Power, profits and labor practices in the video game industry

Video games. A massive global industry expected to generate nearly $190 billion in revenue this year, according to industry estimates.

The gaming industry is making more money than Hollywood — and North American sports.

So why have there been unprecedented layoffs across the gaming world this year?

Today, On Point: Power, profits and labor practices in the video game industry.

Dianna Lora, worked in the gaming industry for around 15 years. Former senior licensing producer and production manager for the game "Star Wars: Hunters" at the company Zynga. She was laid off earlier this year.

Nicole Carpenter, senior reporter at Polygon, a website covering video games and pop culture.

Rachel Sederberg, senior economist and research manager at Lightcast.

Paula Mackiewicz-Armstrong, quality assurance coordinator at CD Projekt Red, where she works on games like "Cyberpunk 2077." Member of the Polish Gamedev Workers Union.

Part I

MEGHNA CHAKRABARTI: Video games. You probably play them, right? If not you, I will bet that someone very close to you does, because more than 3 billion people around the world do, according to the Amsterdam based data firm Newzoo. And the games vary wonderfully and wildly. There are mobile games like Cat Snack Bar, where you are a restaurant tycoon, who also happens to be a cat, and you take orders, cook food, and serve guests.

And then there are, of course, the console games, like Red Dead Redemption, a western adventure set in the American Southwest and Mexico, and in that one you're a former outlaw hunting down your old gang members. Then, there is the beloved Italian plumber Mario. Since his first appearance in 1981 in the arcade game Donkey Kong, Mario has spawned more than 200 games of various genres and sub genres. And, get this, as far back as 1990, a survey found that Mario was so popular, kids back then recognized him more often than they did Mickey Mouse.

So all of this is to say that video games are a big business, they're a huge business in fact. Worldwide, the gaming market is expected to hit roughly $190 billion in revenue this year. The gaming industry makes more money than Hollywood. It makes more money than North American sports. So why, as of late, have gaming companies been laying off people at an unprecedented level?

Industry estimates show that around 8,000 developers have lost their jobs this year. That's a massive spike from previous years. So what is actually going on? That's what we're going to want to explore today, and we'll start with Dianna Lora. She's worked in the gaming industry for about a decade and a half, and until recently, she was the former senior licensing producer and production manager for the game Star Wars Hunters.

Star Wars Hunters, I should say. That's the full name. And that was at the company Zynga. Dianna, welcome to you.

DIANNA LORA: Oh, thank you for having me. This is a delight. I'm a big fan.

CHAKRABARTI: I'm not really an intense gamer, but I have been watching in awe as the industry has been growing since those early Mario days, which I don't want to date myself by saying that, I, in fact, played that game.

But Dianna, I actually want to start at the beginning of your career that about decade and a half ago, what was the first game that you worked on?

LORA: I actually started out in in theater. I went to school for musical theater. And from there actually was an early day content creator press type person.

So that was, those were my early days in in gaming. My first official game was a Japanese mobile gaming company that doesn't exist anymore. I want to talk about the volatility of the industry. But this Japanese mobile gaming company started making Otome games for women. Drama, romance type games for the mobile.

CHAKRABARTI: Wow.

LORA: For the mobile market. Yeah, it was pretty fun.

CHAKRABARTI: Okay. And so what drew you into moving into the industry full time? What was it about it that made it an exciting place to be?

LORA: Oh, I just love it. It really comes from, I think, the gem of being in theater, a bunch of creative weirdos coming together and making awesome things and putting it out into the world.

What's not to love about that? It's the same concept of when you're making a show on Broadway or when you're making a movie or when you're making music, it's just, it's that creative outlet. You love it.

CHAKRABARTI: So actually, now that you mentioned movies, audiences for films have been like very habituated for a long time that they know credits are going to come at the end, right?

So they know that it takes hundreds and hundreds of people to make one movie, right? Whether or not they sit around for the credits, can you give us a sense as to how many people it takes to make a modern day, let's say, big headlining video game?

LORA: Like a blockbuster type game?

CHAKRABARTI: Yeah.

LORA: It could, you could easily say it's hundreds, it arguably like at least 500 to 1,000 people.

It really depends on what you're making. You have the concept of these blockbuster games that need many studios, that need a lot of people and need a lot of expertise to put it out, to make the cool things that we're playing and that we're seeing and makes that, make the water shimmer and makes the character's hair flow. That all, that takes a group of people to make.

