This article was originally published in Edge 428 - buy it here

By Alex Spencer

Almost 60,000 industry jobs lost over five years. Game budgets and schedules out of control. Hundreds of development studios closed. Console prices that have risen since launch. Despite analyst predictions of revenues growing for the videogame industry as a whole, the story behind the scenes is grim. In Edge 428’s cover story, we meet with nine industry experts to ask how we might carve out a brighter future. Where now during the second videogame crash?

“This is the worst videogame crash, or disruption, that we’ve seen since the 1980s.”

Tim Sweeney, Epic Games

Before we can begin prescribing potential cures, we need a solid diagnosis of the problem, and of its scale. Enter Amir Satvat, who has been running the ASGC Games Industry Layoffs Tracker since 2022. “I don’t mean this immodestly,” Satvat says. “I think we may have more data on the games labour market than anybody in the world.”

According to Satvat’s current projections, which add publicly disclosed numbers to data shared privately by affected individuals and organisations, more than 14,500 videogame workers will lose their jobs this year. That will put the five-year total, from 2022 to 2026, at over 58,000 people out of work. 

But, Satvat says, it’s not all bad news. “I also have hiring data, which suggests that something like 18,000 to 25,000 people are getting new jobs in games every year.” The videogame industry has actually grown over this period, albeit “very modestly, by a small number of thousands of people,” he explains. “The problem is comparing that to the five years before it – I believe the industry grew by 150,000 people in that period.”

Even with this dramatic slowdown in growth, Satvat says, “it is hard for me to foresee a picture where the industry doesn’t eventually contract from its current size. If I’m being optimistic, there is some number that is not a ghastly decrease from where we are now, where things can stabilise out. But for it to stay exactly the same as when you had these very large firms that were relatively stable? It’s hard for me to visualise how that happens.”

So, what about the idea, as suggested by industry veteran Brenda Romero, that we are encountering a second videogame crash? Satvat caveats with the fact that his data shows the layoffs are very localised, to patches of the western world that have traditionally been considered hubs of game development. 

Most affected are the UK, northern and western Europe, and North America – and one US state in particular. “There was a 12-to-18-month period where I estimated that over half of layoffs, globally, were in California,” Satvat says. Other regions have been largely insulated from these effects. That includes countries just starting to build up a videogame industry – often those where wages are lower – but also more established areas such as eastern Europe, and one of the most storied development hubs of all: Japan. 

“I think this is as bad as the ’83 crash if you’re a game developer based in North America or western Europe, in a traditional triple-A studio,” Satvat says. “That is ground zero for the destruction.”

When we put this to Epic Games CEO Tim Sweeney, his answer is immediate. Are we living through a videogame crash? “We absolutely are,” he says. “This is the worst videogame crash, or disruption, that we’ve seen since the 1980s, when Atari fell and was replaced by Nintendo. I was just a player back then – I only joined the industry as a programmer in the 1990s – but I’ve not seen anything this bad since then.” Despite making one of the biggest videogames in existence – as we type these words, over two million people are playing Fortnite – Epic has been far from exempt from these problems. As CEO, Sweeney oversaw more than 1,000 layoffs in March this year, on top of 830 redundancies in September 2023.

Today he believes he has a clear view of the wider crisis, and how it compares to the problems in gaming’s history. “What happened in the ’80s was that Atari just made a lot of really bad games, and their hardware platform died,” he says. “Now, though, it’s multi-causal. And no patient going to their doctor wants to hear the problem is multi-causal. Those are the hardest problems to solve, because it means there’s not just one pivot you can make.” Those causes, as he sees it, are a combination of “a variety of outside challenges” – that is, macroeconomic factors beyond the control of videogame companies – and “internal industry dysfunctions”, the first of which is the persistently rising cost of making a triple-A game.

“I think the first time I spoke about, ‘Hey, cost is going to kill us’ was 2005.”

Raph Koster, Playable Worlds

“Since around the year 2000, game budgets have literally doubled every few years,” Sweeney says. “The first Gears Of War, in 2006, cost us $12 million to make, and because we sold six million copies on Xbox, we made $100 million. It was immensely profitable. But, by the end of that generation, as we were making [2011’s] Gears Of War 3, it cost about $100 million to make – and our revenue projection was still about $120 million, because the audience wasn’t growing.”

