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An allergy to transparency | This Week in Business

How the IARC works, what makes Naughty Dog's layoffs different, and the industry's ongoing effort to control everything anyone knows about it

This Week in Business is our weekly recap column, a collection of stats and quotes from recent stories presented with a dash of opinion (sometimes more than a dash) and intended to shed light on various trends. Check every Friday for a new entry.

This industry is terrified of transparency.

From the secrecy around development to the unnecessary NDAs on everything from ex-employees to underwhelming embargoed news, the games industry likes nothing so much as playing its cards close to the chest.

It's pathological, and it has been consistent for as long as I've been covering the industry.

The industry's inclination towards opacity has never been great, and it has gotten worse over the years

Was that E3 trailer pre-rendered or in-engine? Is the DLC on the original game disc or downloaded after the fact? Is your game using NFTs?

Even when a bit of secrecy is justified – marketing plans are a thing and there's no need for everyone to know every game you're working on at any given moment – the enthusiasm with which companies like Epic, The Pokémon Company, and MiHoYo sue people for leaking game news is unsettling.

The industry's inclination towards opacity has never been great, and it has gotten worse over the years.

STAT | 326,000 – The number of Xbox 360s Microsoft sold in the US during its first five days on sale, 59% of what the original Xbox sold in its first week, as reported by the NPD Group in December of 2005.

Read the rest of that article and compare the information we used to get about sales to what we see today. Exact sales figures for games. Year-over-year comparisons for franchises and individual publishers. A veritable buffet of actual data, some of it coming directly from the NPD, other bits coming from analysts freely sharing points of interest from the month's numbers.

These days, Circana (formerly NPD) gives a top 20 software list with no numbers. Most months we'll at least be told which console sold the most, but that's about it. And the publishers and platform holders have similarly throttled back the data they release even when things are selling well.

STAT | 2 million – The number of copies Madden NFL 07 sold in its first week, up 12% year-on-year, as EA announced in its victory lap press release for the game in August of 2006.

STAT | More than double – Madden 24 players using cover athlete Josh Allen completed more than double the passing touchdowns of the next most successful quarterback in the game's first week, Patrick Mahomes, one of the bolded points of emphasis in EA's victory lap press release for launch of the game in August of this year.

To be fair, EA also told us the game set a single-week franchise record for digital units sold, saw a 36% increase in games played for week one compared to Madden NFL 23, and had more players in week one, which are some stats you can clearly look at and say "sounds good, I guess," but are of limited use when it comes to getting a clear picture of the franchise's performance, particularly when publishers only give apples-to-apples comparisons on engagement figures that may not correlate to business performance, and they regularly switch up the engagement figures given to whatever sounds the most flattering.

And it's not just sales, obviously. There's the entire way the industry has handled free-to-play games, where its natural instinct was to not even be transparent about when you were actually spending money in a game.

It took legal action and public outcry for that to change. Just like it took years of complaints over loot boxes before platforms decided that maybe it would be good to tell people what the odds of getting the thing they want are.

(Well, not exactly the thing they want, of course. Just their odds of getting an item from the same tier of rarity.)

(And not their actual odds. A lot of companies just settled on saying "less than 1%," because people have a hard time conceptualizing chances that remote so there's really no difference between your odds of having celiac disease and your odds of winning every Powerball lottery for a year straight, right?)

That didn't do the trick and people kept complaining that companies were offering their kids gambling methadone, so industry ratings boards finally relented and rolled out an informational label to put on games with loot boxes – In-game Purchases (Includes Random Items) – in April of 2020. It was almost literally the least they could do, and the industry is still not even doing that reliably.

QUOTE | "This is not social corporate responsibility where a company is going above and beyond what is required by law. This is literally the bare minimum legal requirement that many companies are failing to meet." – Loot box researcher Leon Xiao on the industry's inability to label games correctly after Hutch Games was chastised by the UK Advertising Standards Authority this week for failing to inform customers of the presence of loot boxes in two of its games.

