Taking layoffs too lightly | This Week in Business

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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 takes layoffs too lightly.

Oh sure, we talk a big game about avoiding them whenever possible. And when it isn't possible, we talk about what an incredibly difficult decision it somehow still manages to be.

But for as long as I've covered this industry, layoffs have been seen as a fact of life, both by the people making the cuts and the ones being cut.

Developers know they are never guaranteed tomorrow. Executives are pretty sure they can trim headcount by 5% or so at any given time and still expect things to get things done. And any kind of serious industry-watcher understands layoffs to be just another part of the game. Perhaps a distasteful or sad task, but one that people understand well-run organizations will engage in from time to time.

Former EA and Unity CEO John Riccitiello told us so a couple years ago after the company laid off about 200 people (three-quarters of whom were able to successfully reapply to other roles at Unity). He bristled at the idea that such layoffs were anything notable, and proceeded to give an explanation that provided such a clear view into the executive mentality around layoffs that I have been bringing it up semi-regularly in this column ever since.

QUOTE | "We laid off a net of 1% through reallocation. To imagine that as being abnormal in the scheme of anything, especially when you're headlong into a recession, would be anything but real. Real is thousands and thousands of well-run companies make adjustments like this in order to serve the better purpose of its customers and frankly, the better purpose of the people who work at the company…

"We didn't cut 1% of jobs because we were trying to make a P&L. We did it because we were focusing our energy. Like with lots of things – your parents when they ask you to eat your vegetables – they're not doing it to punish you. They're doing it to facilitate your better and more nutritious self. There's another, more real story in that. Here the real story is pretty simple. We did the things a good company does to manage and meet the needs of its customers." - Riccitiello defends Unity's 2022 "adjustments."

If adjustments like that are the metric for a well-run company, Riccitiello can rest assured that his tenure left Unity as one of the best-run and best-adjusted operations in gaming.

But it's not just Riccitiello that thinks this way. Take Bobby Kotick. (Please!)

The former Activision Blizzard CEO took the idea of layoffs as evidence of a well-run business to heart so much that Activision Blizzard reported revenues and earnings per year for 2018, and celebrated its performance by laying off 800 people across the company about an hour later in the post-earnings call.

There may be a bit of an asterisk on that one because Activision had just weeks before cancelled its deal with Bungie on Destiny so it wouldn't need quite the same publishing apparatus; maybe a few cuts make some sense there. But there were no such asterisks for the four other times in the preceding decade that Activision Blizzard marked record annual earnings by laying people off.

As with Riccitiello's eat-your-veggies explanation, I've referenced Kotick's celebratory layoffs in this space from time to time because it shows how utterly unexceptional layoffs are in this industry, how developers can bring unprecedented wealth to their employer and its shareholders, then receive nothing more than a pink slip in the way of thanks. Not because laying those developers off was by any stretch of the imagination necessary, but just because some executive thought of the practice as basic hygiene.

It shows how utterly unexceptional layoffs are in this industry, how devs can bring unprecedented wealth to their employer and its shareholders, then receive nothing more than a pink slip in the way of thanks

You can see some of that same callous indifference to the human cost of layoffs in the number of companies like Epic Games or Riot Games, who embraced unsustainable business practices in the name of chasing growth, then let hundreds of employees pay the price for those miscalculations. You can see it in Sony laying off 900 because PlayStation's profit margin isn't impressive enough, EA laying off upwards of 700 a month after it raised its full-year earnings guidance and posted growth in all key metrics, including net income jumping 42% year-over-year. You can see it in the profitable Microsoft gaming division welcoming the also-profitable Activision Blizzard to the fold by cutting 1,900 employees in the name of "a sustainable cost structure."

To be sure, a number of those cuts were made to adjust to a fast-changing market, as executives see no reason to wait around for their bottom line to tank before changing course. And some were going to happen at some point along the line anyway; no matter how successful a publisher may be, they probably don't need the same amount of people managing their brick-and-mortar business now that they needed 15 years ago.

