2009 has been a challenging year for everyone. Contrary to popular (wishful) thinking, the games industry is not immune to recessions. This year we’ve experienced quite a few job losses, so many that we decided to try to chronicle them all.

Are they all related to the recession? No, of course not. Some companies will use the economic downturn to hide bad company practices (one tell-tale example: restructuring your team after the launch of your game). Still, we’ll also see that quite a few small companies have experienced job losses and/or closure due to financing problems that can be linked to the increased difficulty in securing loans. Telling these companies apart is an exercise we’ll to the reader.

We pick things up in December 2008 before easing ourselves into the brutal year of 2009.

December 2008

Midway starts us off. Famed makers of Mortal Kombat, facing bankruptcy (which would eventually come to pass in February 2009) dismissed 25% of its staff, closed down its Austin studio (makers of Area 51), and cancelled a whole bunch of projects. This one was a pretty big deal. The dark saga behind Midway appears to be rather corrupt and makes for an entertaining read. Some really interesting stuff went down at that company. Overall, 180 staff were let go across the Chicago and San Diego offices, and an unknown number for the Austin studio (following the 90-130 who were let go in August).

Factor 5 also faced difficulties. In December, they let half of their staff go (37 people). It would later shut down, relaunch with a core staff and mostly repatriate to Germany. To be fair, the failure of their publisher the month prior – Brash Entertainment – did nothing to help their situation.

Austin-based Aspyr joined in on the party by confirming slashes. Word on the street is that up to a third of the staff was let go.

Lord of the Rings Online developer Turbine (Massachusetts and California) effectuated general job cuts following the launch of their latest title, letting go of staff in QA and Account Management.

EA capped off the pre-Christmas HR festivities by announcing 1000 job cuts (later rising to 1100), to be executed between December 2008 and March 31st 2009 (the end of the fiscal quarter). It is unclear whether these layoffs include the 600 cuts announced on October 31st. One has to ask, why do it right before the New Year? Is there some sort of financial accounting benefit involved? Because it seems like an awful way to spend Christmas if you’re an employee.

These deep cuts, like the ones from October, were part of restructuring program put into place by John Riticiello. Let’s examine a little:

• Mythic, Tiburon and Black Box were the first affected studios to be announced.
• Pandemic Brisbane got dropped. For the first time, part of its 2007 $860 million investment was touched. This also laid down the groundwork for later cuts at Pandemic.
• All in all, 12 facilities were closed and 11% of its workforce was let go.

January 2009

Sadly this pre-Christmas job cut fest was only a warm up to 2009.

On January 2nd, Free Radical closed down and laid off most of its staff (140 people), with 40 left to take the company into administrator-ship and attempt to sell off the assets. Small dev house Gusto Derby’s closure left 14 people out of work. Sega San Francisco got in the mix with another 30 people sent home.

Eidos joined the party with layoffs at Crystal Dynamics (better known for working on the Tombraider franchise). 30 people were let go from the Eidos Redwood City studio. A week later, Eidos closed down Rockpool Games, a 14-man studio in Manchester, UK.

At just about this time, Microsoft began its 5000-man purge. ACES Studio, the long-time developers of Microsoft Flight Simulator is one of the many casualties. The number of jobs lost at the studio is not publicly available, but it was confirmed that the entire studio was shut down.

Disney Interactive decided to get involved as well, letting go of roughly 30 people at its Vancouver-based Propaganda Games studio (most recently known for Turok). Another 20 jobs were lost in its consolidation of Avalanche Software and Fall Line Studios. Meanwhile, Kuju experienced its own set of (minor?) layoffs. Again, official numbers were not always easy to come by.

THQ Wireless saw major cuts as a 100 jobs are eliminated (representing nearly 75% of its wireless workforce). Studios in California, the UK and Germany were all affected. This came right on the heels of earlier cuts in November and, sadly, the worse was still laid ahead.

February – May

Taking a more sensible approach at the problem, Marvelous Entertainment put out a call for 20 voluntary retirements. If you have to make cuts, there are certainly worse ways to go about it.

In March, another THQ studio was hit hard: 86 out of 102 QA employees at Volition were let go.

Having failed to secure a buyer, the month of April saw the demise of UK-based Empire Publishing (publishers of FlatOut and Jackass). Meanwhile, Microsoft’s purge continued with a 28% slashing of the staff at their in-game ad firm Massive.

April 1st was no joke at Big Huge Games, where a first round of layoffs was performed (having already been “put on notice” a couple weeks prior).

In May 2009, the long, drawn-out saga of Duke Nukem Forever was unfortunately brought to a close with the shuttering of 3D Realms. Having run out of money to support the project, and embroiled in a legal and financial dispute with their publisher (Take-Two Interactive), management were left with no choice but to shut down the studio. A dark day for Duke Nukem fans. For the full saga on Duke Nukem, we recommend this very well-written piece.