Even in the face of a government crackdown, transparency was simply too much to ask

Even in the face of a government crackdown, transparency was simply too much to ask.

QUOTE | "Commercially sensitive" – The words Epic's Matt Weissinger used in a parliamentary hearing with the UK's Digital, Culture, Media, and Sport Committee to describe information about Fortnite user habits as a way to avoid sharing it with the government.

On one level, I can understand that. Maybe it's better not to share the actual numbers in some cases because the truth of how people play in the current engagement-obsessed era of the industry could be even more damaging than whatever imagined horrors legislators and concerned parents can cook up.

But I'm skeptical that's the real reason the industry is cagey about this kind of thing. It's not that I think the actual numbers would be perfectly acceptable if we knew them; it's that this industry is consistently, reflexively, and often needlessly opaque.

For example, this week Epic announced that it was adding IARC age ratings to content made in Fortnite's Creative Mode. Created to streamline the ratings process worldwide, the IARC lets developers fill out a questionnaire about the potentially objectionable content in their game, and then it automatically assigns ratings for the game under the ratings systems for North America, Europe, Brazil, Australia, Germany, and Korea.

The IARC system saves actual human raters from exposure to Fortnite's Creative Mode

The system was created specifically as an adaptation to the massive number of new games hitting on digital storefronts (PC, console, and mobile), and it's free for developers and only takes a few minutes to fill out, to make sure storefronts can require it without adding too much burden for developers. It's a reasonable idea and a pragmatic system on the surface, but considering what a huge swath of the industry it covers, a bit of external scrutiny is warranted.

Curious about exactly what was asked on the form and believing there was a legitimate interest in people seeing how the industry's rating assignments worked, I reached out to the IARC and asked for a copy.

The IARC's representative replied and asked what I wanted it for. I explained I wanted to get a better idea of how the process works, and noted that the questionnaire is already widely available and it would be pretty trivial for me to get a copy anyway.

I was motivated to see what they were so keen on not sharing. A few hours later, I had a copy of the questionnaire, and it was… not really worth hiding

They said no because it was only intended for developers, so of course I was motivated to see what they were so keen on not sharing. A few hours later, I had a copy of the questionnaire, and it was… not really worth hiding, honestly.

There are lots of questions about the frequency and detail of violence, as you would expect. Is it realistic or fantastical, implied or shown? Does it have a pixelated or childlike style? Can defenseless characters be injured or killed, and are there consequences for that?

It's also somewhat funny to see the questions that have a distinctly Video Games vibe to them.

QUOTE | "Do these [revealing] outfits ever appear to be out-of-place, such as a bikini worn on the battlefield or sole wearing undergarments in public?" – One of the IARC questions.

The attempt to draw clear demarcations around the various levels of nudity are also fun, like a "check all that apply" question for the types of nudity included that some will no doubt read as a Pokémon-style "Catch 'em all" checklist:

  • Human Buttocks
  • Nipple-less Breasts or Breasts with Minimal Coverage, e.g., pasties, long hair
  • Female Fantasy Creatures' Breasts, e.g., harpies
  • Female Human Breasts with Nipples
  • Geniltalia

Then there are sections about gambling, bad language, drugs, and crude humor, which had to be detailed as clinically and straight-faced as possible, which actually makes it funnier than most of the games that would qualify for the term.

QUOTE | "Flatulence (with depiction of 'flatulence cloud'), whimsical depictions of feces ('poo coils'), vomiting" – One of the "check all that apply" options on the list of bodily functions in the crude humor section.

Screenshot of Boogerman showing the main character bracing for a fart attack. A meter in the top left shows a finger trailing mucus out of a nose. A meter on the top right shows Boogerman's head burping a green cloud of gas. There are plungers for some reason.
When Boogerman makes his inevitable comeback, the IARC will be ready

Finally there's the "Miscellaneous" section, which asks about user-generated content, loot boxes, chat moderation and blocking features, and whether a game advocates committing acts of terrorism, as well as some overtly region-specific concerns.

