This Thursday, the video game industry’s brightest stars will gather in Los Angeles for The Game Awards, a celebration often dubbed the Oscars of gaming. Yet, beneath the glitz and fanfare, the industry is grappling with one of its most challenging years in recent memory, marked by mass layoffs, studio closures, and financial uncertainty.
The scale of the crisis is staggering. According to Game Industry Layoffs, at least 14,500 employees lost their jobs in 2024, a sharp increase from the 10,500 layoffs recorded in 2023. Prominent studios like Ubisoft have shuttered branches in San Francisco and Osaka, while Sony-owned Firewalk Studios, known for the ill-fated Concord, closed its doors in October. Despite these setbacks, the global gaming market generated an impressive $188 billion in revenue this year, per data from Newzoo. But the growth masks deeper issues within the industry’s funding and development pipelines.
The root of the problem lies in waning investor confidence. Many investors are shifting their attention to more lucrative sectors like artificial intelligence, leaving game developers and publishers scrambling for funding. This financial strain is forcing major players to diversify. Nintendo found success on the big screen with Super Mario Bros. The Movie, which became the second-highest-grossing film of 2023. Others, like Bethesda and Amazon, are venturing into television with series adaptations of Fallout and Secret Level.
Despite these pivots, the industry continues to rely heavily on legacy franchises. Activision Blizzard celebrated the success of its latest Call of Duty installment, praised as one of the best in the series, while evergreen titles like Fortnite, Minecraft, and Grand Theft Auto V remain cash cows for their publishers. However, new entries often struggle to make an impact in an already crowded market.
Daniel Ahmad, an analyst at Niko Partners, highlighted the challenges facing new titles. “It’s difficult for new games to break into what is a very established marketplace,” he explained. Even heavily marketed titles like Final Fantasy VII Rebirth and Star Wars Outlaws fell short of expectations this year.
Amid the struggles, several indie and international titles have defied the odds. Palworld, a quirky game nicknamed “Pokémon with guns,” gained widespread popularity, while Helldivers 2, inspired by the sci-fi classic Starship Troopers, carved out its own niche. The biggest success story, however, came from China with the release of Black Myth: Wukong. This action-packed adaptation of the 16th-century Chinese novel Journey to the West sold 25 million copies globally, with 70% of its sales in China.
Ahmad called Black Myth a landmark achievement for the Chinese gaming industry. “It’s a great moment,” he said, noting that China’s lower development costs and massive audience of over 700 million gamers position the country as a rising force in AAA game development. Analysts predict more blockbuster titles from Chinese studios like Tencent and NetEase in the near future.
While 2024 has been brutal, analysts like Charles-Louis Planade of Midcap Partners foresee a brighter future. He predicts a “sector rebound” next year, with fewer studio closures and a healthier competitive environment for those that survive the recent turbulence. The pandemic-era boom, which saw unprecedented growth, has now run its course, leaving a leaner but potentially more stable industry in its wake.
The coming year promises significant developments. Nintendo is expected to reveal the successor to its wildly successful Switch console, and Grand Theft Auto VI—arguably the most anticipated game of the decade—will finally hit shelves in the fall. After a ten-year wait, its release could inject much-needed energy into the industry.
Despite the setbacks of 2024, the resilience of the gaming community and the promise of new innovations suggest that brighter days are ahead. While the industry navigates its “darkest hour,” the stage is set for a comeback that could redefine gaming’s future.