It’s a situation Raph Koster, now CEO of Stars Reach developer Playable Worlds, has been warning about for two decades. “I think the first time I spoke about, ‘Hey, cost is going to kill us’ was 2005,” he says. That was when Koster gave a talk titled ‘Moore’s Wall’ – a reference to Intel co-founder Gordon Moore’s eponymous law, which states that processing capacity doubles roughly every two years without a significant cost increase. More relevant to Koster’s thinking, though, was another maxim, named after a different tech co-founder: Nathan Myhrvold, of Intellectual Ventures, later Microsoft’s first CTO. “Myhrvold’s Law says that software is a gas – it expands to fill whatever computer you have,” Koster says. As hardware overheads grow, software engineers stop worrying about optimising for their previous limitations. “The place that shows up the most in games, for better or worse, is in content costs.” Take the example of that most quintessential of game items, the crate. “What used to be a single 128x128 texture is now multiple 4K textures with shaders and all this stuff,” Koster says. “And, yes, tools have improved along the way. You don’t handpaint that texture pixel by pixel any more – you can use procedural tools like Substance, or just purchase it from a texture library or whatever. But there’s still downstream cost, even if it’s just testing how those umpteen textures and shaders interact. It all adds up.”*

When it comes to the layoffs situation, Amir Satvat says, “Japan is a completely different ballgame.” He acknowledges that the country isn’t entirely “a utopia”: there are still layoffs, and they are generally focused on contractors based outside the country, “to protect core staff in Japan”, but these have generally numbered in the hundreds rather than thousands. “Everyone calls out Nintendo, but you can look at Konami or Capcom – these companies all have staff retention of 97 per cent plus.” So, what can the west learn? “My understanding is that, generally, Japanese teams tend to be much smaller and leaner,” Satvat says. “They didn’t get swept up in the live-service trend, or into these mega-blockbusters with 500-person teams.” And perhaps most important of all? “The executive salaries. They still make great money, but it’s two or three million dollars, not 30 million.”

In 2005, Koster studied the previous decade or so of game budgets, and came to a startling conclusion: “The cost of game development goes up about 10x every decade.” In 2017, he repeated the experiment, this time tapping industry contacts to gather numbers on 250 releases spanning over three decades. This larger data set showed him the very same thing. The cost of making a triple-A console or PC game (accounting for inflation) grew from around $1 million in the mid-’90s to $10 million by 2005, and $100 million by 2015. In the blog post accompanying this research, Koster wrote: “We’re talking one-terabyte games that cost $250 million to develop by the early 2020s”. Today, Sweeney talks about “budgets beginning to hit the $250–400 million level” – figures that line up with those in internal documents that leaked from Insomniac in 2023.

Meanwhile, Koster adds, “there’s another factor that nobody ever likes to hear, which is that players pay less [for games] than they ever have.” The retail price of games today, he points out, is more or less the same as it was in the 16bit console days, while inflation has more than doubled the cost of goods overall. And although digital distribution negates the preowned market – where games are cheaper, with no return for developers – it has been replaced by a ‘wishlist and wait’ mentality. “Who buys something at $60, even, today? They wait until it goes on sale on Steam and pick it up for five or ten bucks, or less.”

“The players who aren’t spending most of their play time in only one or two games? That’s a very, very small piece of the pie” 

Amir Satvat, ASGC

With the cost of making a game rising, and the amount of money spent on them falling (if only in relative terms), the only way for the industry to balance its books, let alone grow, is to sell games to ever more people. And, for a while, that was how it worked.  “From 1980 until about five years ago, the gaming audience was growing exponentially,” Sweeney points out. “We went from a small number of computer nerds to most of humanity – about five billion users across PC, console and mobile who have made gaming a part of their lives.” That growth attracted enormous investment, which somehow overlooked the fact that this meant videogames were approaching a hard cap. “Those players are here now – they’ve identified the areas where they want to play games,” Sweeney says. “And that market is not big enough to support all the industry’s ambitions.”

