The State of Gaming in 2024

An exploration of the post-pandemic game market boom (and crash) from the perspective of a long-term gamer

The State of Gaming in 2024
Photo by NASA / Unsplash.

The dazzling heights of popularity to which gaming has ascended over the last decade feels a bit like a fever dream. Not so long ago, the admittance of being a gamer was met with a myriad of social challenges. The video gaming stereotype was one filled with misconceptions, oversimplifications, ignorance, and vitriol. As a 30-year-old who's been enjoying video games for the vast majority of their life, I fell victim to harassment on the part of these flawed stereotypes as a youth, despite my insistent protests on behalf of my beloved pastime.

If you had told me during those times that gaming would become the biggest entertainment medium the world has ever seen, I would have scoffed at the delusion. And yet, here we are fifteen years later, watching as the gaming industry trivializes the movie and music industries, becoming a financial behemoth worth well over $200 billion USD. With money practically pouring into the industry's coffers, and with profits projected to only increase over the coming years, it would appear that the gaming trade is in an extremely positive and unarguably envious position.

Or is it?

During the 2023 Game Awards, industry darling Geoff Keighley called 2023 a "platinum year for gaming," and who can deny that? Resident Evil 4 Remake, Baldur's Gate 3, Alan Wake 2, The Legend of Zelda: Tears of the Kingdom, Marvel's Spider-Man 2, Sea of Stars, Hi-Fi Rush, Dredge, Cocoon, and more. So many Game of the Year contenders came out in 2023 that the year itself nearly suffocated with excellence. 2024 has certainly slowed the trend a bit, with larger gaps between the still-excellent roster of game releases, but it has by no means been a slouch year thus far. Helldivers 2's powerhouse release alone has sustained much of the gaming population single-handedly for months on end. It truly feels like a blessing to be able to enjoy games in what will surely be remembered as a landmark period in gaming's rich history. Unfortunately, historic times are rarely painted in black and white.

Layoffs and the Pandemic

Nearly 20,000. That's the number of layoffs the games industry has seen in the last two years. With an estimated 270,000 people working in the industry in 2023, that's approximately 7.5% of the entire industry. Despite seeing some of the most impressive releases in history for the better part of a decade, the ultimate result is an industry that seems weaker than ever. The amount of talent that has been let go is difficult to fathom, let alone justify. A platinum year indeed.

How is this possible? How can the finish line of such a wonderful year be the loss of so much talent? The answer is seemingly multi-faceted, but like so many things going on in our lives today, it appears to start with the COVID-19 pandemic.

Charts showing industry layoffs from 2023. Source: Games Industry Layoffs.

We don't need a recap of what we lived through for the first few years of the 2020s. Needless to say, the pandemic forced people inside at an unprecedented rate. Isolated from their peers and suddenly faced with a substantial amount of free time, people turned to a hobby that many hadn't indulged in since they were children – video games. According to Statista, March of 2020 saw as much as a 44% increase in people playing games in a single week. An entire industry jumping up such an exaggerated amount is practically unheard of, and suddenly the video game industry found itself with significantly more eyes watching and an unexpected boon of money to spend.

Thankfully, the Covid-19 pandemic did eventually end. After many grueling years of isolation, the world tentatively opened its doors, and people went back to their normal lives. This meant that – within a few short years – the number of people playing video games every day exploded and, almost as quickly, started to recede. While this change is completely understandable, it appears that the industry never pivoted to meet the change, with an unlimited growth mindset continuing to dominate the conversation of video game monetization to this day. Despite the fact that people had to go back to work and the player base was objectively smaller, there were shareholders to please and investments to make good on. The amount of players leveled out, but the expense continued to climb.

The Rising Cost of Video Game Creation

All the way back in the '90s, Square Enix's Final Fantasy VII cost a whopping $40 million to develop. Adjusting for inflation, that's just shy of an $80 million development cost. That's no small investment by any means, but compare it to CDPR's Cyberpunk 2077's massive $174 million budget, or Red Dead Redemption 2's astronomical budget of $370-$540 million. Games are getting bigger, they're getting harder to make, and they're getting significantly more expensive. These kinds of budgets aren't something you can crowdsource, nor can you hope to personally fund these ventures that cost more than some of the most expensive movies ever made. Due to the ballooning costs, games must be invested in by huge investment groups, massive companies, and very wealthy people in order to even get created at the level the consumers expect them to be. This has created a laundry list of problems that must be addressed in order to understand how the AAA industry has gotten into the dire straights it finds itself in.

