Larian Studios - Industry Layoffs not neccessary

[HiddenX]

IGN reports some statements about the game industry by Larian:

Baldur's Gate 3 Dev Larian's Publishing Director Calls Games Industry Layoffs an 'Avoidable F*ck Up'

Larian publishing director says the notion that industry-wide layoffs are inevitable is 'just not true.'

Over the past few months, Baldur's Gate 3's developers have used its platform during awards season speeches to advocate for a healthier game industry. This tradition now extends to its publishing director, who, in a recent interview with Game File, shared his thoughts on industry-wide layoffs plaguing developers over the past two years as an "avoidable fuck up."

Chief among 2024's massive layoffs include Nintendo announcing its restructuring in March which has the potential to affect over 100 contract workers; Sony laying off roughly 900 employees in February -- including developers across studios like Insomniac, Naughty Dog, and Guerrilla, and Microsoft laying off 1,900 staff from its workforce in January following its $69 billion acquisition of Activision Blizzard.

The complex and avoidable nature of layoffs
Speaking with Game File's Steven Totilo, Michael Douse likened major gaming companies to massive oil tankers predicated on their ability to steer toward sucess. Should a company fail to plan accordingly, while giving developers proper financial reserves to pivot, fallout via layoffs is sure to come. Instead of feeling like layoffs are an inevitable aspect of the gaming industry, Douse argues that they are avoidable.

"But to prevent these giant operational failures that we call layoffs...they are an avoidable f*ck up. That's really all they are," Douse told Game File. "That's why you see one after the other. Because companies are going: 'Well, finally. Now we can, too. We've wanted to do it for ages. Everyone else is. So why don't we?' That's really kind of sick.'"

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Thanks Couchpotato!

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[Couchpotato]

In a perfect world I'd agree but when you sell stock, and are what is called a public company you become beholden to every stockholder, and investor you have.

All they care about is profits and that's the harsh reality of bussiness.

 

[Redglyph]

Easy for them to say about much bigger companies when they have just grown to ~450 employees and benefit from a share majority. 'Curb their greed and plan better' must sound very naive to people who must manage thousands of people when the industry is having difficulties.

 

[JFarrell71]

Easy for them to say about much bigger companies when they have just grown to ~450 employees and benefit from a share majority. 'Curb their greed and plan better' must sound very naive to people who must manage thousands of people when the industry is having difficulties.

Is the industry having difficulties, though? When a giant company like Sony lays off this many people, lack of sales revenue is not the reason.

 

[Couchpotato]

Yep I mentioned that before. Let's hope Larian continues to make profits.

Otherwise they'll end up eating crow and be like all other developers/publishers.

 

[Vaelith]

Layoffs are not necessary for a company like Larian, that is not run by shareholders and investors who care only about every fraction of a percent profit they can make, without care for any collateral damage.

Sadly, not many companies are run like that these days. Most of the layoffs happening in the big companies in the industry were not necessary per se, but if you're an investor, why would you settle for earning 10 billion a year, when you could earn 10.5 billion by discarding 1,000 workers and demanding more productivity from those you keep, under the looming threat that they might not make the next cut?

 

[Carnifex]

It's hard to make or sustain such absolute statements, though I'm not qualified myself to pass judgements.

 

[Redglyph]

Is the industry having difficulties, though? When a giant company like Sony lays off this many people, lack of sales revenue is not the reason.

It's a discussion that took place in another thread, a few weeks ago (also about Larian, I think). The Covid gave a boost, but it slowed down after, and 2022-2023 weren't at the same level any more. Was it at the same scale as the lay-offs? I have no idea. I don't think the current revenue is the only parameter they take into account.

Maybe some companies or holdings do it for pure profit, but I'd find it hard to believe they all do. Some could just be bad planners, but it's not something simple either, so just saying 'plan better' just makes me roll my eyes.

 

[bjon045]

Given that Larian was near bankruptcy after they released Divinity 2 and they had to restructure their company this is a little bit rich.