And although much of Earth’s population plays games of some description, that doesn’t mean that the market is equally open to all types of games – a large proportion of that five billion engages solely with free-to-play mobile apps. “If you look at the core PC and console audience in the west, it’s about the same size as it was five to ten years ago,” Sweeney says.

And even that core ends up being divided further. As Satvat points outs: “With TAM [total addressable market] and SAM [serviceable addressable market] analyses, they’re always a little bit dishonest, because the amount of players who aren’t spending most of their play time in only one or two games? That’s a very, very small piece of the pie. The actual SAM you can go after might be a small fraction of what we think it is, because of how many players are already locked up [playing one game only].”

Naturally, Sweeney is well aware of this. “In the past, gaming was about you playing a game by yourself, having fun, completing it, and moving on to the next game,” he says. “The average serious gamer might go through ten big games fully every year, and dabble in maybe 20 more smaller ones, whereas now, more and more gamers’ time is occupied by going into the one game that they continually play, getting together with their friends, and then deciding together what to do [there].” This is what Sweeney refers to as “the emerging space of ecosystem games”: social-led multiplayer platforms in which players have many different experiences to choose from. “Fortnite’s an ecosystem game; Roblox is an ecosystem game.” He also cites Minecraft along with a few other megaliths that don’t quite fit the description but “have audiences of similar sizes, that fill a similar role”, among them Clash Of Clans and League Of Legends and, in Asia, PUBG Mobile and CrossFire.

“Companies have only done this in times of crisis, and we have one now. So maybe now is the time.”

Tim Sweeney, Epic Games

But even if that list of games changes, Sweeney doesn’t see us shaking off the general shape of things any time soon. And so, he argues, in order to thrive in the future that’s coming, “you need to either be an ecosystem, and grow a massive audience that can sustain your product,  or be in an ecosystem, and reach the audience where it already is.”

That vision seems to be driving the direction of Unreal Engine 6, which, rather than focusing on traditional visual gains, is being pitched on how closely it can integrate with the UEFN (Unreal Editor For Fortnite) platform. “We want any team using Unreal Engine to be able to participate in that and build [an ecosystem game],” Sweeney says. “And not only that, but also connect it to all of the others.” 

At this year’s State Of Unreal, Sweeney talked about “team open”. In functional terms, this consists of a few parts. The easiest sell is the promise of a unified social layer, making it easier to play with friends regardless of your chosen formats, “so invites worked across games and voice chat worked everywhere,” he explains. Something we find harder to be enthused about is the idea of being able to buy cosmetics within one game and carry them over to another, in what Sweeney calls “an open and interoperable economy where you can make things that work in Fortnite and every other game that chooses to participate”.

This, of course, has long been part of the Web3 sales pitch. Sweeney is a vocal, long-time advocate for the prospect of the metaverse, but he’s much less keen on the other stuff – he acknowledges that “NFTs tried this same thing, and it absolutely failed, and everyone was ripped off in the process”. The most compelling part of his argument for this economy’s adoption, as far as we’re concerned, isn’t addressed at players but to developers. With players spending less money on games, but more within games, Sweeney reckons there’s an opportunity to spread that money around a little more effectively. “There needs to be some sort of revenue-sharing model so that if you buy an outfit here, but you’re mostly playing there, then they get some money.” He also sees such a shift encouraging those single-game devotees to expand their horizons, by freeing them from the sunk-cost friction of losing everything they’ve already bought.

There’s a lot of work to be done here, Sweeney concedes. The technology problem – involving making complicated assets, with all their associated physics and animations, “compatible between different games, even different engines” – feels as though it fits within Epic’s wheelhouse. Striking the deals that would be required in order to connect all these systems together, though? That’s much more of an unknown. “If we want to do this in a way all developers and publishers can get on board with, we’ve got to do it as peers,” Sweeney says. “Companies have only done this [kind of thing] in times of crisis, and we have one now. So maybe now is the time.”

This is certainly a sweeping vision for a reshaped version of the industry. But even assuming Epic can make it all work, where does that leave those developers who aren’t interested in making the kinds of games where such systems would make sense – and those players who aren’t especially interested in playing them? Well, in lieu of curing all our current problems, we might have to focus on treating them enough to be survivable.