QUOTE | "Does the game contain any content that can substantially erode the national identity of the Republic of Korea by describing anti-national acts or distorting historical facts?"

Is it interesting? Mildly. Do I have a better understanding of how the IARC works now, having read through this? Absolutely.

Did the IARC gain anything by not being transparent about this? Other than to waste a bit of my time, no, not in the least.

But this is the way the industry is: a massively influential global giant pants-wettingly terrified at the idea that people will know anything about it besides exactly what it wants them to know.

The problem is that when people don't understand how something works, they might assume the worst. And when you needlessly try to prevent them understanding how it works, you're only helping justify those assumptions.

It's a simple calculation, really. Would people knowing what you're actually doing be worse than people assuming you're doing the worst thing they can think of?

If it is, this transparency-averse habit of the industry's makes sense. If not, it's likely hurting more than it's helping.

A whimsical depiction of Naughty Dog feces ('poo coils')

Joel from The Last of Us Part 1 looking just off to the side of the camera, where the back of Ellie's head and shoulder are barely visible. His face seems to have a slight sneer.
I don't think Joel appreciates our section heading

Naughty Dog had a round of layoffs this week. At least 25 people or so. It's a bummer, sure, but that number is less than what we've seen at Epic Games, Roblox, Volition, Beamdog, Ascendant Studios, Blackbird Interactive, Striking Distance Studios, CD Projekt Red, and there are more than a few other companies with unspecified layoffs that could have been greater.

So why are we going to talk about Naughty Dog specifically here? Because there are better and worse ways to do things, even objectively awful things like taking someone's livelihood away.

There are better and worse ways to do things, even objectively awful things like taking someone's livelihood away

If you want an example of a better way, I'll actually point to Epic Games, which last week laid off 830 people as a result of a foolishly short-sighted and deliberately unsustainable business strategy, but did a few things to avoid piling needless additional harm onto the employees it was letting go, things we know about because Epic posted Tim Sweeney's email to staff about the layoffs onto its official website.

According to that email, impacted employees are getting six months severance (and six months healthcare for those in the US, Canada and Brazil), accelerated stock options, and vested profit-sharing for US employees with a 401k. On top of that, it's also providing career transition services and visa support "where we can."

That's about as good a package as I've heard a company dole out in layoffs, and I've been on news beats covering these things at a depressingly steady cadence for more than 18 years now.

I also appreciate that Epic was quick to acknowledge the facts of the situation to the outside world after breaking the news to staff first, so outlets didn't have to rely on unofficial sources for key details, because those sources can still get details wrong even if they're acting in good faith.

STAT | Roughly 20 people – The number of people we reported had been omitted from The Callisto Protocol's credits for leaving the studio before the game's completion, because that was the best estimate of the developers we spoke with.

STAT | More than 50 – The number of names added to the "Additional Development" section of The Callisto Protocol's credits (a section specifically consisting of former employees) a few months after our report.

Now compare Epic's openness and support for laid off employees to that of Naughty Dog.

Kotaku broke the news of the Naughty Dog layoffs Tuesday morning, saying two sources familiar with the situation confirmed the cuts were coming from the ranks of contractors – mostly contractors in QA – that there was no severance involved, and that "remaining employees are being pressured to keep the news quiet."

We pinged parent company Sony for confirmation and comment; they never responded, because transparency.

Before we go further, there's one reaction to the story that I want to address first. We heard it in a few places from a few people after the Naughty Dog story, and it basically boils down to two points:

● Contractors don't get severance.

● Contractors get paid more than full-time employees in exchange for the lack of benefits and job security.

That might be how contractors are often advertised as working in order to avoid people concluding it's an arrangement designed to be exploitive from the get-go. But those points are by no means inherent to contractors.

There's nothing stopping Naughty Dog from taking better care of the people who work for it

For example, I was a contractor for several years, and I had a clause in my contract to pay severance if the company decided to terminate it early. That might not be common, but it's enough to show there's an option to do things differently.