And you could argue, it really depends. Because there are games that take, you can, that make, one person makes it, a group of 10 but, it could be upwards to the hundreds of thousands.

CHAKRABARTI: So in that case, it's very similar in terms of the variability of how much talent it takes, just like we see in films.

Okay you're a gamer yourself too, right?

LORA: Yeah, I am. Yeah, I am.

CHAKRABARTI: Okay, can you, would you mind naming like one or two of your favorites?

LORA: Oh my gosh, I'm obsessed with Baldur's Gate 3 right now. They just released a patch, so I need to jump back in, but so I'm obsessed with Baldur's Gate 3. I'm playing like Dave the Diver, occasionally playing Diablo with my partner.

I played; I have a cycle of games that I go through cause my backlog is ridiculous. There are too many games coming out right now. So it's always a good time. Always something to do.

CHAKRABARTI: Okay. But you're not working for Zynga anymore.

LORA: No, not anymore, no.

CHAKRABARTI: What happened? I got laid off, which is the part of the industry, right?

Yeah. Yeah, you make a game and then eventually you get laid off. Sorry for laughing. It's very dark. Yeah. I'm sorry.

CHAKRABARTI: You know what? I'm glad you can laugh about it because it's the only way to push back the darkness.

LORA: Exactly. I don't know.

CHAKRABARTI: Did that come in an expected round of layoffs from Zynga?

Or is it, did the game, was it finished and then there's churn naturally? How did it happen?

LORA: It was unexpected. I think at this point, we're starting to get wise, at least the developers are, we're starting to get wise that when the third quarter hits if things are looking scary that there's a slight possibility that layoffs may happen. You have your, you know, you have your town halls, and you have your meetings with your leads and they're like, "No, we're projecting record profits. Everything looks fantastic. Everything looks great."

And the next thing you know, like a week later, you're being brought into a room with HR and they're like, "Hey, thanks, you've been let go for redundancy." And you're like, "Wait a minute, hold on a second. I thought we were struggling. How am I redundant?"

CHAKRABARTI: The game that you were working on, Star Wars Hunters.

Was it done when you got laid off or not?

LORA: No, it's still in the middle of production, yeah.

CHAKRABARTI: Oh, okay. Okay. So help me understand something. We're going to talk with a reporter who covers the gaming industry extensively in just a minute here. So you were saying the message you were getting was things are going well for the company. But then you got laid off, what, like a week or two later?

LORA: Yeah. Yeah, pretty much.

CHAKRABARTI: Okay. And how many of your fellow, of your colleagues got laid off too?

LORA: I don't know.

CHAKRABARTI: Okay.

LORA: I know there was a handful of us, but I sincerely don't know. As much as we know, of the 8,000 people that have been laid off, it could be potentially even more than that. Because there are a lot of companies that aren't announcing layoffs or whatever.

You have one person who disappears one day or five people who disappear another day. And then, you don't know, you just don't know. And then, you also have, you don't want to say anything bad about the company, or you don't want to say, "Hey, I just got laid off." Because of the shame and stuff that comes along with it.

And so numbers may be even higher than we think.

CHAKRABARTI: So Dianna, does the industry, from the point of view of the workers, does it feel different now than it did when you first dove into it that 15-ish years ago?

LORA: I think so. It definitely, bigger budgets, a lot more expectations, games as a service. Slash live service games where, you know, instead of just having a standard one game, your game that comes out. Remember, if we want to go back to Super Mario Brothers, you have that one game, one and done. But now you have these games that are, like, multi-yeared, sometimes have 10-year plans.

So the expectation of an exponential growth, it makes it so that the games like last longer, productions last longer, things cost more money. The tech gets fancier. So you need to have, you need to have the hair that looks like it's real and it's blowing in the wind. Expectations in the gaming industry are definitely higher.

So that's where you have like this, you have this sort of this disconnect of we have, where they're saying, "Record profits, lots of money is being made, lots of money being made." But then, however, it's also supposed to be super volatile and their investments in NFTs, Bitcoin, Metaverse, and so the companies are hiring out to build out these industries, those particular industries, the cost that it makes these games, like these are blockbuster games that tends to a hundred million dollars.

LORA: Yeah. Wow. It's a lot different.

CHAKRABARTI: We have about a minute before our break and after that we're going to get a really deep business analysis of what's going on here. But, Dianna, I imagine that a lot of listeners gamers or not right now are just being like, meh.