“‘It’s only going to make $50 million’? OK. Let’s find a model where making $50 million is a good thing, not a bad thing.”

Shawn Layden, The Odysseus Partnership

This brings us back to that key three-part equation: budget, price and audience. With the latter two variables being the result of player behaviour and macroeconomic factors, that leaves only one thing we can change. Can we reverse the costs of exploding budgets, both financial and creative?

That’s a question on the mind of Shawn Layden, who saw these increases firsthand at Sony, from the PS1 days through to the eve of PS5’s launch. “At a million dollars, or two, or even five, why not take ten shots on goal?” he says. “Now it’s $50 million just to get to beta, for some of these bigger games, and so you’re wrapping up all of your resources into that one shot. And if you only get one, of course you’re going to take what you perceive to be the highest percentage shot possible. And so you end with a very crowded market with a lot of games [that look alike].”

Bruce Straley spent 18 years at Naughty Dog, where he was, among other things, game director on The Last Of Us and the two best Uncharteds. After leaving in 2017, Straley founded Wildflower Interactive, where he is currently working with a relatively tiny team to make Coven Of The Chicken Foot. “I have an idea for a triple-A game,” he tells us. “I will probably never make it.” That’s not, it seems, the result of a lack of opportunity – as Straley points out, declaring ‘I’m going to make the next Last Of Us’ would open a lot of doors. Rather, it’s a question of interest and enthusiasm. “I think the verbs and experiences we’re delivering in the triple-A space are…” He stops and laughs. “I wanna say boring.”

He points to the next game from the Sony studio that would have once been his neighbour, back in Santa Monica. “God Of War Laufey, I look at that game, and every pixel is mindblowing. The amount of work and skill that’s gone into every single frame… I’ve made those kinds of games, and I’m still blown away. But when I actually look at what you’re doing in the game? I’m not excited. And that’s nothing against the God Of War team. Just, across the board in triple-A, it feels like there’s no opportunity to inject fresh, innovative ideas.”

While these creative ‘safe bets’ might work out in the short term, over a longer span of time they could actually represent a greater threat. “You make more conservative, less innovative games,” Koster says. “That then runs the risk of your audience going, ‘Well, where’s the novelty? Where’s the freshness?’ And, you know, genres often die because they’ve crawled up their own ass. They get glitzier and glitzier without ever reinventing themselves.”

Layden agrees: “I think a lot of [publishers and platform holders] have painted themselves into a corner where they can’t do the good work of creating opportunities for the future by taking some chances today.” The ray of hope now, he says, “is the emergence of mid-tier publishers, like Kepler bringing out Expedition 33, and Lyrical Games.” (The latter is a spinoff of the movie production company, most recently responsible for The Death Of Robin Hood; its first game, Valor Mortis, is set to be released later this year.)  “If you can keep it tight, and flat, so your running costs are low, you can get behind games which have a lower probability of financial success,” Layden says. “By which I mean: ‘It’s only going to make $50 million’? Well, OK. Let’s find a model where making $50 million is a good thing, not a bad thing. I think that’s where the future is going to come from – people moving into that space.” Layden is working on something along those lines himself. “I’m trying to get a group together to create a similar type of fund,” he says, with the mantra “come back to double-A gaming”.

“Unless we hit the singularity, a platform will come along that changes things.”

Raph Koster, Playable Worlds

Satvat says he’s hearing more about development teams “trying to right-size” – and not only at the indie end of the scale. “A game that’s been made by one or two people, that’s great,” he says. “But I’m more interested in what would have been a 50-to-60-person team becoming a 20-person team, and the 400-person team becoming a 100-person team, as people are trying to find more efficient ways to do things.”

Wildflower Interactive is one such example. The core Coven Of The Chicken Foot team is 11 people, Straley says. “But we co-dev with an audio company, and all our rigging and modelling is outsourced. These are people we’ve built relationships with, and try to integrate into the team as much as possible. It’s not like we send it off to the Philippines and they just crank out stuff.” Co-development “is, so far, the best solution we have,” Straley continues. He says it offers a balance between the large standing teams of traditional game development “where you’re burning money between projects”, and “the Hollywood model”, where everyone is a contractor brought on for the project and then dissolved, which also doesn’t allow for the magic that happens when teams work together for a long time. “People have been saying for years that you can’t make The Witcher 3 or GTAV as your first game,” Satvat says. “The only reason something like Elden Ring or [the output from] Nintendo is possible is because you have the same people working together and iterating over five or six titles.”

