Why the video game sector is in crisis and what are the future prospects

For some time, the world of video games has shown increasingly evident cracks, despite the fact that it seems to be experiencing a golden age from the point of view of the quality of the titles. 2023 has been a banner year for gamers, with masterpieces like The Legend of Zelda: Tears of the Kingdom And Baldur’s Gate 3 which have left their mark on the history of the medium, as well as 2024. However, behind the glittering facade of this multi-billion dollar industry, organizational, economic and cultural problems are hidden that risk compromising its future.

Microsoft’s announcement of the closure of four studios in June 2024 has profoundly shaken the sector, demonstrating how unstable the landscape is even for the most consolidated giants. But how did we get to this situation and what are the root causes of this crisis?

The video game industry is under pressure

The dissonance between the creativity of developers and the strategic choices of company leaders has become increasingly evident. Development cycles have become extremely long, complex and expensive, while economic expectations have grown exponentially. Many companies aim to produce “triple A” games — the most prestigious and expensive productions — but some go further, trying to create “quadruple A” or even “quintuple A” titles. This only increases the pressure on developers, often forced to work for endless hours, including weekends, in what is called crunch culture.

It is not uncommon for extremely ambitious titles, the result of years of work and sacrifice, to fail spectacularly due to short-sighted corporate strategies. An emblematic example is Skull and Bonesa troubled and continually postponed project which represents the symbol of a management that can at least be reviewed by some large companies in the sector.

The Microsoft case: a bolt from the blue

Microsoft’s announcement to close four development studios a few months ago surprised everyone, especially since the company was considered a safe and stable environment. The studies involved were Roundhouse Studios, Alpha Dog Studios, Arkane Austin And Tango Gameworksall part of the ZeniMax stable, acquired in 2020 for $7.5 billion.

Among these, the closure of Tango Gameworks caused a particular stir. Founded in 2010 by the legendary Shinji Mikami, the team had recently released Hi-Fi Rush, a game critically acclaimed for its originality and quality. Despite reaching 3 million players in the first few months, the success of the title was not enough to save the studio. This decision seems inexplicable, especially considering that Hi-Fi Rush it was one of the few Microsoft games to receive recognition in 2023, while more famous titles like Starfield did not achieve the same critical success.

According to Matt Booty, head of Xbox Game Studiosclosing the studios was a difficult but necessary choice to concentrate resources on priority projects. However, these words do not really explain the reasons behind such drastic decisions, leaving room for numerous speculations.

The roots of the crisis in the videogame sector

One of the main reasons behind the closure of these studios could be the recent acquisition of Activision Blizzard by Microsoft, costing almost 70 billion dollars. This move put enormous pressure on the company’s gaming division, which was forced to demonstrate short-term profits to justify the colossal investment. Studios such as Arkane Austin and Tango Gameworks, which had just concluded development of new games and would not produce significant revenue for several years, were likely deemed “expendable”.

But this logic risks being counterproductive. Cutting creative resources could compromise the company’s ability to develop new franchises and innovate, essential elements to remain competitive in an increasingly crowded and competitive market.

The consequences for developers

The crisis in the videogame sector not only affects companies, but above all developers, who find themselves working in an increasingly precarious and stressful environment. The idea that “making mistakes is no longer allowed” is becoming the norm, creating a climate of insecurity and frustration. Even when a team produces a successful game, as in the case of Tango Gameworksthere is no guarantee of stability or continuity.

Dinga Bakaba, chief of Arkane Lyonclearly expressed this frustration, underlining how the gaming industry is first and foremost a cultural and creative sector. Managers, according to Bakaba, should support developers and create a work environment that favors the creation of works of artistic and entertainment value, instead of transforming everything into a “Darwinian jungle” dominated by market logic.

The future of the video game industry

Despite the crisis, the world of video games has demonstrated several times that it knows how to reinvent itself. However, to overcome current challenges, significant changes will be necessary at a structural and cultural level:

  • Labor regulation: Stricter rules to combat crunch culture and ensure decent working conditions for developers.
  • Economic sustainability: Resize economic expectations and pharaonic budgets, focusing on smaller but innovative projects.
  • Enhancement of talents: Investing in people and their skills, instead of treating studies as simply expendable resources.

There crisis in the world of video games represents a turning point for the industry. The challenge will be to find a balance between economic needs and the need to preserve the creativity and cultural value of this medium. Only through more careful and respectful management of talent will the sector be able to continue to grow and offer unforgettable experiences to players all over the world.