Expense is, unfortunately, the antithesis of creativity. Take, for example, one of the punching bags of the industry – Call of Duty. A precedent has been set by Activision that there will be an annual release in the Call of Duty franchise. Aside from a few rogue years, the famous FPS releases like clockwork. Not only does this immediately set an impossible standard when it comes to actually getting the game out the door and onto store shelves, but with staggering budgets like Modern Warfare 2's $250 million, another massive dilemma reads its ugly head; these investors expect, no, demand a return on their investment, no matter the cost. Whether the games are ready or not, whether they're just a glorified DLC bastardized into a full release, whether they're even particularly fun, they will go out on time.

As far as the player is concerned, this required return ultimately means one thing; creativity is not welcome. The Call of Duty franchise has been under fire for years for re-releasing the same basic gameplay loop repurposed with a new skin, but with such massive budgets and expectations for return, it literally can't exist otherwise. Activision finds itself backed up against a wall when it comes to creating a new and fun experience. If it goes poorly, then they find themselves in the formidable crosshairs of angry investors, threatening to pull the plug on their funding. If a new idea goes well with their core audience, they still run the risk of alienating their casual player base with something too niche or too far removed from what they know and love, ultimately finding themselves in those same unenviable crosshairs.

Thus, the safest route and the widest net are the only truly viable options when it comes to game development. You can't afford to take risks and be innovative when you have investors breathing down your neck. Instead, you have to do internal studies and research to try to make your game as addicting as it legally can be, to make it so your game is the one people accidentally spend their life-savings on, and to make your game the game that people will play for as long as possible. With budgets this huge, gaming no longer becomes about fun, immersive, exciting, novel experiences. After a certain point, the bottom line becomes the only line that matters. Failing to hit that bottom line means the rug is pulled out from underneath you.

And in this industry, failure means death.

Arkane Studios (@ArkaneStudios) / X
The game history of Arkane. Source: Twitter.

Games are getting bigger, they're getting harder to make, and they're getting significantly more expensive.

Failure to Thrive

Arkane Studios has been around for 25 years. In those 25 years, they've birthed gaming masterpieces such as the Dishonored series, Deathloop, and Prey. The latter of those works was developed by the Austin branch of Arkane, known affectionately as Arkane Austin. Prey is a fantastic video game, filled with a compelling story, interesting characters, fun "choose-your-own-adventure" style gameplay, gripping visuals, and it is positively dripping with atmosphere. It's a cult classic for a very good reason. If you're a fan of sci-fi and horror, it almost certainly will be for you. It is routinely lauded as one of the best sci-fi horror games of all time and is often considered the spiritual successor to Bioshock that we all deserved. Prey was released in 2017 to critical acclaim and since then, Arkane Austin has only released one title; the infamous vampire-hunting experience known as Redfall.

You would be able to write a book about how not to release a game based entirely on Redfall. Empty promises, crashes, weird textures, pop-ins, horrible animations, dumb-as-rocks AI, static cutscenes, boring and unsatisfying gameplay, along with bugs and glitches aplenty. It was a disaster of epic proportions. Immediately upon release, it was blatantly clear that Redfall was nowhere near done when it was set upon the public like a vampire on an unsuspecting village.

To top it off, this was Microsoft's first time charging $70 for a game (previous pricing was $60 USD) and the reception was about as negative as could be. For the first time since its founding, Arkane had released an objectively bad video game. Redfall objectively sucked (pun intended,) but sometimes bad video games happen. Making a game in general is a grueling task after all, and the people developing these games are only human. A litany of problems spelled out the game's fate, chief among them that an alleged 70% of the staff who had experience working on Prey were no longer at the company when it was released. Arkane was, by many metrics, set up to fail and one bad video game should not tarnish a lifetime of good works. Under other circumstances, maybe it wouldn't have.

Unfortunately for Arkane Austin, however, this release happened right after Microsoft's $7.5 billion purchase of Arkane's parent company, Bethesda Softworks. When Redfall failed to perform, it carried the weight of an unbelievable amount of money on its back, along with the reputation and expectations of this new partnership. Its failure ultimately resulted in the parent company of Microsoft shutting Arkane Austin's doors in May of 2024. This wasn't a new studio trying to get its footing, but a tried-and-tested establishment that had already proven itself profitable. Arkane's singular misstep ended in even more industry layoffs and an entire company branch shutting down.