There's like tech layoffs going on, all over different parts of the tech industry, and as a gamer, as long as the game comes out and I can play it, so what's the big deal? Churn is churn. What do you, what would you say to that?

LORA: I would say that's an unfortunate thing. I think that, you have it's an unfortunate thought process.

You have a situation where these games are being made under, Iin some cases, duress. We need to have some form of a unification. I'm very vocal about talking unionization. The industry is still very young. We need to have some form of protections. Because I personally don't feel comfortable playing games where I know that people, the people who made it, are under duress.

CHAKRABARTI: Interesting. Again, it seems to me that there's a relationship to the entertainment industry as a whole, right? Because we just experienced months long strikes, right? In Hollywood. Yeah. For people just trying to put their foot down and say, "Enough is enough." So looking at how that's playing out at the, in the video game industry is what we're doing this hour.

And when we come back after the break, we're going to hear from a senior reporter who's taken many deep dives into the business of gaming. So that's when we come back.

Part II

CHAKRABARTI: Now, Dianna, hold on for a second, because it's time for me to bring in Nicole Carpenter, and she's a senior reporter at Polygon. It's a website covering video games and pop culture. Nicole, welcome to On Point.

NICOLE CARPENTER: Hi, thank you for having me.

CHAKRABARTI: So help us get an understanding of the shape of the industry, first of all.

When I hear or read that 6,000, 7,000, possibly even 8,000 people have been laid off in the gaming industry, it's hard for me to know if that's a significant number or not. Do we know about how many people overall are in the industry?

CARPENTER: It's hard to say how many people are in the industry overall, because beyond just the core development, there's support studios, there are a ton of people. But to put this into context, I was looking over some sort of unofficial layoff trackers from years prior. In 2022, the kind of unofficial number there was 2,000 layoffs compared to, like you said, the 8,000, which honestly is probably a little bit low, because companies don't report numbers all the time.

And important context there, 2022 is also a volatile year for the video game industry. So 2,000 layoffs, a little bit, that wasn't great to see either. So it is safe to say that this year has been unprecedented for seeing these kind of layoffs.

CHAKRKABARTI: Okay, good. That's important context, right?

Because companies go through different cycles, but if we're seeing a cross sector cycle, or activity here, it's worthy of note. Obviously, I want to understand what's driving this. For example, we reached out to a bunch of different companies for comment, or to see if they'd come on for this hour, almost all of them said no, and those include Niantic, Unity, Bungie, Embracer Group, Epic Games, ByteDance and EA Games.

Let me just focus on Electronic Arts here for a second, because a little earlier this year, around May, they gave us their fiscal year end finances the picture of it. And they said for this past fiscal year, EA had a $7.426 billion in net revenue. That's just for one company.

But even, but slightly earlier than that, just a month or two earlier than that, in March, EA said it was laying off 6% of its workforce. Is there an explanation for that, Nicole?

CARPENTER: The explanation that companies are giving are the economic situation. And part of that is that games are bigger than ever.

They're taking longer to make. They cost more money and companies are looking to have less risk there. And by decreasing head count, it is an awful but sure way to bring those profits up for shareholders. But one of the other things that we're seeing is come down from the pandemic.

During the pandemic, the gaming industry had a huge boom. And since then, growth has slowed. However, you mentioned the video game industry. It's valued at almost $200 billion. It's $184 billion. It decreased in 2022, but it was still above, well above $100 billion. But so anyways, what I'm trying to say there is that companies are seeing that decrease in revenue from the pandemic, they may be over hired there and are trying to correct in that way. They were looking for kind of that short term profit rather than that long term sustainability and the workers are paying for it now.

CHAKRABARTI: Okay, this is starting to sound familiar, and Dianna, I hear you hmming.

Tell me what you think.

LORA: Yeah, I'm hmming. I think she's right. I think that also, on top of that, I've also been in, not in my last company, but in other companies, as well. I've been in the shareholders meetings where they're like, "Profits are high, record profits." They have layoffs, but then, it's time to vote for, to see if the executives get their raise.

So I think that there's a combination of, yeah, there is an overuse of the volatility of the investments of all these different tech and things like that, because obviously it takes money, it takes time, it takes people. And they're trying to save money, but at the same time, you have the shareholders who are also asking for raises.

