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Video game companies are cutting staff despite high revenues


Ryan Lastimosa was convalescing at home after surgery when he received a text from his boss at gaming company Respawn Entertainment, telling him they needed to talk.

When he spoke to him, the company's president informed Lastimosa - who is the director of the innovation department - that the company had canceled an electronic game played by a single player, about a year and a half after it was developed for the company based in the Chatsworth suburb of Los Angeles, and thus Lastimosa and his team of 47 technicians were exposed to losing their jobs. , having worked with the company since its founding 13 years ago.

The Los Angeles Times reported that, on the other hand, Electronic Arts, based in Redwood City, Northern California, announced last March that it would reduce its workforce by 6%, which means eliminating 800 jobs, in addition to reducing its office space. This is amid a restructuring process in order to focus on “strategic priorities”.

Experts say that the video game industry corrected its course over the past year after enjoying a period of rapid growth, as publishers and developers adapted to the decline in demand following the end of the Corona pandemic, in addition to the high cost of production and increased competition in this sector.

Electronic gaming industry estimates indicate that about 6,500 workers in this field have been laid off worldwide since last January, including hundreds of companies operating in California . A number of observers assert that the real number may be much greater than the announced number, because a number of companies did not disclose the jobs they cut.

The cancellation of these jobs negatively affected video game and technology companies, and although the workforce reduction represents a small portion of the total workforce in this industry, many experts believe that the reduction in workers that occurred last year was particularly severe for a year that could have been possible under different circumstances. To be successful in video games.

Kevin Kloden, chief global strategist at the Milken Institute for Economic Studies in California, comments on this development, saying: “We see a wave of companies that have expanded excessively, or hired programmers based on expectations of expansion, and every time there is a major merger between companies.” There will be a noticeable impact on employment.”

This month, the Amsterdam-based data company Newso lowered its forecast for the revenues of video game companies at the global level for the year 2023, to reach $184 billion, an increase of 0.6% compared to the previous year, but a decrease from the revenues that the company had previously expected for the year 2023. It amounted to 187.7 billion dollars.

Newso stated that the global electronic games market is expected to generate annual revenues of up to $205.7 billion in 2026.

The trade association for video game companies in the United States says that reducing costs by eliminating jobs has had a double effect in California, which has about 720 video game production companies, including about 700 companies working in the field of publishing and developing electronic games and software, and there are many companies. Large game publishers in Southern California, including Activision, Blizzard Entertainment, and Riot Games, as well as Sega's North American headquarters.

Data available for the year 2022 indicate that the number of employees in the video game industry in California reached more than 152,000 employees, and the economic impact of this industry in that year amounted to $54.1 billion.

Aubrey Quinn, senior vice president of the Video Game Industry Association of the United States, explains, “In the United States alone, the size of this industry has grown threefold over the past decade, from $15.2 billion in 2012 to $56.6 billion in 2022, and no other industry in the field has witnessed "Entertainment is growing so much." Despite job cuts, video games are still a growing industry, she says.

Quinn adds, "The wages for these jobs are high, representing double the average salary in the United States, and more than 212 million Americans play video games regularly, so the demand for great and attractive games is not diminishing."

In the case of Lastimosa, he says he was able to coordinate with company management to find jobs for many of his team members. He believes that the exaggerated growth of this industry, which was witnessed during the outbreak of the Corona pandemic, is one of the reasons for job cuts during the current year.

He adds: "We have a lot of investors, and a lot of different types of money that are heavily invested in developing games if investors notice the huge increase in the number of people who want to play these games and stay at home and buy a lot of things from digital sites."

In response to the turmoil that has plagued this industry, Amir Satvat, who lives in the US state of Connecticut, launched seven online employment resources in the field of electronic games, including a job guide and a place to register those wishing to be employed, through which they can communicate with company owners.

Satvat says that the number of workers in the field of electronic games in the world is 350,000 people, and he estimates that the elimination of 6,500 jobs represents only about 2% of the total number of workers in this industry. He adds that, however, these reductions still “provoke anxiety to a large extent,” even if the percentage is small.

He explains that there are several factors that contributed to the job cuts. In addition to the uncertainty that followed the end of the Corona pandemic, and what resulted from the acquisitions between these companies, we find another reason represented by the significant increase in the number of companies that are trying to find a place in the field of direct broadcasting of these companies. Games, as well as increasing competition from other forms of entertainment, attract gamers who do not have more time to spend in front of screens.