees?” Dayberry told me.

“Unionization is good for companies. They are just too shortsighted to see it,” says Kai.

Executives currently operate with impunity, accountable to shareholders but not their workforces. Electronic Arts, for example, spent $325 million on stock buybacks in just the third quarter of 2023, right before a spate of mass layoffs, and has spent a total of $1.3 billion on stock buybacks over the course of just one year.

“A mandatory severance and limits on layoffs enforced by a collective bargaining agreement and job actions would slow that down pretty fast,” Kai told me. Union contracts could check executive power with clauses that forbid layoffs for enterprises operating at a profit or only temporary and survivable losses. “Add mandatory severance to this as a poison pill against layoffs and we can protect jobs from predatory capitalists,” Kai insists. Coordinated work stoppages and slowdowns “would grind any large development studio to a very sudden and violent halt.”

ZeniMax Workers United is also bargaining to clamp down on the industry’s widespread use of independent contractors in place of employees. Even a “temporary employee” designation for certain roles could make those workers less exploitable. The union is also interested in more transparency from higher-ups about the entire game development process, including resource allocation.

As in other industries, unionization in video games isn’t just about workers taking home their fair share — it’s about dignity. “People have the ability — not the ability — they have . . . an option to care about each other now, because we can actually do something,” Dayberry says.

While only 5 percent of developers polled currently have a union, the majority support unionizing the industry. “Change is definitely on the horizon,” Kai says.

Dayberry also notes a generational shift: “This current generation is less inclined to eat shit on a regular basis than past generations.”

Though ZeniMax Workers United has so far faced relatively little union busting from parent company Microsoft, which signed a labor-neutrality agreement, other companies may not be so gentle. Until strong contracts are signed, at-will employment can be weaponized against any potential troublemakers and labor agitators.

“Companies fear unionization because they want to pad C-suite salaries and make investors rich,” Kai says.

I’ve personally contributed to the success of franchises that have made companies billions of dollars, and what did I get out of it? A flat salary that barely rose over my entire career when adjusted for inflation, crippling stress-induced health issues, and ultimately laid off like everyone else, because some rich capitalist decided that they couldn’t make enough money.

The Media’s Complicity in Managerial Narratives

In the face of mass layoffs, the mainstream media’s coverage of the issue has been woefully inadequate, leaving their readers thinking the video game industry is just inherently unstable for workers.

NPR’s Ailsa Chang’s interview of IGN’s Rebekah Valentine sums it up. We’re told the main causes for mass layoffs are 1) games are just getting more and more expensive to make and therefore riskier (“You need to have the best graphics, the most content, the most things for players to do,” says Valentine. “And as a result, they take even longer to make. So games that, you know, previously may have only taken two or three years to make are now taking four or five, six, seven, maybe even longer. And therefore the cost is just skyrocketing.”) and 2) the video game industry “is kind of a fundamentally unstable career,” says Valentine, and this is framed as a cultural problem.

To the first point, many gamers have become wise to and fatigued with high-production, bloated games that are produced at enormous personal cost to the people who create them. I want shorter games with worse graphics made by people who are paid more to work less and I’m not kidding has become a meme among gamers for a reason.

Companies are making literal billions of dollars on microtransactions alone, which are cynically designed to manipulate consumers into reflexively paying for more content in an addictive model reminiscent of a slot machine, and yet those billions can’t seem to save video game developer jobs.

To the second point, there is nothing fundamentally unstable about the video game industry. Executives impose mass layoffs while increasing their own salaries and shareholder earnings. And they do it not because such actions are fundamental to the industry but because they can get away with it.

An essential aspect of this pro-corporate argument is simply chalking it all up to culture.

CHANG: Well, do you think that the culture, then, within the video game industry is just fundamentally incompatible with job security, stability, predictability?

VALENTINE: Yeah.

CHANG: (Laughter)

VALENTINE: Long term, it certainly seems that way.

Obviously, no industry should be “fundamentally incompatible with job security, stability, predictability.” This is not to say that there isn’t a definable culture in the video game industry. The concept of “crunch,” of killing yourself with overwork in order to get the product over the finish line, is indeed driven into worker’s heads. One video game college in Washington is infamous for teaching its students to accept exploitative crunch culture. But to call job insecurity part of the culture is to obfuscate the very real, identifiable decisions that powerful executives make to exploit and then unburden themselves of workers. Grinding developers to dust is not a culture.

The Next Checkpoint

Besides worker protections secured through unions, more public funding could be allocated to make the arts industries less volatile as a whole. Countries like France generously fund entertainment and the arts. This allows for more risk-taking and creativity without the fear of bankruptcy, as well as the diminution of the profit motive.

There is precedent for this in the United States. The Works Progress Administration gave opportunities for radical creatives to make a living, leading to a flourishing in public art. The National Endowment for the Arts is an existing mechanism by which we could do this in the United States, though it requires both more funding and an egalitarian overhaul. Breaking the monopoly of corporate and vulture capitalist funding in entertainment would open up space for work that is more experimental, less regimented, and provides for tens or even hundreds of thousands of video game workers.

If we accept precarity in the video game industry, or any other industry, as immutable or just a quirk of the “culture,” we all lose. Game development does not have a culture of instability. It has a culture of exploitation.

Developers themselves know how to fix it. As Autumn Mitchell of ZeniMax Workers United put it, “We have something more certain than luck, something more powerful than hope: we have a union.”