But we very rarely hear any kind of detailed explanations for these sort of cuts, largely because any kind of honesty or explanation opens the executives' decisions up to detailed scrutiny (as in the cases of Epic and Riot admitting they were run unsustainably), while vague platitudes about setting the company up for future growth and other such shareholder reassurances tend to be so immaterial there's nothing for outsiders to engage with.

In such cases, we are essentially being asked to give them the benefit of the doubt that the cuts were needed. But we've been playing that game for way too long in the industry, and the only thing it really does is trivialize the impact of layoffs and minimize the company's PR hit. It makes layoffs easier to go to as a first resort rather than a last one. The paragraph above represents nearly 5,000 layoffs. If you've never been laid off or had trouble finding a job, you might struggle to emotionally grasp the impact of one layoff. But 5,000 is utterly inconceivable. The human misery caused by that much turmoil for that many people can only be understood abstractly, particularly for the decision-makers who generally don't have to witness it.

So in the interest of comprehension, let's bring that scale back down a bit.

STAT | 3 – The number of unionized IGN employees laid off in a round of cuts last month.

QUOTE | "This decision was made despite the fact that the company is in no economic distress and without consulting the union." – The IGN Creators Guild, taking exception to the layoffs.

It's just three people, though, right? It sucks for them, sure, but so many other places are cutting so much deeper these days, in both the gaming and media industries. So why make a big deal about this? It's not like it's a matter of life or death.

QUOTE | "Recently, I went through the worst week of my life. I was laid off in a company re-org and I was diagnosed with cancer. When it rains, it pours." – The GoFundMe campaign launched this week by Joshua Yehl, one of those three IGN employees who lost their job.

"Recently, I went through the worst week of my life. I was laid off in a company re-org and I was diagnosed with cancer"Joshua Yehl

For everyone not in the US, remember that health care in the US is not a public good, and your ability to receive obscenely expensive treatments for life-threatening conditions (or even basic care for serious but easily treatable problems) is often dependent on your continued employment.

For anyone in the US, you probably didn't need the reminder because it's likely a source of ever-present terror lurking on the periphery of conscious thought – if you're even lucky enough to be able to push it that far away. For many it's an existential threat that would make functioning normally impossible if they ever gave it the concern it actually deserves.

Having lived multiple decades in the US and multiple decades outside the US, my experience is that no country has a monopoly on the terrors of precarity, but the exhausting stress of constantly living one unfortunate turn away from irrevocable personal disaster really does hit different there.

QUOTE | "Even before my first chemo session, I had to deal with numerous tests and prescriptions, and it's only going to get worse from here. Simply put, I'm broke, unemployed, and desperate. If I can't come up with the money I need, it may mean the end of my life." – Yehl notes that in light of his rare and aggressive type of cancer, continued employment absolutely is a matter of life or death.

But how many people is that true for? Those layoffs mentioned above represented nearly 5,000 jobs lost. How many of those people are in a situation like Yehl's?

STAT | 403 - In the US in 2020, there were 403 new cancer cases for every 100,000 people, according to the CDC. So if you were to take a sample of 5,000 people that were just laid off, you might expect 20 of them to be diagnosed with cancer this year.

Of course, not all 5,000 people mentioned above live in the US, and the rates for cancer are considerably lower for the younger age groups game developers are mostly pulled from. But how many have diabetes, high cholesterol, high blood pressure, mental health issues? How many have conditions that are kept under control by expensive therapy or medication, conditions that could have serious negative impacts in the short- and long-term if they aren't properly managed, conditions that get worse with stress, like the stress of losing your job, the stress of looking for a new job, or the stress of wondering how you're going to pay for absolutely essential medication without a job?

Now how many people like that were involved last year when Amazon laid off 9,000, when Microsoft laid off 10,000, when Google laid off 12,000 and Meta laid off 10,000 just a few months after laying off 11,000? Do you trust that Andy Jassy, Satya Nadella, Sundar Pichai and Mark Zuckerberg appropriately weighed the enormity of that suffering before going ahead those cuts?

