Video Game Layoffs Continue with Cuts at MindsEye and Splitgate 2 Studios
The video game landscape is changing, and it's not good for developers. Several layoffs have been announced throughout the year, and it continued on Monday with cuts at two studios.
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The first round of layoffs comes from MindsEye developer Build A Rocket Boy. The UK-based game developer has begun the 45-day consultation process required when layoffs total more than 100 workers. It's unclear how many will be included in these layoffs, but the studio employs roughly 300 people in the UK and 200 more abroad. These layoffs follow the disastrous launch of MindsEye, which has a Metacritic score of 38 out of 100 and a user score of 2.6 out of 10.
Next are cuts from Splitgate 2 developer 1047 Games. A LinkedIn post notes these only include a small number of employees. Additionally, company co-founders Ian Proulx and Nicholas Bagamian have agreed to take no salaries as they 'lock in to deliver the next phase of the project.'
Video Game Layoffs Have Become An Industry Trend
While Build A Rocket Boy and 1047 Games aren't large developers, they add to a growing trend of layoffs. That includes those that have taken place at major studios, such as Sony's (SONY) Days Gone developer Bend Studios. Warner Bros (WBD) has also cut its game development staff and recently reorganized its studios to focus on core intellectual properties.
Some of these layoffs are likely related to overhiring during the COVID-19 pandemic. With people trapped at home during lockdowns, the video game hobby surged. That resulted in increased hiring to meet demand, but those lockdowns ended years ago and it only makes sense that some jobs would be cut.
Other issues facing the game industry are large costs and long periods of development. The money that goes toward the development of AAA games has ballooned greatly over the last several years as developers seek to create larger worlds with more detailed graphics. This even saw Ubisoft (UBSFY) start referring to some of its games, such as Skull & Bones as AAAA titles. The higher development costs necessitate the need for hits, as blunders can lead to financial struggles and job cuts.
Which Video Game Stocks are Worth Investing In?
Using TipRanks' comparison tool, traders can see which video game stocks are worth investing in. That includes major players, such as Nintendo (NTDOF), Microsoft (MSFT), and Sony. Of the big three, NTDOF has a consensus Moderate Buy rating, while MSFT and SONY have Strong Buy ratings. Sony offers the highest upside potential at 20.08%, with Nintendo and Microsoft both offering upside potentials of roughly 7%.
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