Economic Crisis Hits Game Companies Hard

No sector of the economy is safe from the current financial crisis, not even the escapist video game industry. A plethora of studios have announced major job cuts in the past weeks, as tightening purse strings force developers to make tough choices and focus on key game properties.

The latest to be hit by layoffs is mega publisher THQ, which is closing some key studios in its stable of game development houses. The first studio on the chopping block is UK-based Juice games, previously responsible for the Juiced racing series. THQ cited “risky” game projects as a reason for the layoffs. Another racing game developer, Paradigm Entertainment, will also be shuttered. Paradigm was responsible for the Ignition: Stuntman games. It is also rumored that SandBlast! Games will also be closed, following desultory sales of their last game, Destroy All Humans! Altogether, more than 30 jobs will be cut under THQ’s leadership.

While this is bad news, other developers have been hit even harder. Global publisher Electronic Arts recently announced that it would be cutting up to 600 jobs in an effort to reduce costs. The company cited weaker-than-expected October sales as the reason for the layoffs.

Avalanche Studios, the developer behind Just Cause and an upcoming sequel to the sandbox shooter, has been forced to lay off around half of its 160-person staff. The company has cut two undisclosed projects, and will focus its efforts on core IPs like Just Cause 2.

With all of these companies reducing their workforce or closing altogether, what will be the effect on the gaming landscape? In the short term, the effect will definitely be negative. We can expect companies to focus on known profit-generators (i.e., sequels) and less on innovative or risky projects. For would-be game developers hoping to enter the industry, the next few months are going to be tough. Most companies have put a freeze on hiring new employees until the economic crisis blows over. It might be that the next 12 months will be the best time for independent developers to hunker down and blow us away with their basement projects.

[Source: Gamesindustry.biz]