Where I keep consistently saying the math isn't mathing, you said you're telling me, you're making a ton of money. You're telling me that you want a raise and yet it takes, it takes my coworkers months, sometimes years, to get a raise or to take a day off.

So it's like, what are you talking about here? That doesn't make any sense. And so I think that's where you have a little bit of this, the indignancy of this 8,000 people getting, being laid off and the frustration that comes from it. Because the executives right now are sitting up there and they're saying that, "Gosh, if only we could make more money." And it's just like, how much money, more money do you need, bro?

It makes no sense.

CHAKRABARTI: This is getting me thinking that perhaps, Nicole, is this a sign of the maturation of the video game industry overall, because all of the things that we're talking about here can be applied to so many other industries. And they've reached that point before, like again, just sticking with EA as an example, when they announced that 6% job cut. CEO Andrew Wilson said that they wanted to drive a quote, "Greater focus across their portfolio and they were moving away from projects that did not contribute to their strategy."

And I think most importantly, what they told to their shareholders is, "Yeah, they missed some quarterly estimates on revenue." So in order to maintain that return, I think that shareholders were expecting the easiest way to do that was to cut headcount and I could just remove the phrase video gaming industry and replace it with almost any other and it would sound exactly the same. So is this just a maturation of the industry, Nicole?

CARPENTER: I'm not sure. I think that it is moving, this is a reflection of what the tech industry is going through. But do you want the industry to continue to be volatile like that?

Do you want the industry to continue to be driven by shareholder interest? I'm not sure if it's a maturation, and I'm also not sure if that's a path that the industry wants to continue down, at least, when we're talking about the workers and not the shareholders.

CHAKRABARTUL Because you just, I was going to ask for a clarification on industry, but I appreciate that you beat me to it, Nicole. So in terms of some of the impacts, layoffs plus working conditions, that developers and employees are seeing in the video game industry.

Dianna and Nicole, I wonder if you could just hang with me here for a minute and listen through a story that's been told within the industry, but I want to share with listeners. And it's about a game called Cyberpunk 2077. And I know that's going to sound familiar to both of you. For those of you who don't know, it's set in a very gritty, dystopian world called Night City, and you, as the player, are a mercenary named V.

And the goal of the game, more or less, is to try to keep your mind from being overwritten by an experimental biochip. Okay, so that's the premise of the game, and it was very anticipated. Because back in 2020, Cyberpunk was expected to be one of the best releases of that year. And the company behind the game, CD PROJEKT RED, had reportedly been working on the game for about eight years already.

And in fact, Cyberpunk was so highly anticipated that at least one developer said they got death threats when the release date was pushed back. Finally, on December 10th, 2020, Cyberpunk 2077 got its big release.

CRITICAL NOBODY: This game is an unfinished, broken, buggy mess, and you should not play it or buy it in its current state.

WATCHMOJO: Today, we'll be counting down our picks for the Top 10 Hilarious Cyberpunk 2077 Bugs and Glitches.

DESTIN LEGARIE: It is not an exaggeration to say that I felt nauseated after playing because of the terrible framerate. It really is that bad.

CHAKRABARTI: Okay, so clearly the release fell like a lead balloon according to YouTubers Critical Nobody, Ricky with WatchMojo, and Destin Legarie.

WATCHMOJO: It had problems. Among them, the scenery was slow to load, non-player characters would stay stuck in a default T pose, with their arms stuck straight out to the sides. Trees defied the laws of nature, which might have been okay, given that this was an imaginary world, but gamers weren't having it.

Tiny trees covered the map, growing through the floors, in vehicles, and even suspended in the air.

CHAKRABARTI: Ricky with WatchMojo there again. Cyberpunk 2077 was so buggy that Sony pulled it from the PlayStation Store just days after the game was released. And that brings us to Paula Mackiewicz-Armstrong. She watched the bad press roll in, and she works as a Quality Assurance Coordinator at CD PROJEKT RED and spent a lot of time on Cyberpunk.

PAULA MACKIEWICZ-ARMSTRONG: It was hard. It was not a good time for anybody really. We all felt we failed. And also, that things were profoundly wrong during the development. Looking at the review scores was not a good feeling. I had a policy of, "Don't read the comments, cause just don't."

CHAKRABARTI: Paula says she and others at the company knew the game was not ready.