Of course, there is another way of reducing team sizes, of which Satvat says he’s seen increasing evidence. “That phenomenon of the 50-person teams becoming 20, I think the reason a lot of people are doing that – or believe they can do that – is because they have all these tools like Claude,” he says. AI tooling is another part of Epic’s pitch for UE6, with integrations for Claude, Gemini and the like, but Satvat is not convinced they make a difference. “Are you actually getting a measurable productive gain in what you’re doing because you’re using these tools?” he asks. “I’ve seen firms that made staff reductions because they thought they could, due to AI, and are now realising that they cut too many people and are hiring back.”

In fact, according to Koster, improved tools have never been the deciding factor when it comes to game budgets. Back in 2005, he’d expected the arrival of UE3 and Unity to bring down the cost of creation – but his research shows that wasn’t the case. “We have better tooling today than we’ve ever had before,” he says. “It’s just that those things have not reduced the cost for the median game as much as the costs have risen.”

Beyond the decisions of individual developers, Koster believes there’s only one thing that can reduce costs – and it is in the hands of history. “Our industry is cyclical,” he says. “Unless we hit the singularity, a platform will come along that changes things.” For Koster, when it comes to the content arms race, this kind of technological reset is “historically, the only way out I’ve seen”. 

The constituent parts of this hypothetical platform are that “it needs to provide a new affordance, meaning there has to be gameplay you cannot get except on that platform”. This would bring in new players, or give existing ones a reason to try the new platform for themselves. The platform also has to be “worse for making traditional games – because that means the big incumbents cannot just transfer their expertise, come in and dominate”. But most important of all? “The number-one biggest thing this new platform needs,” Koster says, “is to have shitty graphics.”

He cites previous examples of this kind of reset: Flash-powered browser games, social games on Facebook, motion controls on Wii, and – most recently and significantly – mobile. If those new platforms stick around, he says, “they eventually catch up, and then the costs rise in exactly the same way,” until the cycle begins all over again. “But we haven’t had a new platform come along to reset that cost curve in a long time. Like, a long time.”

Koster doesn’t know what form this reset might take – “it might be that we have to wait for [gaming on] AR glasses” – but he’s adamant about what it isn’t: “AI is not a platform reset, where costs get lower. AI is just a computer getting bigger, and so the gas will keep filling it.” And while AI’s proponents might talk about it democratising creation, it’s far from the great equaliser we need. “It is actually incredibly expensive, in the end, so most of the benefit flows upwards,” Koster says. “AI is changing things very rapidly, and it also doesn’t matter.”

There is another possibility here, Satvat suggests, and it might actually stem from one of the biggest challenges facing the industry right now. “The fact that hardware prices are out of control, and consoles are becoming unaffordable, I think is going to have a major impact on developers focusing on design rather than how fancy a game looks, or going heavy on [hardware] demands,” he says. “That seems a pretty obvious conclusion for the foreseeable future.”

There are notes for hope here, and potentially strategies for survival, but they’re not the active steps towards reshaping the industry we’d hoped for. If that is possible – which is not guaranteed – then it almost certainly requires taking a much wider view of the issues at hand.

“It’s impossible for me to look at this as a game industry problem.”

Harvey Smith, Black Pony Immersive

“Ultimately, to fix what’s broken in the videogame industry, we might have to fix reality,” says Sam Barlow, founder and CEO of Half Mermaid, pointing out that a lot of the problems we’re facing are “downstream of what big tech has done to the world and the economy”.

This view is common to almost everyone we interview. Tanya X Short, co-founder of indie developer-publisher outfit Kitfox Games, and of game worker gender diversity organisation Pixelles, highlights the way that VC investment spilled over from that industry, with venture capitalists expecting something that behaved like tech rather than art – and the subsequent, rapid removal of that money when they realised it was in fact both.