Some people seem to understand this, at least.

QUOTE | "[The layoffs] are an avoidable fuck-up. That's all they really are. That's why you see one after the other. Because companies are going: 'Well, finally. Now we can, too. We've wanted to do it for ages. Everyone else is. So why don't we?' That's really kind of sick. None of these companies are at risk of going bankrupt. They're just at risk of pissing off the shareholders." – Larian head of publishing Michael Douse, in an interview with Game File published last Friday.

STAT | 0 – The number of layoffs Monument Valley developer Ustwo has had, as chief creative officer Danny Gray told Marie Dealessandri in an interview published this week around the game's tenth anniversary.

QUOTE | "Studio leaders in the game industry must implement sustainable measures within their organizations to avoid unnecessary layoffs. With more than 8,700 game developers affected by layoffs this year, the gravity of this situation and its impact on the industry cannot be overstated." - The IGDA released its own statement on layoffs this week, saying studios must abide by six principles in an effort to create a more sustainable industry that doesn't drive away so much talent through layoffs.

I'm not saying a company should never, ever lay off employees, but I am saying every decision-maker in the process had better have a very clear understanding as to what they're doing when they put people out of work, because layoffs really are a matter of life and death for some people. And the executives deciding on the layoffs absolutely have a moral obligation to not embark on those cuts unnecessarily, and when they're needed, to not make the situation any worse than absolutely necessary.

Speaking of which…

What a load of Crop

Last Friday, former Prytania Media CEO Annie Delisi Strain posted a statement on the Crop Circle Games website about the studio's sudden closure.

QUOTE | "This message is an opportunity for me to personally talk about the difficult but absolutely necessary changes we have made at Prytania Media, including the closure of Crop Circle Games, a significant reduction in Prytania Media's non-developer employees, and the successful realignment of the games and staffing at our three other studios." – Strain begins to explain what's been happening at the company in recent months.

It was somewhat overdue, considering the company had laid off most of the team in early February. Perhaps "laid off" isn't the right phrasing though. A number of the staff said they had actually been furloughed, which meant they wouldn't be paid, but they also wouldn't receive severance, which is kind of a worst-of-both-worlds situation. (And also the latest weapon of choice for Immortals of Aveum developer Ascendant Studios, which did actual layoffs last year and this week reportedly furloughed most of the staff that was left.)

Crop Circle staff were officially terminated, but the severance packages it reportedly offered were unimpressive, to say the least

Late last month, Prytania finally confirmed that the studio was closing and the staff were officially terminated, but the severance packages it reportedly offered were unimpressive, to say the least.

QUOTE | "They are also requiring that we sign away our right to compensation from any [National Labor Relations Board] or [California Department of Industrial Relations] action in exchange for an extra two months of healthcare. Healthcare that we know they already paid for. I'd ping [Prytania co-founder and Annie's husband] Jeff [Strain] here but he deleted his LinkedIn account. 🤡" – A former Crop Circle developer in a post on LinkedIn, simultaneously detailing how Prytania is treating its employees and letting me know this website can properly display a clown emoji, something I expect to get plenty of use out of in This Week in Business columns from here on out.

Furloughing staff and basically putting them out of work without severance is one thing. Holding severance hostage in exchange for someone giving up their right to get compensated from legal action for the ugly way you're letting your company collapse is another. But when that "severance" is not the actual money they are owed but two months of healthcare – a deal you could only expect someone to accept if they had absolutely dire and immediate healthcare needs and no other recourse at all – that takes a real shameless dedication to self-interest over the well-being of your people.

On a tangential note, it's not surprising to me that Strain has a bit of a penchant for doomsday prepping, a classic hobby for those eager to prioritize themselves over their fellow humans.