MACKIEWICZ-ARMSTRONG: The developers were crunching. That's where the team works basically around the clock to finish up a game, often working right up to the release. It wasn't enough. Though they asked for more time, they were told they had to meet the release date.

You work, work. You have food at some point.

You leave, you do barely anything before you go to bed and do it all again. Everybody is having problems and we're trying to work it out and support one another and then it's only after the crunch ends that you realize the cost of, I don't know, I gained a few kilos because I wasn't eating well.

My eyes are super strained. I am so tired and low energy. I'll just go crashing down.

CHAKRABARTI: After Cyberpunk 2077 was pulled from the market, Paula and others kept working on improvements. CD PROJEKT RED released a number of bug fixes over the next couple of years. But something else also changed.

Paula and her colleagues unionized under the Polish Gamedev Workers Union. And just a few months ago, an expansion game to Cyberpunk 2077 came out, and that's called Phantom Liberty. Reviews are good. It was even nominated for some awards and Paula says she hopes CD PROJEKT RED is taking notes.

MACKIEWICZ-ARMSTRONG: I think the company has learned that there is no magic solution to make everything work out. Phantom Liberty, the expansion, definitely shows that the change to approach has worked. And giving it as much time as it needed, and it was a much better experience watching the review scores for the expansion than for the base game.

CHAKRABARTI: That's Paula Mackiewicz-Armstrong, a Quality Assurance Coordinator at CD PROJEKT RED. Okay, Dianna, let me turn to you because you've lived this life.

LORA: Yes.

CHAKRABARTI: Talk a little bit more about crunching. Seems like it's a part of working in the industry already.

LORA: Yeah, she's right. She's right. There's no other way to say it.

She's totally right. Crunching is ridiculous. It's due to poor planning. It's due to a shareholder pressure, management pressure. It's promising, over promising from management that then trickles down to folks like QA and folks like production, and who need to try and manage these expectations that management has given. And the pressure that the shareholders want, they want their quarterly earnings to exceed the last quarter. And what ends up happening is that there's only so much that you can do and there are only so many hours in the day and crunches is the inevitable thing that happens.

Crunch has broken up families. It has delayed people from having children. There's been divorce, there's been heart attacks, there's been, I don't want to say deaths, but health issues. So crunch is a thing that the industry, mental health is also, is kind of layered into that.

That it's important and it's a thing that's a part of this industry where we need to have a serious conversation about the churn of talent that is burnt out. Like anybody, the joke is that if you've lived, if you've been in the industry for more than five years, you're already a veteran. Because if you can survive five years of development, then you can do anything.

I'm ancient. I am, I'm falling and crumbling into dust at this point. There are some people who are, and you've been in the industry for 20, 30 years. And I'm like, how are you alive? It's, so it's a thing. So crunch is inevitable. But it shouldn't be, and it doesn't have to be.

And we need to stand up and we need to prevent that. And it's a common thing.

CHAKRABARTI: Okay. Nicole, we have about 30 seconds before we have to take our next break. Are there indications of any kind of change in the working culture in the industry? Given Dianna isn't the first one to voice complaints over crunch culture.

CARPENTER: Absolutely. Over the past couple of years, the video game industry has pushed towards unionization, and we see that change and we see workers having a say in their working conditions.

Part III

CHAKRABARtI: We spoke with Rachel Sederberg, a senior economist and research manager at Lightcast, and that's a labor market analytics firm.

And she helped us get a bigger view here about layoffs across the tech industry as a whole. Obviously, we're talking about video gaming today, but people have heard of hugely opposite places like Meta, Google, Amazon, Microsoft. Could that be because high interest rates have to force some changes in businesses?

Or, could it be because of shifting priorities to less expensive efforts?

RACHEL SEDERBERG: We saw huge gains in all of these companies or near all of these companies over the last few years in terms of bringing on new hires, trying different products and services. And so there's always going to be a period where the company takes a step back and assesses what their options are. It's not inherently that the company's in trouble.

CHAKRABARTI: Nicole Carpenter, what do you think about that?

CARPENTER: Yeah, I absolutely agree with that because we see for the companies that are public, we can see the profits, we can see that the companies are not struggling. But they are taking a look at the company, assessing it, and making those layoffs to the needs that they've set out.

So what are they then, in the gaming industry, what are people, what are companies starting to focus on? Because I read that statement from EA and it implied that they were going to abandon projects that didn't match the direction they wanted the company to go. Is that a sign of less experimentation and a move to like bigger blockbuster games?