“Entertainment is never a sound investment,” Short says. “It’s not a sure thing, by definition – it’s very capricious, it’s very personal. And I think we coasted by for a while because ‘game’ can mean so many different things that maybe some of them aren’t entertainment. And maybe we enjoyed the fruits of that misplaced investment for a little bit too long.”

Sweeney is no great fan of big technology firms, as his battles with Apple and Google in US courts attest. “We’ve seen companies grow to the multi-trillion-dollar level, and this [expectation] that growth would just continue forever,” he says. “But no, it’s largely just the big tech companies extracting ever more revenue from the companies that actually do the work and produce valuable things.”

These tech firms might represent the sharp end of the situation, but others argue that we need to dig deeper still, and examine things that we have come to take for granted over the passage of time. “It’s impossible for me to look at this as a game industry problem,” says Harvey Smith, “when really it’s the result of this much bigger, complex system that we’ve allowed to be captured by greedy, rapacious forces.” 

Smith’s most recent game, Redfall, was about this very thing: fighting back against the vampire overlords who suck the populace dry. It’s bitterly ironic, then, that developer Arkane Austin was closed shortly after its release, in a wave of 2024 Microsoft gaming layoffs that has since been followed by two much bigger ones.

“Instead of just being crushed and thrown to the wind, maybe those people would have figured it out and then, another cycle along, they would have had another Dishonored,” Smith reflects. “And, even if they just made the occasional hit – one out of every three or whatever – wouldn’t you want to hold onto that? “I guess the answer is no. You wouldn’t want to do that, if there’s an opportunity cost where instead you could put that money into AI, and even if it’s a bubble, your share price goes up massively.”

“I just don’t think art is what capitalism is designed to nurture. But humans are.”

Tanya X Short, Kitfox Games

Short hasn’t been so directly wronged by these systems, but she stands in solidarity. “I don’t think our current financial models are set up for art or entertainment,” she says. “I just don’t think art is what capitalism is designed to nurture. But humans are.” 

That distinction is key. What we’re talking about here isn’t individual humans but the systems that humans invented and now enforce. “We always want to ascribe villainy here,” Koster says. “And, look, I’m not ruling out villains – I know some. But the systemic dynamics are what really make this happen.” It is not a bug but a feature of capitalism “that, absent regulation, it develops into market concentration, followed by cartels, followed by monopolies,” he says. “That’s intrinsic in how it works.”

There’s a maxim Smith is fond of quoting: “Show me the incentive, I’ll show you the outcome”. It’s a line we’ve previously heard him apply to game design, but here he wields it in a manner closer to its original use, when it was first uttered by – another irony – billionaire investor Charlie Munger. “Right now, our incentive is to make the Dow Jones go up,” Smith says. And if that is the incentive, then the outcome is always going to be mass layoffs and closing studios after decades of team-building alchemy. 

All this talk of rules, systems and design – if we accept the industry’s current situation is the result of a larger malfunctioning system, and that we have to save it, then there’s reason for hope. Because who could be better at coming up with alternatives than people whose skills lie in designing better systems?

Putting capitalism into game terms makes it easier to spot the flaws in its underlying design. “Without getting into the macroeconomics and politics of it all, let’s think in terms of what makes things more fun,” Koster says. The lesson is evident in everything from any decent league sport, or even Mario Kart’s Blue Shell: “In games, you don’t give another advantage to the person already winning.”

Whether you’re framing this system as a game or an economic ideology, things are always better if “we keep everything more competitive,” Koster says. “It helps make the system more viable. Now, that is not how raw capitalism works. But that is why we have anti-monopoly laws, because regulation does actually do that.”

Things will change over time, Koster says, referencing another of his far-sighted lifecycles. “One of the things that happens to monopolies is that they get so dominant that they calcify. They get comfy, and then one day people go ‘eh’ and just walk away. This is true of any sufficiently complex system that keeps making itself more complex and more self-similar and more dominant – it’s also making itself more fragile. And eventually they hit a collapse scenario. The same thing happens to… everything, actually. It’s, like, a universal law of nature. If things calcify, they break. And I do have faith in laws of nature. I do think that, at some point, things will change. Something will come along that breaks this. But it’s not on a convenient… It’s not on a timer, man.”