QUOTE | "Now, I could bore you for literally hours with an analysis of survival techniques and supplies and why I have what I have on this table. After Jeff left NCsoft in 2009, before he officially launched Undead Labs, we spent months reading every bit of material we could get our hands on about survival and tools and disaster preparedness and, of course, we brushed up on our zombie lore. I loved it. I effing LOVED it!" – In a 2012 blog post on the Undead Labs site about her own doomsday survival kit, Strain seems almost gleeful about the prospect of society collapsing and everyone having to fend for themselves with no law or social norms to restrict their behavior. Why use such a thought experiment to consider community support networks or sustainable farming practices in your area when you could instead enjoy fantasizing about questions like, "Who's got the grit to fight and survive and rebuild and where would you fit in?"

Getting back to Crop Circle, Strain's letter was only fleetingly complimentary of the developers and the game they worked on. She said the team was likeable, with a delightful enthusiasm for each other. But it's hard to read the entire letter without feeling like Strain is blaming the studio's failure on the people she hired to make a game.

QUOTE | "In the end, despite the kind words of everyone we pitched to for two solid years, the game did not have core features that have emerged as requirements to be competitive in today's hyper aggressive market. I know it's painful for all us who love the game and this extraordinary team to acknowledge, but the game was just fundamentally out of touch with emerging player tastes and not aligned with the portfolio strategies of any publishers or investors. As a result, in contrast to our other studios, there was not a single organization of any kind willing to invest in continued game development." – Strain says the fault lies with the uninvestable game out of step wtih player tastes, not the leadership who formed a team to make that game and were in charge of it every step of the way.

Strain doesn't really get into what Crop Circle's demise means to the team, but she's more willing to talk about what it means to her. Even the admission that "we did incredibly painful and difficult things, including layoffs" is at best ambiguous as to whether the pain and difficulty was suffered by the laid off devs or the leadership.

QUOTE | "Prytania Media and each of these studios were my lifelong dream — a place for game developers to work in carefully curated positive environments that allowed them [to] experience the joy of their craft. In particular, I carried the stories of dozens of industry women who experienced things too awful to write here and it has been my dream to create a forward thinking and profitable place safe for them and for me. I believed in each of these studios, the teams that assembled around the game concepts, and the game ideas themselves. I believed enough to invest significant amounts of my personal money and to devote the last three years of my life — and I now know — my health, to the success of every person and game associated with us."

And at least on that front, she has my sympathy. It's awful to lose a lifelong dream. Fortunately, she still has Prytania Media and its other studios Possibility Space, Fang & Claw, and Dawon Entertainment. So that's still like four out of five lifelong dreams left.

[UPDATE]: Shortly after this column's publication, Possibility Space was shut down with no public announcement or statement from Prytania. So maybe we're down to three of five?[/UPDATE]

And I don't doubt that Strain invested money in these operations. Losing money sucks and it's a big vote of confidence to personally bankroll behind a project in the first place. Not everyone is so bold or so willing to put their money where their mouth is.

And obviously, no one should have to sacrifice their health in the name of the job. If it happens to anyone – management or worker – it is happening to one person too many.

Along with her husband, Strain was the one in charge. She signed up for this

But here's the thing: Along with her husband, Strain was the one in charge. She signed up for this when she decided to chase five lifelong dreams at once, when she took the CEO role to run the parent company instead of finding someone else to do the job, and when she put her own money behind it.

She willingly took those risks when she decided to start these companies, and as the funder, co-founder and CEO, she would presumably have reaped the largest benefits had those risks paid off.

I can feel for her financial woes, her studio's failure, and certainly her health issues, but that doesn't excuse how this went down. And I didn't see one word in Strain's statement that even attempted to explain why it was okay to furlough employees and string them along for weeks, or to withhold severance from them and pressure them into giving up their legal rights in exchange for a fleeting window of health care.

QUOTE | "For independent developers of all sizes, there are no easy paths forward. I stand by these decisions." – Strain, suggesting she has no regrets about how this all went down.

Well, maybe there was at least one thing she regrets.