What is that, Nicole?

CARPENTER: Yes. I think that like we said before, games are bigger than ever. They're more expensive than ever. They take longer to create. And so that inherently means less risk is going to be taken. We're seeing games that are sequels. We're seeing games that are based on existing IP, so that there is much less experimentation.

And I think Dianna was talking about live service games earlier. And those are games that are designed to be played for a really long time, like Fortnite. Fortnite is a live service game. It is continuously updated. They're not releasing new games, but they're releasing new things for that one game.

And they have that player base already invested in that. You can see why they're investing in that, because the player base is already there. But Epic Games was one of the companies that laid off a ton of workers, 900 workers actually, and then a couple weeks later announced that they had their biggest day in Fortnite ever.

CHAKRABARTI: Huh. Okay. Dianna, what's the impact of that on what we want to believe is the inherent creativity in this industry? Because, as I hear Nicole describe it, honestly, the first thing that jumps to my mind is the Marvel Universe in films, right? There's going to be, like, an infinite number of Marvel films because the studios know it makes money, but also, to Nicole's point about Fortnite audiences are invested in the Marvel Universe to get moviegoers to come to the theaters, it actually makes sense for the blockbusters to be, just almost everything that they do.

Is there any, in the video gaming world, Dianna, is there any consequence to that?

LORA: Oh, yeah, definitely. I think, you've just said it. Listen, I understand companies want to, they're trying to make money. They're trying to prioritize, make things that are sure bets.

And you can see that, you could see that happening in the movie industry as well, where you have sequels, you have blockbuster movies that are constantly being made. You want to get this sure bet, but you want to get your money. Cool. That's fine. That's happening in the industry as well. And gaming, where you have even, on the other end of that live services, actually now, I think companies are also, the gaming companies are also looking at the validity of live service games.

Do we want to continue investing in, creating a new live service game where the market right now is inundated in all of these different types of live service games? Like if somebody is going to be playing Fortnite, and that's their main game, you have to work extra hard to try and pull that person away from Fortnite.

To play a different brand-new type of game. Even the sure bets and that, we're a lot of, my friends and I in the industry and in the business side we're talking about like games that were supposed to be sure bets and are supposed to be sure bets.

Aren't sure bets anymore, a game that like a couple of years ago, that has the star power that has the game mechanics, that looks great. That has the money in the marketing to get it out there. Even that's not a sure bet because you have to convince people to pull away from the game, the live service games that they already have. So it's a double-edged sword, in the midst of all this, the saturation of these live service games, now these companies need to go crap. We just put ourselves in a position where anything new, we have to work doubly hard to pull people away from the stuff that we made.

And that's what we're seeing. And so even, listen, if we look at the positive aspect of this, where we're going, with the layoffs, people are going to still create. People are still going to make newer games; people are going to make smaller games. And frankly, I think that maybe that's where these companies should be focusing on, they should be focusing on smaller games. That don't take many years, and don't take multi studios and don't take thousands of people, hundreds of people to make, so that is the change that I think the industry needs. At least these executives need to start thinking about, they may already, they may be.

CHAKRABARTI: Let me just jump in here, because I have so many questions about what you just said about smaller games.

And let me turn back to Nicole for a couple of them. One is that I've been throwing around the names of some of the bigger game companies in the industry. Is this spate of layoffs also having an impact on, I don't know, independent developers or smaller companies?

CARPENTER: It is having an impact on smaller companies, as well.

You can see layoffs across companies of all size. For a company about a hundred people one that comes to mind is Ascendant Games. It was still a video game that cost a lot of money to make, but a smaller studio compared to others. They laid off half of their staff. But even studios that are smaller, that are within the dozens, some of them are shutting down entirely.

We can see that across the industry in studios of all sizes.

CHAKRABARTI: Okay, for the smaller studios, it's still not clear about why they're shutting down entirely. Is it that they're not as profitable as they wanted to be? Or are they being out competed? What is it?

CARPENTER: Yeah, I think it is about being about the competition in the industry, but it's also about the people who are investing into those studios are making less investments, as well.

They don't have the money coming in that they might have. And the indie game space is where you see all that innovation. It's the more experimental area and they need that support from the investments on the outside.

CHAKRABARTI: I got it. Investors not making their expected return.

