We are entering a recession. The writing has been on the wall for some time.
I get that people really want to parrot talking heads on this, but it simply isn't true.
People have been fearmongering a recession in order to get people to spend less in hopes to reduce inflation, which has lead to a drag on the economy, but the idea that this promised recession is just around the corner simply isn't true.
The economy grew by 3.3% gdp in Q4 '23, the economy continues to add non-farm jobs, adding 216K jobs in December with unemployment staying at 3.7%
Some sectors of the economy are up and some are down.
Gaming in particular is still up, they're just "right-sizing" based on increased development costs. They're firing people left and right only to try to shift to contract work to hire these people back on for less money. As they hire these people as contractors they will do more layoffs, rinse and repeat until they have the margins they want.
If you hire a game developer at post-inflation rate of 150K a year and realize that per personnel rate is going to make any unsuccessful game destroy your bottom line, you fire that developer, and hire another developer as a contractor for 90K. You then fire another 150K developer once the 90K developer is up to speed, and you continue that until your payroll is where you want it to be. You then convert some of these contractors to full-time.
The problem is companies that do this in excess are destroying studio culture and it's why they'll struggle mightily to maintain and build successful franchises.
Sometimes layoffs are the right thing for a studio. It can save a studio and prevent a studio from being shuttered, but in most cases, it is an example of poor management and leadership misreading the tea leaves and projects gone off the rails. Sometimes it is employees getting too comfortable.
The big difference between Sony and Microsoft is that Microsoft does layoffs just to do layoffs and protect their bottom line regardless of performance. Sony's layoffs almost always have to do with poor performance or cancelled projects where studios simply can't keep themselves in the green. Sony generally gives studios a multitude of chances too.
You can see right now on linkedin and individual playstation studios sites that there is generally a hiring freeze for MOST but not all PlayStation Studios. Some are actually still hiring. Even Bungie has 15 roles open, whether these are backfill are not is certainly up for investigation, but my point is that you should probably get rid of you bottom 5-10% performing employees on a yearly basis anyways. If layoffs are based on poor performance of the company, teams and individuals should be looked at. Across-the-board cuts just to meet future profit margins though... seem potentially short-sighted.
