'Awesome people get pushed away': What's happening in the Swedish gaming industry?

Local Sweden

2 days ago

In the past few months, a number of Swedish gaming companies have gone bankrupt or laid off staff amid struggles to find funding. Why is this happening, and how is it affecting foreigners in the industry?
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For years, gaming has been one of Sweden's largest exports, with the gaming industry employing thousands in recent years. Many of those are international workers on work permits. We spoke to some of them to get an insider's perspective on what's happening in the industry.
'It's pretty horrific'
One of the people The Local spoke to has worked in the Swedish gaming industry for over a decade, including stints at major game publishers.
He's been affected personally by recent layoffs and has multiple friends and former colleagues who have been laid off and had to leave Sweden, unable to find a new job.
'One of my friends had three months to find a job, was scrambling around, and it didn't work out. He had a place here, had to sell it, his kid spoke Swedish, and now they've moved back to his home country. It's pretty horrific,' he said.
As an EU citizen, he doesn't need a work permit to stay in Sweden, unlike non-EU citizens who lose their work permit unless they find a new job within three months after their notice period ends. Because of this, he has been able to go freelance. He wished to remain anonymous so as not to jeopardise his career.
The layoffs in the industry aren't just hitting younger, more entry-level members of the gaming industry, he said, but also people with a lot of experience.
'I have a friend who shipped classic games on the Nintendo 64, he has such a wealth of knowledge. He just got laid off last week and has three months to figure it out.'
'More of a correction than a crisis'
Karl Magnus Troedsson, former CEO of Swedish games company DICE, recently described the situation in the games industry to Svenska Dagbladet (SvD) as "a negative perfect storm", due to bankruptcies, redundancies and difficulties finding staff.
"The discussion has gone from 'it'll be better in 2024', to '2025 looks like it will be difficult', to 'oh god, what is 2026 going to be like'," he told the newspaper.
Troedsson is also the founder and partner of games-focused risk capital company Behold Ventures.
"It's natural that you reassess the size of your staff," he said, "but what we're seeing now is much larger. It's a negative perfect storm."
But despite the layoffs, the reader we spoke to is not sure he would describe the current situation as a crisis.
'It's more of a correction,' he said, adding that the industry saw a huge boom during the pandemic, as more people were stuck at home.
At that time, there was a lot of investment going around, he said, as the gaming industry was one of the only industries that was performing well.
'The investors and venture capitalists and all the other people who had money to throw around were like 'oh, we're just gonna put money there because these nerds are at home and can ship games from home – they're just working in their basements, producing games, and people are consuming them,' he said.
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Not only did this lead a lot of companies to start 'hiring like crazy', he added, but it also led to a lot of so-called 'veterans' leaving their stable jobs at big studios and securing investment to go out on their own.
'There are a bunch of these in Stockholm, companies that were started two or three years ago by veterans, who got a lot of money from venture capitalists. They would just transfer 100 million kronor to a company like that, to a team, and say 'ok, if they make a game that sells 1 billion kronor, we've made ten times our profit'. If they do that with 20 companies and five of them do that, they're good.'
'A lot of it doesn't make sense from a business standpoint'
Many of those companies are now struggling to get more funding, the reader said, as they're moving on to the next stage of production, but costs are mounting and the business argument for more investment has become weaker.
'It's not easy to create a game from nothing. It's more difficult than creating a film. You can storyboard a film, but you can't storyboard a game. You need to design it. So a lot of these people built these teams, relocated people from across the globe, and then when the time comes to get funding, it's not easy to get. AI is a black hole for all the money out there, then there's the stuff that Trump is doing and the global outlook in general. People are battening down the hatches.'
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Not only is it difficult to create a game from scratch – he estimated the average time to make a good game at 'five to six years' – but it's difficult to form a company from scratch and costs a lot of money to keep it going for that long before there is a final product to sell.
'From a business standpoint, a lot of it doesn't make sense,' he said. 'Let's say you have a staff of 60 to 70 people, you have a burn rate of a million euros a month. You have to pay rent, licenses, fly people around the world to go to conferences, they're usually in senior positions and have high wages, and often they're making a game that can't recoup those numbers.'
This means that, even in cases where a studio has created a concept for a fun game which is likely to sell, it can end up not getting funding to move onto the next stage of the production process because it still might not sell enough to cover the years of costs racked up during production.
'Talent is getting pushed away'
A number of other people working in the gaming industry speaking to The Local confirmed that they had not only lost their job once due to employer bankruptcies, but that they had lost their jobs multiple times as different employers filed for bankruptcy one after another.
'I'm in a lot of stress,' one non-EU reader said, adding that he had been looking for a job for six months with little success.
'I got a few interviews amidst a multitude of applications, with the majority of them ending in ghosting. The situation is indeed very bad."
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He said that he would expect to have found something by now, due to his experience and passion for his work.
"Instead, I'm on the verge of being forced to uplift my whole life back to the other side of the world, and to leave my current future plans behind."
"It sucks. Although the industry is tough (or in literal flames), it would be much less stressful if Swedish migration rules were more considerate. The time to find another job is too small and doesn't even allow you to use your a-kassa [unemployment insurance] properly."
The non-EU reader said that he has several colleagues in the same situation, and that some of them have already left the country.
"In the end, awesome people and talent gets pushed away."
Another person The Local spoke to, originally from South Korea, said the gaming industry is 'doomed'.
'People who have jobs are terrified they are going to lose them'
The EU reader quoted previously, who has recently gone freelance after a layoff, added that people in the gaming industry in general are 'terrified'.
'You have to understand that this is a dream job for people. And the companies use that. They fly people around, underpay and overwork people, all of that is part of this industry. So the people who have jobs now are all terrified that they're going to lose them, and they should be,' he said.
During the pandemic, roles in the gaming industry attracted specialists from other tech companies like Spotify and Klarna, and now there are not enough jobs to go around, he added.
'Now it's like musical chairs. The music has stopped and some people don't have seats.'
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More investment is also going to AI, which has made it even more difficult to get a share of the shrinking pot of money available.
It's not just the smaller studios which are struggling due to increased costs – larger studios like Microsoft, which owns Mojang, the company responsible for Minecraft, the best-selling game in history, are also laying off workers.
'From a growth perspective, the money is there. Microsoft booked record profits in their gaming division. But costs have doubled since the pandemic, and now that's being corrected down, because you don't need 2,000 people to make Candy Crush,' he said.
Candy Crush is made by Swedish studio King, which was acquired by Microsoft in 2023. The Unionen union recently confirmed to Svenska Dagbladet that King would be laying off 200 workers, with 96 of those based in Stockholm.
'A personal crisis'
The EU reader who had worked at major publishing studios added that this could be the start of a shift from salaried roles to freelance gigs – but only for specialists and people who already have a lot of experience.
'A composer, for instance, could be independent, because they can work on many projects. You're not tied to one brand or company with one specific IP. You could work on Star Wars one month and Call of Duty the next month.'
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Despite his belief that the current situation is a 'correction' more than a 'crisis', the reader added that it is definitely a 'personal crisis' for many people in the industry currently going through a layoff.
'There are people that consider themselves to be game developers who are not going to be game developers next year. And for them, that's a personal crisis, because they've reached their goal, which is to work on games. And there are not enough chairs to seat everyone.'