Let's actually put a pin in that because it has a lot to do with what Rachel Sederberg told us as well. She was the senior economist and research manager at Lightcast. And she told us that, look, these decisions, these managerial and labor decisions are not being made in a vacuum.

We've mentioned that this is going on across the tech sector and leaders being aware that other companies are also tightening their workforce could be playing a role, at least subconsciously.

RACHEL There might be some thought towards Okay my competitors are behaving in this manner, so maybe I should think strategically about, is this the right decision for my company?

And so they want to be as competitive as possible, and those strategic moves that company A makes, company B has to take into account when they're thinking of how competitive can I be in this space where there are many players?

CHAKRABARTI: Nicole, the question that comes into my mind after listening to Rachel is even though we've been, in a sense, focusing on are companies making their quarterly return?

Are they missing it by a little? And the short-term decision making that comes out of that. In a sense, there's a form of long-term decision making that also has to be made here. Because look, if shareholders do not get their expected return or investors in smaller, independent developer companies, what happens is, yeah, they pull their funding or share price goes down. And if you're a CEO of a company and that happens, you're thinking it's going to be a lot tougher for me to raise capital in the next quarter or in the next year to work on these games that we don't know what the return would be, because they're not automatic blockbusters.

There is a connection there, which doesn't necessarily have to do with like personal greed in terms of what a CEO might make and not treating their workers like they matter. But it's more of yeah, if we're going to keep going in this competitive atmosphere, we have to make some tough decisions.

What do you think about that? Nicole? (LAUGHS)

CARPENTER: Yeah, you can see this happening and you can, I think the industry is so competitive and that's why you see the decisions Rachel was saying with the companies that are seeing other people make. Make these decisions and then thinking," Oh, I need to do that too." I think one of the earlier companies that did this was Microsoft.

They laid off 10,000 people and hundreds of those were from the game industry, as well. So I think that other companies were looking towards that. They were looking towards even the company, the layoffs in the wider tech world like Twitter as well. And those were also an impact. Those also impacted the video game industry.

CHAKRABARTI: Yeah, and Dianna, I'm sure you have a thought or two about what I just asked. So you want to jump in?

LORA: No, I agree. Again, I understand the business part of it. I understand. I understand all of that. I think in the end of the day, we, these are the sort of things that the inevitability of business and I respect that.

I understand that. But, once again, I'm thinking about the workers. I'm thinking about the people that you know, that are around me who are saying that they're stressed. And that they're sick or whatever. And those are the people that I'm thinking about. And so like my brain, I understand the business side of it 100%.

I get all of that. I get it. But you can't, you literally, you can't even think about the QA person who's working, 60 to 70 hours for 10 an hour. You can't even think about that. And this is where not to bring it back again, but where we have to do, where we have to really think about worker protection, and we have to think about these particular people who are killing themselves to make these quarterly earnings to hit these numbers.

I said it earlier, the industry is fairly young. And Hollywood has been around for 100 plus years, so they've had the time to figure their stuff out, the gaming industry. We're at a point right now where we need to figure our stuff out and we need to start thinking about the future and how we take care of the people who work here because we're going to have a brain drain. We're not going to have people left.

CHAKRABARTI: Actually, it's perfectly fine for you to bring it back to that because I think this is really one of the strongest undercurrents here. So interesting to me, Dianna, that you came from the world of theater, right?

There is worker representation, obviously.

LORA: I'm a union member in the theater.

CHAKRABARTI: And when we talked to Paula about Cyberpunk 2077, she, they joined a union after that. And again, coming back to Hollywood, I've been talking about correction in terms of financial corrections, and 10K forms of corrections that have to be reported to the SEC.

But workers now. In these media, entertainment, tech industries are also demanding a correction, right? And that's what's been going on in so many different places. Nicole, I don't see that as abating, as you said earlier. Do you think that could have the potential to change how the big developers run their companies or the kinds of products they expect to put out?

CARPENTER: Yeah, I do. I think that unions coming into these bigger companies gives workers a seat at the table. It gives workers say in how they want to do that work. It might not impact decision making on that top level, maybe not decision making on what games are coming out of this, but I think that it could help with timelines.

It could help with eliminating some of that crunch and protecting workers from doing that.

LORA: Severance minimums.

CARPENTER: Severance minimums as well. Health insurance, because a lot of people were laid off without health insurance. These are company transparency, salary transparency, because there's a huge thing.

I think that we need to have these serious conversations.