There's nothing stopping Naughty Dog from writing such language into their contracts as a way to take better care of the people who work for it in the unfortunate event that the studio needs to cut ties before their contracts end. I mean, nothing except a callous disregard for the well-being of people you rely on to get your games done and a desire to hold onto the option to cut them loose at any moment at as little expense as possible.

As for contractors being paid more than full-timers, perhaps that's how it works in some situations, but QA isn't necessarily one of them.

STAT | $17 per hour – The amount contractors were making at Activision Blizzard's Raven Software in December of 2021, according to The Washington Post. Before a raise the previous month, they had been making even less.

STAT | $18.50 – The minimum pay those contractors received when they were moved to full-time employees, according to the Post, in addition to the benefits and bonuses that come with full-time status.

But that's fine, right? So long as contractors agreed to a setup with little pay, no job security, and no safety net, why should Naughty Dog feel compelled to do anything else for them? This is a transactional business relationship by definition, and it's not like the workers are giving the studio anything beyond what's explicitly spelled out in the contract.

QUOTE | "There's people who never go home and see their families. They have children who are growing up without seeing them... I mean, my health really declined, and I had to take care of myself, because it was, like, bad. And there were people who, y'know, collapsed, or had to go and check themselves in somewhere when one of these games were done. Or they got divorced. That's not okay, any of that. None of this is worth that." - Former Naughty Dog creative director Amy Hennig, in 2016, explaining that Naughty Dog has a history of asking a whole lot more of its workers than is written in their contracts.

QUOTE | "People just naturally do it. Because we hire a particular type of person who's motivated and passionate and wants to leave their mark on the industry. That's why they come to Naughty Dog." – Evan Wells, in a 2016 interview, says Naughty Dog isn't actually asking for more than is in their contracts; it's just hiring people it knows will kill themselves for the job without being asked to.

An Uncharted 4 screen showing the player in a jeep careening down a set of stairs toward an area with people running for cover
Naughty Dog games produce collateral damage on both sides of the screen

But we've talked about Naughty Dog's crunch culture before, and I actually can't say for certain that's relevant here.

After all, I don't know exactly how much Naughty Dog pays its QA contractors or how much it asks of them specifically. For all I know, these QA contractors were the best of the best, hired guns that command top dollar and parachute into projects at key moments to get them over the hump, and then determine which of a dozen different possible clients they will take on.

But I do know that would be a very unusual situation for QA contractors in the industry. I know it's far more common that they are the most precariously employed and worst compensated of developers, qualities that can then be used to crunch them harder.

QUOTE | "Contractors reported earning as little as $11 an hour. One said when the studio required them to work overtime, it was portrayed to them as a generous opportunity to earn a little more money, an offer many felt compelled to accept given how difficult it was to get by on their basic wages." – An excerpt from our 2019 feature on crunch culture at Mortal Kombat developer NetherRealm Studios.

I know that QA contractors are often the least established members of the dev team, that they are frequently viewed as utterly replaceable and overworked in line with that view.

QUOTE | "All [management] wanted was people who are disposable…One senior guy would say, 'Just get more bodies.' That's what the contractors were called: bodies. And then when we're done with them, we can just dispose of them. They can be replaced with fresh people who don't have the toxic nature of being disgruntled." – A source for a 2019 Polygon feature on Epic Games' treatment of employees and contract workers on Fortnite.

I know that companies have a well-established history of taking advantage of passion.

QUOTE | "A lot of people who just started working at Paradox, they're young, and newly graduated from a game development school or something, and they're like, 'Oh my god, I'm so passionate and I'm going I get to work on my idol company, I've grown up playing their games, etc.' And then to get to here and be told we're like a family and a flat organisation, when it's not. It just feels very, very deceptive that they're playing on people's passion this much. Making them feel like this is normal." – A source for Rock Paper Shotgun's 2020 feature on poor treatment of QA workers at Paradox.