STAT | Less than a day – How long Strain's message was up on Crop Circle Games' website before the entire site went down. We've checked a few different times and it remains down as of this writing. Meanwhile, Prytania Media's website has gone private; visiting it now brings up nothing more than a log-in interface.

There's no shame in failure, particularly when you're offering something new in a hit-driven games industry where everyone's mostly playing hits that came out seven years ago, on average.

But there's definitely shame in making that failure worse, in not allowing a studio to die with some dignity, and in failing to take reasonable care of the employees who devoted themselves to your cause.

Lightly lies the head that wears the 🤡

That emoji is paying off already.

The whole thing reminds me more than a little bit of the saga of Curt Schilling's 38 Studios, which, unlike its founder, is a real first ballot Hall of Famer when it comes to games industry horror stories.

Like Strain, Schilling invested his own money to get 38 Studios off the ground.

Like Strain, Schilling didn't consider employee healthcare a given. 38 Studios actually stopped paying insurance premiums on employee healthcare before it shut down, much to the chagrin of the 38 Studios executive whose wife needed a bone marrow transplant.

Like Strain, Schilling shut the studio down in a hurry, leaving employees to twist. In fact, some of them had to wait nine years to get their final paychecks from the company, and even then they were paid no more than 20% of what they were owed.

Like Strain, Schilling was not particularly repentant about it, explaining why he didn't pull the plug when the company had enough money to pay employees severance, instead choosing to push it to the moment of collapse, believing all the while that some last-minute salvation was just around the corner.

QUOTE | "I never doubted I was going to do it. My whole life was spent doing things that people didn't believe were possible, because God blessed me with the ability to throw a baseball. And I carried that same mentality into everything I did here... We never had that sense of urgency or panic. I think there was a sense of invulnerability -- I don't want to say invulnerability, but I think we were comfortable." – Schilling, revisiting his thought process several months after 38 Studios went under.

I don't even need to believe that Strain or Schilling made their decisions out of malice here. I can believe that they simply misjudged and misunderstood their situations until they had boxed themselves in so thoroughly that they didn't have the money in the bank needed to fail gracefully, that the only path forward for their companies was the equivalent of panicked drowning that would drag employees down with it.

That's the thing about leadership in this field. Just like layoffs, it's taken too lightly

And that's the thing about leadership in this field (and lots of other fields, really). Just like layoffs, it's taken too lightly.

It's too often treated as a thing to be desired. It's the big paycheck, the final say on what happens, the face of the company. It's fame and respect and fortune (to the extent these things are given to people in the games industry).

There's not enough attention placed on the burden of it. The person in charge is, after all, responsible for what happens; just as they stand to gain more than the people they lead in a positive outcome, so too should they be held accountable for a negative outcome in ways that employees are not.

And all we can do to not let bad leadership off the hook is to not be so accepting of the status quo, to treat casual layoffs and studio collapse horror stories as the appalling things they are.

We may know layoffs are common in the industry, that developers get jerked around by failing employers on a semi-regular basis, that awful stuff happens to people who just want to make games for a living.

But the more we react to it with desensitized indifference instead of the shock and anger that are too often deserved, the more it is normalized, the more such things become not cautionary tales in the making but hallmarks of a well-run company.

If these things are not utterly repellant and unacceptable, then they are just another helping of veggies facilitating the industry's more nutritious self.

The rest of the week in review

QUOTE | "We are thrilled to reestablish our partnership with NetEase and to work together, with deep appreciation for the collaboration between our teams, to deliver legendary gaming experiences to players in China." - Blizzard Entertainment president Johanna Faries on the deal that will bring World of Warcraft, Overwatch, Diablo, and Starcraft back to China after the previous Blizzard-NetEase relationship ended in 2022 after 14 years.

QUOTE | "We have formed a new team dedicated to game preservation, important to all of us at Xbox and the industry itself. We are building on our strong history of delivering backwards compatibility to our players, and we remain committed to bringing forward the amazing library of Xbox games for future generations of players to enjoy." – In internal emails reported on by Windows Central, Xbox president Sarah Bond says the company is investing more in keeping older Xbox games playable into the future.

