Video Game Layoffs - Mass Events

JEmerson

Good morning everyone. After some initial research post-Activision Blizzard layoffs, I did not find any database that tracks mass layoffs in the video games industry. Instead, I found a plethora of articles dating back to 2012 describing each layoff event locally, but with little context except when events were near each other. In order to provide a better method of tracking these events, I have created http://videogamelayoffs.com/. This is not a happy topic (obviously), but I regard it as a necessary body of knowledge that must be maintained for the industry as a whole. Please feel free to take a look and provide any feedback you have. The website is limited in scope to tracking only mass layoff events (which I have defined based on US Bureau of Labor Statistics definition) greater than a calculated baseline. Additionally, I also provide some resources for any persons who may have been impacted by these (or other) layoff events at the bottom. If you have any suggestions for improvements and/or research that I should consider in order to draw conclusions from, that would be fantastic. I think it is fair to say that the few impacts I have drawn are tenuous at best. Thank you.

MikeF

great idea! i'd like to see something that shows the longest running period of no layoffs.
ex: if the timer reset today then the output would be 6 days unless there was a previous period with a greater value

Amsterdam Hilton Hotel

Cool idea. Giving totals by region could be helpful. It looks like 90% of the grand total is coming from Asia. 

JEmerson

MikeF said:

great idea! i'd like to see something that shows the longest running period of no layoffs.
ex: if the timer reset today then the output would be 6 days unless there was a previous period with a greater value

That is a good idea Mike. I will think about how best and where to place something like that.

Amsterdam Hilton Hotel said:

Cool idea. Giving totals by region could be helpful. It looks like 90% of the grand total is coming from Asia. 

If you take a look at the Economic Impacts page, I have broken out the data some into visual graphs with labels so that it is more easily dissected.

JEmerson

Updating everyone that I have finished a database rebuild for the website. There are still edits that need to be made to the primary data set that is displayed directly, but if you're ever curious about the full database I have made that available in Excel and PDF formats. I am certain there remain many events that I am unaware of. If you know of any, please feel free to contact me via the contact form on the website. Thank you.

NikhilR

What I find intriguing is how many of these companies were advertising that they were hiring mere weeks before they shut down. No idea if anyone was hired, but there were a few people that were just a month into their contracts.
Must be an automated system that keeps refreshing ads or something.

I'm thinking a shift to remote based workforce would be a great way to solve this.
I mean we're a digital industry, is it really necessary to have people on site in expensive cities simply for securing IP related to undisclosed projects?
One other reason is the way grants are set up requiring a studio space, still doesn't justify being within an expensive area. 
And also that people need to work together on site on projects, though game companies outsource a mad lot of work to companies in China so there is remote based work where its cheaper.

Making remote operations more universal would definitely reduce overheads.
I'd read this article where a bunch of companies were agreeing on the employee overhead being in the range of 10,000$ per employee and a big chunk of that factors into studio operating costs and rents being in expensive locations.

JEmerson

NikhilR said:

I'm thinking a shift to remote based workforce would be a great way to solve this.
I mean we're a digital industry, is it really necessary to have people on site in expensive cities simply for securing IP related to undisclosed projects?
One other reason is the way grants are set up requiring a studio space, still doesn't justify being within an expensive area. 
And also that people need to work together on site on projects, though game companies outsource a mad lot of work to companies in China so there is remote based work where its cheaper.

Making remote operations more universal would definitely reduce overheads.
I'd read this article where a bunch of companies were agreeing on the employee overhead being in the range of 10,000$ per employee and a big chunk of that factors into studio operating costs and rents being in expensive locations.

There are certain economies of scale and access to resources that result in businesses locating in high cost of living areas, despite the increases in overhead costs. It is economically more profitable to do so and the pro's outweigh the con's; it is a reason why manufacturing towns form (of which I consider games development to be similar in behavior). On the issue of overhead, in the USA (I am not sure about other markets due to different tax structures and public goods/services) the total cost of an employee is about 30% higher then the wages/salary a worker receives (health insurance, retirement contributions, withholdings, etc). The total cost of a contractor reveals the total cost to the firm, but is similarly situated because the firm must meet the demands of the contractor so that the contractor may withhold properly.

The real concern, in my opinion, is when single large firms go through a round of layoffs and the impact to the local economies then. Some theory suggests there is little or no impact due to the high mobility of workers, but I theorized that is a short term viewpoint as it neglects the accumulation of wealth and community standings that often result in sizable investments into the local economy from a non-corporate entity, but more importantly disregards the impact on non-tradable (non-mobile) jobs. While I continue to research how economists perceive and characterize the data, unfortunately research into this area is still relatively new.

NikhilR

Sigmafie said:

NikhilR said:

I'm thinking a shift to remote based workforce would be a great way to solve this.
I mean we're a digital industry, is it really necessary to have people on site in expensive cities simply for securing IP related to undisclosed projects?
One other reason is the way grants are set up requiring a studio space, still doesn't justify being within an expensive area. 
And also that people need to work together on site on projects, though game companies outsource a mad lot of work to companies in China so there is remote based work where its cheaper.

Making remote operations more universal would definitely reduce overheads.
I'd read this article where a bunch of companies were agreeing on the employee overhead being in the range of 10,000$ per employee and a big chunk of that factors into studio operating costs and rents being in expensive locations.