I know that contractors are often presumed lazy despite the work they are asked to do, and denied basic respect and dignity.

QUOTE | "The testers also coped with the pressures of being surveilled. A couple of sources told Kotaku that QA workers would have their breaks timed or sometimes even be followed into the restrooms by non-management employees…" – A 2022 Kotaku article detailing mistreatment of QA contractors during development of Fallout 76.

I know they often feel they are treated as second-class citizens in their workplaces.

QUOTE | "Many [Nintendo of America contractors] said they can eat lunch at the Mario cafe, but are expected not to linger in the main building. The company's hyper-vigilance around leaks means they must also be accompanied by red badges [full-time employees] in many parts of the campus, and can't even bring their parents on a tour of the Nintendo museum there." – A Kotaku report from last year about Nintendo of America's treatment of "blue badge" contract workers at its Redmond, Washington headquarters.

I know QA contractors are so disdained they will even be looked down on by other QA contractors.

QUOTE | "One former QA contractor said that when the team expanded during crunch time, the pre-existing contractors would refer to the pod where the new people worked as 'the exile room,' adding, 'They were lesser people. They were disposable. They were likely never going to come back.'" – Another line from our NetherRealm Studios feature.

I know management often does not see tremendous value in what QA workers do.

QUOTE | "Some of our disciplines are not long-term disciplines." – Blizzard president Mike Ybarra, dismissing QA and customer service in an all-hands meeting earlier this year as transitionary positions and not essential functions of game development worth specializing in.

I know successful companies use the "prestige" of working for them as an opportunity to pay people less or treat them worse.

QUOTE | "The legacy of Blizzard is all about, 'You're working for Blizzard, aren't you lucky?' But the reality is that we are constantly dealing with difficult people, in a culture that cares little for mental health and expects the same kind of 'smile-all-the-time' as retail does. The only way for this to truly change is to change the culture and the attitude of the people in charge." – An anonymous tester from Blizzard speaking to Kotaku for a 2021 article about conditions in the company's QA team.

And I know that all of this has a tangible toll on real people, one that can't be offset by a shipping bonus, a high Metacritic score, or any number of Game of the Year awards sitting on the creative director's shelf or in a display case in the studio reception area.

QUOTE | "I worked for a number of years in the Lincoln QA studio on GTA5 and RDR2. I ended up leaving due to personal circumstance and the job itself driving me into a suicidal depression." – A source for Eurogamer's 2019 feature on working conditions at Grand Theft Auto and Red Dead Redemption developer Rockstar.

Rockstar management gives QA an inspirational pep talk

The sheer quantity and diversity of the companies implicated in those stories – and the numerous elements in common if you read through them all – suggest these cases aren't so much outliers as they are the status quo for contractor treatment in the industry.

And given the way we know Naughty Dog has treated the full-time employees it wants to keep, pardon me for not giving it the benefit of the doubt on the ones it doesn't.

Given the way we know Naughty Dog has treated the full-time employees it wants to keep, pardon me for not giving it the benefit of the doubt on the ones it doesn't

The lack of transparency about the cuts is added insult to injury, particularly the bit about pressuring people at Naughty Dog to be quiet about it.

That's a conscious decision to value the studio's own reputation and vanity over the needs of the people it is putting in a very difficult position, starting a job hunt in an industry beset by layoffs with the holiday break just around the corner. That's already a tall order for those being let go, but if Naughty Dog got its way and there was no coverage of these cuts, there would be less awareness of the situation, less outreach of support, less publicizing of relevant roles from other studios, and fewer devs hyping departing colleagues to their LinkedIn networks.

None of those things guarantee a soft landing for anyone losing their job, but they all increase the odds of one. But Naughty Dog didn't want to let that happen.

And for what? To avoid people knowing it did a thing that it actually did? Layoffs are a sad fact of life in this industry. A couple dozen people let go with a reasonable cushion alongside a development setback like the shelved multiplayer Last of Us spin-off? I think a studio like Naughty Dog could survive the financial hit of the reasonable cushion and the reputational hit of the cuts themselves. That would still be a bummer of a story, but it's the sort of thing that would be gone within a single news cycle and quickly forgotten.

