This Week in Business: A Recap of Industry Trends
This Week in Business serves as a weekly summary that compiles statistics and notable quotes from recent developments, often infused with personal insights to illuminate various industry trends. Readers can expect a new edition every Friday.
The Common Narrative Behind Layoffs
Every layoff carries a unique narrative, but a prevailing theme has emerged this year amidst numerous job cuts. A few examples from this week illustrate a shared rationale among companies undergoing restructuring.
ByteDance’s Shift in Strategy
“We consistently evaluate our business operations and make necessary adjustments to focus on areas that support long-term strategic growth. After a recent assessment, we’ve made the challenging choice to overhaul our gaming division.” This statement from a ByteDance representative reveals the company’s decision to completely exit the gaming sector, a move that is anticipated to lead to significant layoffs.
Frontier Developments Refocuses on Core Strengths
“Frontier’s efforts to broaden its game portfolio over the past five years, including third-party publishing and exploring related genres, have not yielded the expected results. Consequently, the company is refocusing on creative management simulation games, an area where it has consistently achieved stronger and more reliable returns.” Frontier Developments elaborates on its decision to concentrate on genres that have previously delivered successful titles such as Planet Coaster and Jurassic World Evolution, alongside announcing layoffs and the closure of its Foundry publishing label.
Sega Sammy’s Strategic Realignment
“Each studio possesses distinct capabilities, but the favorable conditions during the early pandemic, combined with the strong performance of various titles, led us to pursue an aggressive growth strategy, even in unfamiliar areas. However, we have recognized that while some studios thrived, others did not, prompting a return to each studio’s core strengths.” Sega Sammy CEO Haruki Satomi explains the cancellation of Creative Assembly’s sci-fi shooter Hyenas, the resultant layoffs, and the studio’s decision to revert to specializing in real-time strategy games.
Unity’s Business Model Reevaluation
“While we have yet to finalize any additions, it is apparent that we will be scaling back our overall activities.” Unity’s interim CEO Jim Whitehurst indicates that the company intends to retract its recent ventures into non-core businesses. This strategy included an additional 265 layoffs announced this week.
Common Patterns of Layoffs in 2023
The trend of layoffs is evident throughout 2023, with many companies citing similar justifications for their workforce reductions. Digital Extremes terminated employees as it shuttered its indie publishing division, while lifestyle and esports brand 100 Thieves downsized its workforce by 20% and divested its energy drink and game development sectors.
Reassessing 100 Thieves’ Strategy
“We are implementing these changes because we believe it is essential for 100 Thieves to concentrate on our primary business and refine our operations. Over the past two years, the economic environment has shifted, and our business growth has not kept pace with our organizational expansion. The responsibility for this adjustment falls on me and CEO Matt Haag.” 100 Thieves President and COO John Robinson addresses the layoffs, though he did not elaborate on why those at the helm are retaining their positions while others are let go.
Amazon Games’ Strategic Refocus
Amazon Games has recognized the challenges it faces in game development and has decided that managing a Twitch channel reminiscent of a TV network, which featured game shows and other entertainment, is no longer necessary. “We commend our teams for their innovative work in exploring new content avenues through Crown Channel and assisting publishers in reaching broader audiences with Game Growth. However, after reevaluating our business strategy, it became clear that we must concentrate our resources on delivering exceptional games to our players now and in the future,” explained Amazon Games VP Christoph Hartmann, following the layoff of approximately 180 employees in the second wave of cuts this year.
The Broader Context of 2023 Layoffs
The layoffs discussed are merely a snapshot of the ongoing trend observed throughout the year. The theme of companies cutting back their workforce due to overextension in various ventures is prevalent, as seen in the layoffs at Epic Games, which were attributed to excessive investments in pursuing metaverse ambitions, and Meta’s reductions, which fall under the same rationale. Embracer Group’s extensive layoffs and closures this year stem from the company losing focus on its core business in favor of recklessly chasing broader ambitions.
Atari’s Strategic Turnaround
In a surprising twist, Atari is gaining recognition for its recent strategic direction under CEO Wade Rosen. After decades of struggling and being overshadowed by its historic reputation, Atari is now focusing on its legacy and retro gaming market. Rosen’s leadership marks a shift towards premium PC and console games, moving away from free-to-play models and mobile gaming.
Investments in Retro Gaming
Atari has made significant strides in its gaming strategy, including the acquisition of retro gaming studios and properties. The company’s recent investments in acquiring Nightdive Studios, known for its remasters, and Digital Eclipse, a specialist in retro compilations, highlight its commitment to revitalizing its classic titles and catering to the nostalgia of gamers.
Challenges Ahead for Atari
Despite these positive developments, Atari is not without challenges. While Rosen’s strategy has shifted focus towards core competencies, the company continues to face financial hurdles and has reported losses since his tenure began. Nevertheless, the direction taken under Rosen indicates an effort to enhance the Atari brand’s value rather than merely extracting it.
Industry Insights and Statistics
STAT | 50 – The number of employees laid off at Fishlabs amid parent company Embracer’s restructuring efforts.
STAT | 7% – Increase in UK physical game sales during the Black Friday week compared to the previous year, as reported by GfK.
STAT | 0.6% – Projected compound annual growth rate for the East Asia PC and mobile games market from 2022 to 2027, according to Niko Partners.
STAT | 22% – Proportion of children surveyed by ESA who expressed a desire for physical games as holiday gifts, with subscriptions and consoles topping the list.
QUOTE | “Industry and advocacy groups should focus on developing policies and supporting infrastructure instead of primarily training individuals to be professional.” – Dr. Tegan Bristow, highlighting challenges in the creative industries pipeline in Africa.
QUOTE | “Despite the fully digital nature of Gamescom, nothing compares to the festival atmosphere on-site.” – Felix Falk discusses the importance of creating global offshoots of Gamescom.
QUOTE | “A dramatic boss fight and final cutscene can be impactful, but allowing players to define their own victories is the essence of emergent game design.” – TinyBuild CEO Alex Nichiporchik shares insights on game design philosophy.
QUOTE | “Data and analytics provide critical insights for targeted actions; a one-size-fits-all approach doesn’t work.” – GapSquare CEO Dr. Zara Nanu addresses the gender pay gap in the gaming industry.
STAT | $40 million – Amount claimed by former Xsolla VP Emil Aliyev was misallocated from company accounts, leading to a lawsuit against the firm.
QUOTE | “The timing of our title’s release coincided with significant competition, impacting its sales.” – Sega CEO Haruki Satomi reflects on the performance of Sonic Superstars.
QUOTE | “All dialogue in Ascension was crafted by seasoned writers, not AI.” – Genvid CEO Jacob Navok addresses concerns regarding the game’s dialogue authenticity.
QUOTE | “Revolutionary advancements occur every five to ten years; we might be on the cusp of another.” – Glu Mobile CEO Niccolo de Masi reflects on technological evolution.