There are certain economies of scale and access to resources that result in businesses locating in high cost of living areas, despite the increases in overhead costs. It is economically more profitable to do so and the pro's outweigh the con's; it is a reason why manufacturing towns form (of which I consider games development to be similar in behavior). On the issue of overhead, in the USA (I am not sure about other markets due to different tax structures and public goods/services) the total cost of an employee is about 30% higher then the wages/salary a worker receives (health insurance, retirement contributions, withholdings, etc). The total cost of a contractor reveals the total cost to the firm, but is similarly situated because the firm must meet the demands of the contractor so that the contractor may withhold properly.

The real concern, in my opinion, is when single large firms go through a round of layoffs and the impact to the local economies then. Some theory suggests there is little or no impact due to the high mobility of workers, but I theorized that is a short term viewpoint as it neglects the accumulation of wealth and community standings that often result in sizable investments into the local economy from a non-corporate entity, but more importantly disregards the impact on non-tradable (non-mobile) jobs. While I continue to research how economists perceive and characterize the data, unfortunately research into this area is still relatively new.

I did notice that a lot of the businesses that are located in expensive areas were there before they got expensive, so they are kinda stuck.

Not all of them, some were smarter and moved out, though causing layoffs in the process.

Like in Toronto, which has the highest cost of living in Canada and is severely lacking in infrastructure the wages paid are just not enough to be sustainable, and yet theres a massive pool of developers desperate to get into any studios hiring, with over 10 schools pumping graduates out like mad and even seniors attempting to retrain them through private bootcamps (its not like they have it any easier)

The overhead for a AAA studio is in the range of a million dollars/month, the government taking up a huge chunk of the cost to keep the studio running through grant money.

The thing is that grant system is still valid if the whole company moved to say Mississauga which is significantly cheaper, or set up a satellite location to offset some of the cost. 

The current location keeps things going I suppose, but does little to improve the lives of the employees working there unless they're all living with parents or rooming together.

JEmerson

NikhilR said:

Sigmafie said:

NikhilR said:

I'm thinking a shift to remote based workforce would be a great way to solve this.
I mean we're a digital industry, is it really necessary to have people on site in expensive cities simply for securing IP related to undisclosed projects?
One other reason is the way grants are set up requiring a studio space, still doesn't justify being within an expensive area. 
And also that people need to work together on site on projects, though game companies outsource a mad lot of work to companies in China so there is remote based work where its cheaper.

Making remote operations more universal would definitely reduce overheads.
I'd read this article where a bunch of companies were agreeing on the employee overhead being in the range of 10,000$ per employee and a big chunk of that factors into studio operating costs and rents being in expensive locations.

There are certain economies of scale and access to resources that result in businesses locating in high cost of living areas, despite the increases in overhead costs. It is economically more profitable to do so and the pro's outweigh the con's; it is a reason why manufacturing towns form (of which I consider games development to be similar in behavior). On the issue of overhead, in the USA (I am not sure about other markets due to different tax structures and public goods/services) the total cost of an employee is about 30% higher then the wages/salary a worker receives (health insurance, retirement contributions, withholdings, etc). The total cost of a contractor reveals the total cost to the firm, but is similarly situated because the firm must meet the demands of the contractor so that the contractor may withhold properly.

The real concern, in my opinion, is when single large firms go through a round of layoffs and the impact to the local economies then. Some theory suggests there is little or no impact due to the high mobility of workers, but I theorized that is a short term viewpoint as it neglects the accumulation of wealth and community standings that often result in sizable investments into the local economy from a non-corporate entity, but more importantly disregards the impact on non-tradable (non-mobile) jobs. While I continue to research how economists perceive and characterize the data, unfortunately research into this area is still relatively new.

The overhead for a AAA studio is in the range of a million dollars/month, the government taking up a huge chunk of the cost to keep the studio running through grant money.

The thing is that grant system is still valid if the whole company moved to say Mississauga which is significantly cheaper, or set up a satellite location to offset some of the cost.

I wouldn't guess about a company's overhead costs as an estimate - each company is different in size and organizational structure which affects how overhead is accounted. Grants and other subsidization methods work to encourage investment activities in the sector; an example of which is France's new advocated investment strategy to try and pry studios/work away from Great Britain during/post Brexit. Subsidization works because it reduces the total cost to operate and offloads some of the risks, but if a company receives the grant regardless of location then having access to knowledge sources in hubs as a benefit will most likely outweigh the benefits of a cost reduction via relocation to less expensive locales or remote work. I think this is a fair assumption to make as we can see the impacts of subsidization in the UK and Canadian markets with respect to where businesses have located.

Going remote can work, but it does come with its own set of issues such as tax law applicability and agencies actions for non-conformity (real or not). How many indie or remote studios hire employees and properly set-up as agent businesses in the jurisdiction where their employee resides and/or properly adjust their withholdings to reflect the taxing jurisdictions of their employees? How do you ensure agreements to protect the work product are followed (e.g., encryption)? Do you properly classify employees? Which jurisdictional law applies for contractors (the business or theirs; well that depends on the parties). It's not a simple issue and I don't think we should pretend it is is my point.

JEmerson

I don't believe I ever posted about it, but the website was updated to reflect database updates as well as a new method of displaying the database. It can now be sorted, filtered, and searched which may further aid those looking for work or just for those that are curious.