But an employer cutting people lose without assistance and trying to do it on the down low? There's a bit of a Streisand Effect to that. It's the kind of thing that might have the press talking at length about your studio's failings on a Friday when the layoffs happened on a Tuesday.

Even if a studio is primarily concerned about optics, it's worth considering the difference between getting bad headlines for doing the same unpopular thing it seems half the industry is doing these days, and getting those same bad headlines with an added dose of, "We told our employees to keep quiet about this and made it harder for their fired friends to get jobs" on top of that.

The rest of the week in review

QUOTE | "While measures like contractor and employee layoffs effectively reduce overhead costs and momentarily boost the appearance of balance sheets, there's an evident lack of comparable reduction in total compensation packages for executives." – In a roundup of investors, analysts, and recruiters giving their thoughts on the recent wave of layoffs, IDG Consulting's SVP of consulting Emilie Avera calls attention to who's being asked to pay the price for companies' current situations.

QUOTE | "Unfortunately, a client refused previously agreed-upon payments, which deprived us of the cash flow to fully pitch our in-progress title and triggered successive failures in our operating income. I take full responsibility for not sufficiently preparing for this outcome." – Puny Human CEO and studio manager Mike Sanders explains why the 20-person studio is shutting down after 16 years .

QUOTE | "Dang is closing up shop. Unfortunately we were not able to find funding for our next game and we are out of money." – Boomerang X developer Dang announced this week it is calling it quits.

QUOTE | "We did not take this action lightly, and our commitment to storytelling and finding new ways to do so remains the same. We are grateful to everyone for their dedication along this journey, and we are working to support everyone impacted." – A Telltale representative confirms that the company had a round of layoffs last month. While the company gave no indication as to how many people were let go, one former Telltale developer said the studio "laid most of us off."

STAT | 1 – The number of months before the layoffs that Telltale went out and bought Flavourworks.

STAT | 633 days – How long it will be between Microsoft announcing the deal to acquire Activision Blizzard and that deal finally closing, if Microsoft's expectations detailed in a report from The Verge come to pass and the acquisition goes through next Friday. The deal was first announced in January of 2022.

STAT | 1,197 days – The number of days between Ubisoft's workplace culture and sexual harassment scandal making headlines and French police bringing five former Ubisoft executives into custody this week.

STAT | 0 – The number of quotes or stats I could come up with for this story about an ex-HR manager of Bungie suing the company for wrongful termination after she took an employee's claims of racial discrimination seriously.

QUOTE | "At the time, I was acting as CEO of both Grasshopper Manufacture and Grasshopper Universe simultaneously, and that was probably the roughest time I've had yet. It was totally different from a traditional consumer/console game developer role, and for a little while, all the knowledge and know-how we'd accumulated over the years as game developers felt like it was going to go out the window and become pointless." – In a 25th anniversary retrospective for No More Heroes studio Grasshopper Manufacture, Goichi Suda describes the company's mobile collaboration with DeNA as a low point.

QUOTE | "You're not alone. There's a large Godot community dedicated to [providing advice for devs picking it up]. Their own Discord has set up channels for it. It's literally like refugees coming in, they don't know anything about Godot but everything about Unity. So there's this whole microclimate of Unity people coming to Godot." – Pistol Shrimp co-founder Dan Gerstein offers words of encouragement for developers considering a switch to the open-source engine Godot. Pistol Shrimp made the switch about a month before Unity announced its new Runtime Fee plans.

STAT | 3 million – The number of copies Cyberpunk 2077's Phantom Liberty has sold since its September 25 launch. The Cyberpunk 2077 core game has now topped 25 million copies sold.

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Brendan Sinclair avatar
Brendan Sinclair: Brendan joined in 2012. Based in Toronto, Ontario, he was previously senior news editor at GameSpot.
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