If we want things to change on a timescale that is convenient to all of the people finding themselves out of work, then, we might have to prepare for a fight.

“Maybe this is that extreme thing that forces people to wake up out of their apathy and give some pushback.”

Sam Barlow, Half Mermaid Productions

“This is all terrible, but it feels like a symptom of things that were already broken in a way we were sort of happy to just live with,” Barlow says. “And maybe this is that extreme thing that forces people to wake up out of their apathy and push back.” He is talking here about the videogame industry’s woes, but also politics in North America.

There are many reasons that the US has been hit harder than others with layoffs, but it’s also worth noting that its political systems make the affected particularly vulnerable. “It’s easy for me, as a Canadian indie, to forget there’s huge swathes of the industry that now have precarious health insurance or childcare situations,” Short says. “When I talk to my American colleagues, they see that as a privilege I have – and that’s true. But I also see this urgency. That is step one. Let’s remove that precariousness. Why haven’t Americans rioted for those kinds of worker protections?”

“People get sick of shit,” Smith says. “A new generation comes along. All it takes is a group of people coming together and changing the rules about how we divide things to make it better.” There are glimmers of hope here, as evinced by the CWA Union demonstration outside the offices of Bethesda for Xbox boss Asha Sharma’s recent visit. 

And, for all the difficulties he’s endured, Smith insists that he is “an optimist”. “I believe in people, that people will keep coming together and keep making cool things,” he concludes. “The model might be different, the structure of it all might be different, but I’m hopeful there’ll always be a market for that, as long as people are brilliant and creative, and they want to do good work. That’s what gives me hope. As long as I see that, I’m like, we’re going to come out OK in the end. It may suck for a while, we may have to depose some kings, but it’ll be OK.”

Interview: Tim Sweeney, Epic Games

If we are identifying this as an industry crash, what are the long-term effects likely to be?

We’ve seen a number of transitions over the years, like with mobile and social [games]. A good fraction of companies become obsolete, or get acquired, and some new leaders come in. Epic was a very small 2D game developer in the early 1990s; we became a major 3D game developer as the 3D generation really took off. And I think we’re going to see winners and losers in this crash, and in the rebuilding that’s going to occur after it.

And where does that leave game developers?

Game developers of all sorts, us included, have somewhat relied on Moore’s Law as a crutch. The hardware gets faster, and so we build cool new features, but we don’t spend as much time as we could optimising all the existing features for the existing hardware, because things move so fast. It would actually not be optimal to do that. But now we’re going to go through a period where we’ve got to make everything run better on the devices people have, so we can build cooler and better games without those advances. The good news is, I think there’s quite a lot of headroom for that. There’s a lot of low-hanging fruit [in terms of] opportunities for optimisation. 

In your vision of a future driven by ecosystem games, what room does that leave for singleplayer games? Or are they ultimately doomed, in your view?

There will always be a market for them, because the things you can do with storytelling in a singleplayer game will always be much greater and more polished than is possible in a multiplayer environment. So the creative potential there is always going to be really high. But the problem is the audience [for those games] isn’t growing – and it’s actually getting smaller.

If you look at what happened in the game business at large [in the 2010s,] focusing on singleplayer became no longer viable for independent studios, so most of the development moved internally [to platform holders] where, instead of getting some royalty of 30 per cent or whatever, they’d get all the revenue from the game. They were able to continue like that for another decade, but we’ve now hit the point where that is no longer economically viable.

Where does the component-cost crisis fit into your vision of where we’re headed?

It’s an unexpected, severe disruption. There’s an unprecedented wave of investment in building AI systems and data centres, based on the belief that they’re going to have a really transformational role in the economy, and the scale of the economic opportunity there means they can outbid the entire entertainment industry for all the components. So we’re getting the short end of the stick, and the prices of RAM and storage are quadrupling, and not necessarily stopping there. We should expect there’s just going to be a continual supply crisis for all gaming-relevant hardware for at least three years. The only solution, I think, is going to be building massive new factories to meet the world’s capacity demands – and that will happen. But there’s no Moore’s Law for construction equipment.

This article was originally published in Edge 428 - buy it here