In August of 2023, Ascendant Studios released their first title, Immortals of Aveum. The first-person shooter tried to shake up the formula by forgoing the guns and swapping them out with spells and magic casting instead. It didn't exactly light the world on fire, sitting at 69% on Metacritic, with audience reception being equally as lukewarm. I played Immortals of Aveum and found a fun game with an interesting setting that suffers from dated writing and sloppy narrative direction. That being said, at least it tried something new, and I think it largely succeeded in what it was trying to do. It's a valiant effort for a first-time developer and is certainly worth trying. That is what Immortals of Aveum is – a first attempt by a new studio to make something exciting.

Source: Press Kit.

Yet, for some reason, it was given a whopping $125 million budget by EA. When Ascendant Studios was given the same budget as a Pixar movie to make their first-ever video game, they were no longer a green studio testing the waters with their first product. They quickly became a gargantuan investment, the final product of an irresponsible amount of money. When that investment didn't pan out, the studio was forced to lay off half of its staff before dying a slow death over the following 6 months.

Now, Ascendant Studios is no more. Immortals of Aveum was deemed a failure of the company that produced it when in reality the developer studio probably shouldn't have ever been given that large of a budget without first proving themselves on smaller projects. Any sort of creative endeavor is improved over time, its edges honed by the mistakes made before. With budgets that large, however, the luxury of making mistakes is taken from you. Failure means death.

Understanding the Industry and Player Needs

The bewildering thing is that for all of their highly-funded research, it appears many of these companies can't see the forest through the trees. The biggest title to release in 2024, one that literally bucked trends for months on end, is Arrowhead's excellent Helldivers 2. While it is being mired in its own controversy at the moment, (unsurprisingly the crux of which is the greed of another major corporation) the fact of the matter is that Helldivers 2 executes its entire business model in the complete opposite direction of these larger AAA titles.

Recent events aside – which appear to have little to do with the developing company anyway – Helldivers 2 has had an extremely consumer-forward approach to live service gaming. Open communication, listening to player feedback, not monetizing the entire game for the sake of it, releasing at a $40 USD price point, and, crucially, focusing on fun, make Helldivers 2 the monumental success it is. Arrowhead Studios has a small team of around 100 people, and while estimates fluctuate, Helldivers 2 was probably made for under $75 million USD. It made $210 million USD in the first month of release. Helldivers 2 feels like a business model of the late 2000s integrated perfectly with today's modern gaming sensibilities, and the gaming community swiftly ate it up.

Arrowhead Studios is considered an indie dev, despite the fact that Helldivers 2 is AAA, and some of the biggest games to release in these "platinum years" have come out of indie developers. Palworld was an unprecedented success that has admittedly slowed down substantially in popularity and growth, but it dared to take on Pokemon and in a lot of aspects, it won. The developer, Pocket Pair, Inc. has fewer than 50 employees and released Palworld in early access for a budget of less than $7 million USD. Baldur's Gate 3 became a worldwide phenomenon, and while developer Larian Studios is no slouch when it comes to making games (they've kind of always been great,) they publish their own games and manage their own decisions. Baldur's Gate 3 had a pretty huge budget (over $100 million,) but that money was allocated to places where it needed to go, and the result is arguably one of the greatest video games ever made. Both of these games were not only critically loved, but they were extremely profitable, with Palworld making an estimated $ 442 million USD and Baldur's Gate 3 making more than $650 million USD.

Baldur's Gate 3. Source: Press Kit.

These three games couldn't be more dissimilar in everything from gameplay style to art design. Baldur's Gate 3 is a CRPG replicating Dungeons and Dragons, Palworld is a creature-collecting base-building open-world survival game, and Helldivers 2 is a third-person PVE extraction shooter in which democracy needs to be spread. The one crucial throughline to these experiences is simple – their biggest priority is fun. The developers made a good, solid, enjoyable game first, knowing that the money would come if they did. Looking at metadata statistics and profit margins can be grueling, but it goes to show that you don't need to implement every scummy play in the book in order to make money off of your video games. Make enjoyable experiences, and people will follow.

