The workforce reductions in video game and technology companies last year have cast a negative shadow on the industry. While employee cuts constitute a relatively small portion of the overall workforce in this sector, experts argue that the downsizing, particularly amid conditions where success could have prevailed in the video game arena, has left a significant impact.
Kevin Kloden, a senior strategist at the Milken Institute for Economic Studies in California, expressed his views on this trend, stating, “We’re witnessing a wave of companies that expanded excessively or hired programmers based on expectations of growth. Major mergers between companies invariably have a pronounced effect on employment.”
This month, data analytics company Newzoo, based in Amsterdam, revised its revenue projections for global video game companies in 2023 to $184 billion, a 0.6% increase compared to the previous year. However, this marks a decline from the company’s earlier forecast for 2023, which stood at $187.7 billion. Newzoo anticipates that the global market for electronic games will yield annual revenues of $205.7 billion by 2026.
The U.S. Entertainment Software Association highlights that cost-cutting through job cancellations has had a compounded impact in California, home to around 720 video game production companies, with nearly 700 firms engaged in publishing and developing electronic games and software. Several major game publishing companies, including Activision, Blizzard Entertainment, and Riot Games, are located in Southern California, along with the North American headquarters of Sega.
Data available for 2022 indicates that the number of employees in the video game industry in California exceeded 152,000, with the industry having an economic impact of $54.1 billion in that year.
O’Brienne Quin, Senior Vice President of the Entertainment Software Association, explains, “In the United States alone, the size of this industry has tripled over the past decade, from $15.2 billion in 2012 to $56.6 billion in 2022, and no other entertainment industry has seen this level of growth.” She adds that despite job reductions, the video game industry continues to experience growth.
Quin further notes, “Wages for these jobs are high, representing double the average salaries across the United States. More than 212 million Americans regularly play video games, and thus, the demand for fantastic and engaging games remains steadfast.”
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