Industry wide these changes are just a continued correction from the Covid boom where companies went crazy hiring staff. Video games/books/streaming and even tabletop had a massive boost in sales during Covid and sales have gone backward since then. This is just moving the growth graph back to where it should be.

If you make shit games you won't do well. The problem is multiplied when these mega publishers try to make bigger and more expensive games.

 

[JFarrell71]

It's hard to make or sustain such absolute statements, though I'm not qualified myself to pass judgements.

Sony made 90 billion in profits in 2023. Their stock rose 10% from January to September. They raised their gaming subscription services by $72-80 per year.

Does any of that strike you as signs a company is losing money?

No. They make shit tons of money. But being a business, when they make a shit ton of money, all they can think about is how to make even more.

 

[JDR13]

Easy for them to say about much bigger companies when they have just grown to ~450 employees and benefit from a share majority. 'Curb their greed and plan better' must sound very naive to people who must manage thousands of people when the industry is having difficulties.

Yeah, this Douse guy is talking like he knows exactly what every other company is going through which I find a little strange. To me, it sounds like he's just throwing shade at other developers because Larian was fortunate enough that they didn't have to make any cuts.

 

[Stingray]

Sony made 90 billion in profits in 2023. Their stock rose 10% from January to September. They raised their gaming subscription services by $72-80 per year.

Does any of that strike you as signs a company is losing money?

No. They make shit tons of money. But being a business, when they make a shit ton of money, all they can think about is how to make even more.

$90B profits would be ludicrous and make them one of the most profitable companies in the world, which they aren't even close to - you must be looking at revenue. From what I can see, Sony reported roughly $6.5B of net income for calendar year 2023. But since we're talking about gaming stuff, it seems like a bad idea to look at the entire Sony business anyway, as gaming is a very small part of their business. It'd be like saying Microsoft is one of the most profitable companies in the world, so their gaming business must be doing insanely well. (Maybe it is, I don't know off-hand, but you cannot draw that conclusion)

 

[lackblogger]

Given that Larian was near bankruptcy after they released Divinity 2 and they had to restructure their company this is a little bit rich.

Not really. And this goes for every response to this thread so far criticising the Larian guy. The guy didn't say the companies were wrong, he said it was evidence of a fuck-up. Which it is.

 

[JFarrell71]

$90B profits would be ludicrous and make them one of the most profitable companies in the world, which they aren't even close to - you must be looking at revenue. From what I can see, Sony reported roughly $6.5B of net income for calendar year 2023. But since we're talking about gaming stuff, it seems like a bad idea to look at the entire Sony business anyway, as gaming is a very small part of their business. It'd be like saying Microsoft is one of the most profitable companies in the world, so their gaming business must be doing insanely well. (Maybe it is, I don't know off-hand, but you cannot draw that conclusion)

My bad. Of course that number is revenue, not profit as I erroneously stated. And yes, Sony has multiple divisions.

So let's just look at SED (Sony Entertainment Division). The Playstation division alone posted over 10 billion dollars in revenue in the 3rd quarter (which ended recently). That was a record. Part of why this happened is because they moved 8.2 million PS5s in that quarter. That's objectively a good thing for them. More systems sold mean more PSN subscriptions sold in the future, more games sold, more everything sold.

Maybe you can see where this is going. Hardware has a low to non-existent profit margin. Because SED sold so many consoles, they had a lower profit margin than they had in that quarter last year. This is normal and to be expected by a sane person.

But business people have to business. All they look at is that profit drop, not context. (There also isn't any report I can find of what that profit actually IS, just what it was relative to last year; making less money doesn't mean they didn't make money).

So they fire people. I'm sure they'll record a huge fourth quarter on the strength of selling stuff to those 8.2 million new PS5 owners. And of course it'll be even bigger, profit-wise (but not revenue wise) because they fire a big chunk of their workforce. The workforce responsible for making the games that drove those increased console sales.

 

[bjon045]

The guy didn't say the companies were wrong, he said it was evidence of a fuck-up. Which it is.