QUOTE | "The creatives will drive the show. If there is no value in gen AI for them, it is not going to be adopted. It is going to produce average games. We can't do tech for tech on this one." - Ubisoft's SVP of production Guillemette Picard promises that in this case, Ubisoft will only put generative AI in their games if there's a good use for it, as opposed to (I presume) the company's approach to blockchain games.

QUOTE | "Additionally, retro game console emulator apps can offer to download games. You are responsible for all such software offered in your app, including ensuring that such software complies with these Guidelines and all applicable laws." – Apple has updated its app review guidelines to allow for retro emulators on the App Store, relaxing its rules so that developers stick around in its walled garden instead of supporting the third-party app stores that the European Union is requiring Apple to allow now.

It's almost as if government action curbing the impulses of the largest companies on earth has beneficial impacts for consumers and everyone those companies have leverage over. Perhaps this general idea could be expanded beyond anticompetitive behavior and into labor relations.

QUOTE | "The reason AAA is so expensive is because everybody insists on doing AAA in the most expensive territories in the world." – Saber Interactive's Matthew Karch says huge games can be made at a fraction of the budget with teams in places like Buenos Aires, Serbia, and Poland.

QUOTE | "I recommend Early Access for small groups [of] indie devs – it does give you a little bit of financial return but that's actually not the point. The point is to get that needed feedback from people who care enough about the game." – In an interview with Marie Dealessandri, Tetra Tactics lead developer Jabari Alii talks about the just-launched roguelike deckbuilder's stint in Early Access and making the industry more accommodating to new talent.

STAT | $120 – EA is raising the cost of an annual EA Play Pro subscription to $120 from $100 starting in May. It's interesting to see companies like EA and Sony getting more aggressive about subscription pricing after the growth of Xbox Game Pass has slowed down. There's less eagerness for aggressive pricing across the industry in general, but it seems like it would be difficult to draw new people in with a worsening value proposition.

QUOTE | "I could do a whole TED talk on this, but I think the critical thing is that the metaverse talk from last year was very much a tech discussion, which is very big in Silicon Valley when you're looking for investment. But nobody will play a virtual world if there's nothing to do inside the virtual world, so it's really a content and systems discussion… We've been doing [connected worlds] for 20 years. It's not new, and they should stop treating it like it's new and get input from people who have been doing this a while." – In an interview around the game's tenth anniversary, Elder Scrolls Online creative director Matt Firor doesn't see much difference between the experiences tech companies chased at the height of the metaverse hype and the ones gamers had been enjoying for decades (other than the part about games giving players a reason to be there in the first place).

QUOTE | "I don't remember seeing other Arabs or North Africans in the industry that I could look up to and be like, 'There's people who represent me that I can see myself in a similar role.'" – In an interview with Sophie McEvoy, Saudi Arabian developer Rafif Kalantan explains why she co-founded the Gamedev Initiative for the Global South (GIGS) with Nifty Craft developer and writer Ashraf Abi-Said.

QUOTE | "No one thinks when we walk in the room that we have 60 years of experience [collectively] because they don't see that every day… They always have to dig into who we are to move past their low expectations." – In an interview with Jeffrey Rousseau, Cornerstone Interactive Studios co-founder and CEO Lisette Titre-Montgomery talks candidly about the struggles she and her co-founders Raymond Graham and Marcus Montgomery face when they make the rounds with VC firms trying to raise funding for the studio.

STAT | 35% - A couple weeks after its first game Palia debuted on Steam, Singularity 6 has laid off more than a third of its staff.

STAT | 8 – AAA game development company ProbablyMonsters has been around for eight years now and has yet to announce a project. It has launched four studios though, with the latest – Hidden Grove – being unveiled this week.

STAT | 5 – Baldur's Gate 3 was the big winner at this year's BAFTA Games Awards, taking home five trophies, including for Best Game and Players' Choice.

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