Why Are Game Publishers Firing People?

The List of Firings So Far…

This week three publishers announced lay offs:

• 1) Activism Blizzard will lay off 100 people as the studio reduces its game development list from four to two titles (cutting the Scarface franchise).
  2) NCSoft Austin cut back on games in the development phase resulting in 21 layoffs.
  3) Midway Austin will layoff between 90 and 120 people.

They’ve all had disappointing second quarter earnings but that only tells part of the story.

Game Sales Aren’t Enough

Game sales are coming up short. According to Chris Deering of the Edinburgh Interactive Festival, “less than 3 out of 10 games recover their development and marketing costs with boxed goods sales”.

The Money Hunt: $$$$

In the short-term companies are cutting back on their projects. But given the hidden costs of layoffs and the recession things will get worse before they get better. It’s time for game companies to look at alternative sources of revenue to enact in the long-term.  So what do you think they should do? Should they try more in-game ads? Maybe start distributing more of their titles online to cut out the middle man (GameStop)? I’ll try to tackle this topic next week.

Tagged as: Alternative Sources of Revenue, Game Publishers, Layoffs