Yes but no one likes a Captain Obvious. I'm not sure the lesson has been learned though. The good thing is that there are plenty of studios who just focus on making good games that people want to play rather than what some suit thinks i.e. live service microtransactions milk the fucking customer until they have nothing left.

 

[biggoron]

No all layoffs are created equal and while over hiring during COVID is real I think it just sped up the inevitable. I think the two largest factors are saturation and consolidation in the industry, especially with all the acquisitions done by Microsoft. These two factors are interrelated. It is easier then ever to make games and there are a ton out there. I know my queue just grows.

The 1,900 person layoff by Microsoft (which made $73.4 Billion of net income in 2023), as mentioned, is directly due to its acquisition of Blizzard Activision. Why make so many games when there is less competition?

Big companies do layoffs all the time, for no real reason, as they often just end up hiring other people (head count rarely stays down). This is probably the case for Nintendo and Sony. And then there is the Embracer blow up which appears to be more related to poor management decision making as opposed to a wider industry trend.

 

[SSIGuy]

Layoffs are not necessary for a company like Larian, that is not run by shareholders and investors who care only about every fraction of a percent profit they can make, without care for any collateral damage.

A free market economy is the best system we got, but it still sucks.

Not to pull this thread off topic too much but it surprises me to no end that when it comes to the US populace and media debating policy and who'd make a better leader, etc, that so rarely does lobbying come up (this applies to some other countries too of course). A corporation ultimately has little regard for what is best for the health, safety and happiness of a population, but is only focused on increasing profits. The idea that it gets to set/sway public policy by throwing "donations" at politicians is seriously flawed imo, and a far bigger issue than most that get debated. Corporations laying people off is just another facet of this... the idea of perhaps making less money to keep more people employed through a rough patch doesn't happen very often.

And as to Larian, I hope it never happens, but the day will likely come when they will lay people off too.

 

[Vaelith]

And as to Larian, I hope it never happens, but the day will likely come when they will lay people off too.

Almost certainly, but we'll see. I can't imagine anything Larian makes to not be a massive blockbuster. I'm sure a lot of people can't wait to see them stumble, though.

 

[Redglyph]

Not to pull this thread off topic too much but it surprises me to no end that when it comes to the US populace and media debating policy and who'd make a better leader, etc, that so rarely does lobbying come up (this applies to some other countries too of course). A corporation ultimately has little regard for what is best for the health, safety and happiness of a population, but is only focused on increasing profits. The idea that it gets to set/sway public policy by throwing "donations" at politicians is seriously flawed imo, and a far bigger issue than most that get debated. Corporations laying people off is just another facet of this... the idea of perhaps making less money to keep more people employed through a rough patch doesn't happen very often.

I don't know what priority people attach to human rights and welfare in the US, in the context of companies, but in Europe, the European Commission has a series of regulations, directives, and recommendations on those topics. There are also a number of global organizations like the UN, Amnesty International, etc.

The focus is generally on human rights, but that's quite general and still far from being respected by most companies (gender / sexual orientation / racial discrimations, people with disabilities, migrant workers, ...), so that covers a part of what you mentioned.

There are unions, too. In Europe, companies are likely to have one when they have enough employees. For example, I was in a company that had one, once, and we got increased pay when working at night or during the weekend (which I never had in smaller companies), quotas for extra hours, and so on.

However, I don't think any of that can do much against restructurations, except unions, which can have a significant influence on the process. The law also requires companies (here, at least) to follow precise rules when a lay-off gets past defined thresholds.

I have the impression it's a very difficult topic, and it must be complex to argue about lay-offs because the decisions behind each of them can easily get biased by a number of factors. For example, after an acquisition, is it better to keep redundant people and be less efficient (risking a bigger problem later), should we try to make those people do something else (what if they don't want to change), or is it safer to sack them?

 

[Morrandir]

A free market economy is the best system we got, but it still sucks.

I would say the best is a regulated/social market economy, which sucks less.