The month of May marked the beginning of the end for GRIN studios (most recently known for the Bionic Commando remake among others) as they let go of a majority of its 200 strong staff in Barcelona, Gottenburg and Stockholm as well as a QA facility in Jakarta. In August, GRIN would eventually shut down completely and file for bankruptcy.

June – July

On June 1st, Indie Danish developer Deadline Games filed for bankruptcy and shut down shortly after releasing their downloadable Watchmen movie tie-in game. An unknown amount of developers lost their jobs.

The US Army shut down their own California-based development studio responsible for America’s Army.

Kuju Chemistry (based in Sheffield, UK) was rumored to be closed. We have yet to find official confirmation, but our sources say it’s dead. Meanwhile, rumors of cuts at Rockstar New England swirled about: 10% of the staff were apparently let go, including the QA department.

Eidos-owned Crystal Dynamics was hit by a second round of layoffs with another 25 positions lost at its San Francisco office

Following their acquisition by Warner Brothers, Midway experienced a series of cuts and closures. As the sale was finalized, the corporate offices of Midway in Chicago were shut down, and 60 employees were dismissed(including Midway CEO Matt Booty). Meanwhile, unable to secure a publisher and funding, Midway Newcastle was shuttered in mid-July, details of which are painstakingly recounted by one of the affected developers.

In late July, Sony Online Entertainment confirmed a slash of 5% of its workforce (41 people). Foundation 9 closed out this period by shutting down its Austin, Texas studio Fizz Factor (handheld developers) and also made cuts at Double Helix. An unknown number of jobs were affected.

August – September

We now enter the “slow” months before the holiday rush. The month of August saw three sets of layoffs. Zoo Tycoon developer, Blue Fang Games let go of 15 staff members. Under rumors of impeding closure, Atomic Games laid off most of their 75-strong staff. Atomic Games was famously (or infamously, depending on how you look at it) known for working on Six Days In Fallujah. EA Maxis faced an unknown number of cuts in the Spore team.

Four more developers were hit hard in September:

• Vogster Entertainment, developer of Crimecraft, made a set of cuts as they “restructured” from development mode to live support mode.
• BottleRocket Entertainment was forced to close its doors. The Mark of Kri developer struggled to find new funding after Namco Bandai took their Splatterhouse title back in-house. An unknown number of developers were affected.
• The Brisbane-based Fuzzyeyes studios laid off most of its staff due to funding concerns. The studio promised at the time to rehire most of the staff in “early 2010″ once financial difficulties are alleviated. We’ll keep an eye out on this one.
• Square Enix was rumored to be planning 200-300 job cuts in its Japan studios as part of a corporate reorganization on the back of its acquisition of Eidos earlier in the year. This one was difficult to confirm.

Activision Sidebar

Activision was quiet on the job slashing front for the first half of 2009. But even while pulling in large and continually-growing profits, the world’s largest publisher could not stay away from the action. They performed a series of nips and tucks in the months of August and October:

• Raven Software lost between 30 and 56 employees out of their 180-strong staff in August.
• Also in August, UK-based Endrant Studios experienced significant cuts right after completing their latest project: the multiplayer components for the game Wolfenstein.
• The San Francisco-based Shaba Games was closed down in October. An estimated 30 employees were laid off.
• LA-based 7 Studios saw 30 people lose their jobs (roughly 50% of their workforce).

October – December

Amid financial troubles, Transmission Games decided to get rid of 28 out of their 135 internal staff. The Melbourne-based studio’s most recent hit was Ashes Cricket 2009. A few weeks later, it was forced to close up shop and presumably the remaining positions were also lost. In the UK, Oxygen Games faced closure as it went into administration. However, the entire staff apparently joined OG International when it picked up the failing company. OG International is itself headed up by the former Oxygen owner. Something definitely shady happened there.

Meanwhile, Pain-developer Idol Minds reportedly laid off half of its 50-strong workforce. In late November, Square Enix Europe made some drastic cuts at Beautiful Games Studios, developer of the Championship Manager series. Announced as a “restructuring”, 80% of the staff were dismissed.

And finally, we come nearly full-circle. Like clockwork, EA announced another round of layoffs. This of course comes as a shock to no one. As we all know by now, EA performs job cuts at least once every single year. These events are so regular for EA that they must be ingrained in their corporate culture. All in all, 1500 positions will be lost between November and April 2010, including 900 developer positions. Affected studios include Pandemic, Mythic (80 people / 40% of the staff), Black box, Tiburon, Redwood Shores and others.

And of course, capping this news a couple days later was the announcement that Pandemic would be completely shut down aka “consolidated” (although the Pandemic brand would live on). The Pandemic staff were apparently notified the day after shipping the final SKU for Saboteur. Lovely. Let’s recall that EA bought Pandemic and BioWare for $860 million in October 2007.