Obviously, some of the examples given aren't small-budget games. Big-budget games absolutely can work, and when they do, you get some of the most memorable pieces of media history of all time. There's no guarantee that Immortals of Aveum wouldn't have killed its developer if it had a smaller budget, nor is there any assurance that Redfall would have been great had Microsoft not purchased Bethesda. Still, expectations for what these games can accomplish need to be reigned in if the industry wants to stay self-sustaining and stop these awful layoffs from happening.

Square Enix has claimed that the new Final Fantasy Rebirth is "underperforming" despite selling over 2 million copies. Microsoft shuttered Tango Gameworks even after their latest release Hi-Fi Rush received multiple Game of the Year nods. This move seemed due at least in part to Xbox Game Pass taking away many full-price sales of the game and because Microsoft's massive acquisition of Activision left a huge hole in their pocketbook. In our current gaming industry, even success doesn't guarantee safety anymore. It can be maddening for someone who loves this industry to see how mismanaged it appears to be from these companies who see nothing but the glittery allure of revenue.

A few years ago, I wrote an article speculating whether or not the AAA gaming space was headed for another crash à la the 1980s. As time has marched on, I realized that if it does happen, it won't be a dramatic train wreck of a crash, tearing down the fabric of the industry to expose the raw and bloody underbelly. Instead, it seems to be more of a cancer within the AAA space, slowly rotting away all the hard-won goodwill that revolutionized what we consider electronic interactive entertainment.

The budgets for video games are inflating into something entirely unsustainable, and the result is that the people who work for these companies, who just want to make fun video games, exist with the executioner's axe ever-hovering above their heads, ready to fall as soon as the astronomical flow of cash is staunched even slightly. This leads to horrible work environments, crunch culture, and burnout, with the developers' only reward seemingly being the continuation of employment rather than the stressful unknown of corporate downsizing.

HELLDIVERS™ 2 on Steam
Helldivers 2 achieved success despite a relatively meager budget. Source: Steam.

Open communication, listening to player feedback, not monetizing the entire game for the sake of it, releasing at a $40 USD price point, and, crucially, focusing on fun, make Helldivers 2 the monumental success it is.

The Future of the Gaming Industry

So, are there any positives? I believe there are. In that same article, I reference the idea that the indie scene seems to be the prevalent future of gaming, and I think that holds more true now than it did four years ago when I initially wrote it.

When an indie developer makes a game, it tends to be more concise, without months of bureaucracy and red tape preventing even the simplest of changes from happening. Visions are clearer, and smaller teams allow voices to be heard. If you're developing for a small studio, you are no longer a single face among the crowd, an employee ID number for HR to file away. Instead, you become a living, breathing contribution to modern art, and the fact that many of the largest games in the last few years have been indies means that the system largely works. Now more than ever, I feel that the future of gaming is "Indie", and every PAX I attend is a little bigger with a little more coverage and a little more palpable excitement in the air. People are becoming privy to the manipulative tricks and horrible workplaces that many AAA studio heads seem to be providing, and it appears that they're taking serious notice.

The layoffs are unsustainable and I truly believe that, without oversight, the loss of livelihoods will snuff out the bright and beautiful flame that the AAA games industry has been tending to for years. My hope (even if it seems like an empty dream) is that smaller studios are scooping up all of this wonderful talent, or they are themselves starting smaller studios, to create the coherent experiences we have come to love so much over the last few decades. AAA studios are slowly but surely becoming the lesser option, and while I still want our big, expensive, bombastic games to be made, the people behind these games have to be accounted for and taken care of, unquestioningly.

It's going to be an uphill battle, but I think that we will slowly but surely start to see these changes being made as long as these traditionally "unprofitable" games continue to make money. Every time Palworld makes a dollar, it forces Gamefreak to reconsider cutting corners for their next Pokemon game. Every time Baldur's Gate 3 gets mentioned in a headline, it makes Bethesda reconcile with the things they've produced over the last decade. Every Super Credit purchased in Helldivers 2 makes Modern Warfare 3 look even more insignificant.

The state of the industry may seem dire on the outside, but I believe that there is an extremely bright future for gaming. Video games certainly aren't going anywhere, so we need to work together to make sure that the people who create these experiences we love so much are financially compensated and taken care of physically and mentally. Without the individuals behind the scenes, none of this would be possible, and a world without video games seems much more bleak than one with them in it.

Gaming has the power to change the world, as long as we in the gaming community never ever stop caring.

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