An Unspoken Truth About Layoffs

Given the recent layoffs and media coverage, I see a chance to discuss the often unspoken truths about layoffs. Having gone through a few layoffs in my career, I know it’s not easy being one of the survivors.

Based on my experience at studios affected by layoffs, the most painful factor involves external factors beyond the team's or studio’s control, such as market conditions, strategic shifts within the company, acquisitions, and funding. Making games is a business, and as developers, we must accept that reality. Public companies are structured to maximize shareholder value, which often results in a focus on short-term gains rather than long-term growth. The quickest way to cut costs and boost public perception is to reduce staff, since 80% of game development depends on labor.

Unfortunately, when teams or studios face layoffs, there is an unspoken truth about the collateral damage that occurs and why companies should try to avoid layoffs for short-term gains. Here is what I have personally observed:

1. Understanding the value of a highly functioning team – people are not disposable assets. Knowledge isn't just about knowing how to do art, programming, or other skills. Knowledge is teamwork. People are not replaceable. Knowledge isn't just "I can program, I can do art" — it's about teamwork, knowing how to work together, where creativity shines, and over time, through iteration and experience, understanding who excels where, who can fill in when needed, and who you can rely on. Working together over long periods develops a sixth sense for what needs close management and what will be handled. People learn shorthand, understand project architecture, and share embedded knowledge; TEAMS cannot be replaced. Layoffs disrupt this “flow,” making them less efficient and productive.
2. The talent drain – when layoffs occur, the remaining talent is usually viewed as key to the studio’s success. Unfortunately, they are often the first to seek new opportunities. It's tough being a survivor. It’s like watching a city just bombed and realizing things will never be the same. The trust and security you once had are gone.
3. Implicit trust can be broken – Depending on transparency, empathy, and how employees are treated during layoffs, it will either eliminate any implicit trust that was there or weaken it. This is a common mistake I’ve seen companies make. Communicating bad news is always tricky, but doing so with care, respect, and understanding of its impact, along with a clear explanation for the decision, makes a big difference.
4. Damage to Institutional Knowledge – Game development is complex and requires a lot of expertise in how things work. Documentation has traditionally been a low priority compared to finishing projects. When key contributors leave, that knowledge diminishes with each departure. This loss of expertise leads to inefficiencies in completing the game. This issue becomes apparent when the build breaks for unknown reasons, especially if you have an engine built on a 20-year-old code base.
5. An infection that impacts a strong, established studio culture—such as layoffs—can weaken the core values a studio has developed over time. These values may become damaged, and recovery typically takes the longest.

I see Nintendo as a prime example of a company that has stayed stable in a volatile industry. IMHO, it’s their culture and leadership that make the difference. They are guided by game developers who don’t pursue the latest trends or focus heavily on graphic fidelity. Instead, they concentrate on crafting great player experiences for everyone. They value people and teamwork, caring deeply about dreamers, collaboration, and pure passion. They have a clear guiding vision (North Star). They create a workplace with high retention, produce games that feel uniquely theirs, avoid chasing fleeting trends, and steer clear of the soul-crushing churn that has become common in our industry. Having many long-term employees gives them a solid foundation of institutional knowledge that supports growth and innovation. It encourages efficiency and sustainability. That’s what other game companies should aim for.

The other major factor is a dysfunctional team or studio. This is the unspoken truth when layoffs happen, and people often blame the publisher, but the real problem lies within the team. Typically, issues originate with the core leadership inside the team or studio. Sadly, highly talented individual contributors often become collateral damage because of this dysfunction. 

What does this kind of dysfunction look like? In my experience, I've seen teams with the following attributes:

1. Struggling to make a decision – They often overthink and get caught up in details instead of picking the simplest solution and building on it as they test it out. I always tell teams to create a clear design brief that outlines the player experience, implement it quickly, and then refine it or abandon it (fail fast). You won't have all the information needed to make a perfect decision, but you should choose a direction that feels right in the moment. It's better to make progress than to stay still.
2. Lack of production discipline – teams lack a clear project roadmap to completion. Establishing a roadmap that aligns with the game's core pillars and goals, and includes mechanisms to forecast outcomes (risk/migrations) rather than react, is essential for maintaining steady progress. The main problem is the absence of focus and discipline, which leads the team to change direction frequently. As a result, game development is delayed, becomes too complicated, and drifts away from the original vision.
3. Infighting – In my view, learning to collaborate effectively as a team is one of the most essential parts of building a successful game. When team members are not aligned with the game's main vision or lack mutual trust, it leads to friction, slows progress, and creates an unhealthy workplace culture.
4. Whip Lash - Constantly changing direction. It is common in game development to pivot based on insights gained during the pre-production phase to find the soul of the game. This process can take some time if the game involves unique innovations that lack extensive reference material for guidance. However, if a team frequently makes major 180-degree shifts in direction, it signals leadership issues on the team.
5. Stakeholder Misalignment – This occurs when the studio and publisher are not aligned. It typically happens when there is a lack of transparency with external stakeholders. This often occurs when the scope expands, schedules frequently shift, and budgets increase over time. If this lack of transparency persists, it can erode trust and cause a loss of confidence in the team's ability to deliver.

The first step in addressing the issues above is to evaluate the core leadership team, not the game being pitched. Great games come from people who possess strong leadership skills, are passionate about their game, have experience in developing the game they are pitching, have worked together before, understand what failure looks like, and can create a compelling vision.

Additionally, implementing a gate review process during development with clear goals and deliverables gives stakeholders visibility into the project. Companies should form an oversight team to monitor the studios or teams. This team should not control but guide them toward success, building trust over time (high touch, low friction). The team should include individuals who thoroughly understand the process of building and launching a game. This approach will greatly help in identifying issues early and fixing them before they become major.

Finally, game companies should expand cautiously during prosperous times. Too often, large companies hire more staff instead of adopting more sustainable strategies, such as co-development, outsourcing for scaling, and leveraging AI tools to improve workflows