The longer we wait to post this article, the more cuts are announced (we’ve been collecting data since late November). We fully expect at least one more semi-major layoff announcement between now and New Years. And again, bravo if you’re one of those who managed to convey the news right before Christmas. There’s never really a good time to lay off employees, but there’s definitely a few really bad times to do it.

So, while one would expect December to be a “slow” period, it is unfortunately quite active:

• Smith & Tinker, a toy and online games company, laid off 30% of their staff (15 people).
• Even one of my personal favorite, do-no-evil companies seems intent on spreading some Christmas joy. Rock Band developer Harmonix laid off 13% of its staff, coming mostly from their QA department.
• Mac developer Aspyr Media (Austin, Texas) was rumored to have cut 50% of their staff.
• Sony America shed 30 positions from its Foster City, California QA group.
• Layoffs were reported at Futumark Game Studios, developer of Shattered Horizons.
• Casual game developer Oberon Media laid off 100 people across its world-wide offices. Four days before Christmas.
• More rumored layoffs at former THQ subsiduary Heavy Iron Studios: the majority of the remaining staff (approximately 60 people) got the axe. Three days before Christmas.

Some Analysis

There are a couple interesting things to note:

Press: EA, THQ and Activision received a lot of press regarding their cuts and closures the last 12 months. We’re particularly critical of EA, not just for the frequency of their cuts, but the way they are dragged out in public. EA seems incapable of managing the PR around their layoffs. Perhaps they get more scrutiny for being such a high profile company (although no longer market leaders). Perhaps it’s the sheer magnitude of the losses. We’re not sure, but they could certainly do a much better job of managing rumors and leaks.

Ubisoft: There is no mention of Ubisoft this year. At all. This got us curious and we started digging around. In fact, over the last few years, Ubisoft rarely makes the news with any job cuts. And their financial reports show extensive job growth (1400 new employees in 2008/2009). How do they do manage this? Are they so successful and optimal with their resource allocations that they never need to trim? The financial numbers would suggest otherwise. One rumor we’ve heard is that Ubisoft makes extensive use of fixed-duration contracts, so that people aren’t let go at the end of the project, but that their contracts are simply not renewed. Is that a better policy? Well, from a PR point of view, absolutely. From an employee point of view, it’s hard to say. If an employee is going to be let go, they would definitely prefer to know when it’s going to happen ahead of time. But then again, there is a lack of stability with contract work, and it isn’t an ideal situation for long-term employees. All in all, Ubisoft looks like a healthy place to be employed, and perhaps John Riticiello should give Yves Guillemot a call to get a few PR tips.

Other Quiet Publishers: Other major publishers have shown little (Disney, Sony) to no job losses in 2009 (Nintendo). Sony experienced major cuts in its hardware business, but its development studios were left largely intact. In Nintendo’s case, we’ve never heard of job losses there in as long as we can recall. Sure, they’ve pulled in profits year after year, but they’re also a secretive company, so it would not surprise us if cuts have slipped by unnoticed in the past. Still, in 2009, these publishers’ workforces remained very stable.

Take2: Take2 also had a very quiet year. This is an encouraging sign for a publisher that has struggled to remain competitive with the top competing publishers out there. It should be noted that Take2 don’t comment on much publicly and have an extremely strict corporate privacy policy. Maybe they made cuts and we didn’t hear about them?

The Overall Job Market: In spite of what has probably been a bumper year in job cuts, it’s still difficult to tell whether there has been an overall net loss in the number of positions in the industry. Companies are still hiring left and right but these hirings simply don’t make the news (they’re not sensational enough…). However, a recent developer census shows that overall job numbers in the US are actually slightly up (by nearly 1%) year-on-year. That same census indicates that the Canadian job market has experienced very robust growth of more than 30% (nearly 3,000 new jobs). Our best guess is that European figures would show a similar trend to the US figures.

These final figures are very encouraging for our industry. That the industry can experience job growth in a year as difficult as 2009 speaks to the overall health of the games market. We hope this trend will hold through 2010, as we’re certainly not out of the woods yet.

Outro

This isn’t a “yay! it’s great to be indie” post. We feel for everyone without a job, it’s a obviously a tough time out there, whether you’re indie or not. Still, if you want to take a positive view on things: the video games industry is still vibrant. Many companies are still hiring. And not all the cuts above are because of the recession. Some are plain bad business decisions.

Still, out of all these losses come new beginnings. Not just indies, but also publisher-supported, and all of them start-ups. All of them bringing a new voice to the industry. Some of them – hopefully many of them – will grow to have a significant impact in the future.

And if you did want to try out being indie, it’s never been easier. The tools are freely and cheaply available, the support is out there and enthusiastic developers can be found everywhere.

Update: Added the Transmission Games closure and the second round of layoffs at Crystal Dynamics.

Update 2: Added layoffs at NCsoft West, Obsidian, Volition, Sony Online Entertainment and Idol Minds.

About the Author: Yacine Salmi is a professional game developer and founder of the small indie Piece of Pie Studios, currently working on their first title. He can also be found on twitter.

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