The studio closed and laid off employees! IGN: The 3A game bubble bursts, leaving only 2 options

Media outlet "IGN": Burst of the 3A game bubble

The gaming industry is experiencing a paradoxical contradiction! From the perspective of players, it may be one of the most glorious eras in the history of games. There are frequent releases of high-quality 3A games that pursue high-definition graphics and gameplay quality, and players can enjoy unprecedented rich choices on multiple platforms.

However, the well-known game media "IGN" believes that from the industry's perspective, AAA games are facing a 'bubble burst' crisis.

IGN pointed out that over the past two years, more than 23,000 game industry employees have become unemployed, and in just January 2024 alone, 6,000 people were laid off.

What's even more worrying is that more than 30 game studios, including Arkane Austin, Volition, and the recent Firewalk (developer of "Starbound"), have announced closures.

Image source: The lightspeed shutdown of "Star Howl Special Attack", a studio under PlayStation SONY

What problems are there in the 3A game industry when studios close down and lay off employees?

According to IGN, there are no signs of improvement in this trend, and it may continue to deteriorate.

The biggest challenge for AAA games is the soaring development costs. Five years ago, the average development budget for AAA games ranged from 50 to 150 million US dollars, but now the budget has doubled, with the lowest average budget reaching 200 million US dollars.

Using the Call of Duty series as an example, the development cost of each new game has exceeded $300 million. According to a report submitted by Activision Blizzard to the Competition and Market Authority (CMA), developing a new Call of Duty game now requires half of the studio's workforce.

An unnamed publisher revealed that the development cost of a certain game under its umbrella amounted to a staggering $660 million, plus an exorbitant marketing cost of $550 million, bringing the total investment to $1.2 billion.

How long does it take to recover the cost of 1.2 billion dollars? Taking the best-selling game Minecraft as an example, it took 12 years to accumulate revenue of over 3 billion dollars since its launch in 2011.

However, not every 3A game can achieve such results, but it costs so much before it is released, highlighting that the current development cost of 3A games has reached an unhealthy level.

Image source: 'Minecraft', the best-selling game globally on Xbox

In addition to cost issues, the gaming industry also faces the dilemma of insufficient innovation and a tendency to play it safe.

Take the science fiction shooter game 'Hyenas' developed by SEGA for example. This 'super game' was suddenly cancelled after the first public beta test because SEGA predicted that it would not be able to recover the cost.

The same fate also happened to Blizzard's survival game project 'Odyssey'. This was supposed to be Blizzard's first new IP in eight years, but it was abruptly cancelled after being acquired by Microsoft, and only technical factors such as changing game engines were used as excuses.

Image Source: Activision Blizzard Activision Blizzard's new game 'Odyssey' died in the womb

Even large companies with rich IP assets are facing challenges.

SONY CFO Shiroishi previously stated publicly that the company lacks sufficient original IP to solidify its position, reflecting the industry's persistent pursuit of the 'Games as Service' model, leading to many classic IPs being shelved due to their inability to transition into sustainable revenue-generating online service games.

SONY has invested hundreds of millions of dollars in the development of the multiplayer shooting game 'Star Howl' by its subsidiary studio Firewalk Studios, which is intended to compete with 'Overwatch'. However, the game performed very poorly commercially and ceased operations shortly after its release, leading to the dissolution of the studio.

《IGN》: There are two paths for the game industry to choose

"IGN" believes that the gaming industry is at a historical crossroads, with two completely different development paths to choose from:

First Road

Maintain the status quo, continue to invest a larger budget, create an open but potentially lacking substantial content world, pursue game lengths of more than 80 hours, even if only 10 hours may contain meaningful content. At the same time, the industry can continue to pursue the saturated online service model, attempting to carve out a share in the market dominated by perennial games such as "Fortnite" and "GTA Online". However, this path is filled with risks, and the investment of hundreds of millions of dollars will require each new release to achieve success in the early stages, otherwise it may face the fate of being stillborn.

The second road

Learn from independent game developers and return to the essence of game development. In the list of outstanding games in 2024, excellent independent games such as "UFO 50", "Animal Well", and "Clown Cards" emerged. These independent games have lower production costs, but they focus on innovative game mechanics and exquisite gaming experiences. They are dedicated to creating truly interesting game content, rather than pursuing grand but impractical open worlds.

Is the 3A game bubble? How do players view it?

Some players hold negative opinions on the view of 'IGN', believing that the scale of development and cost are not the real issues.

The commercial performance of open-world games like 'Elden Ring' and 'The Legend of Zelda: Breath of the Wild' is impressive, and the game-as-a-service model also seems to have bubble problems.

Image source: The highly acclaimed AAA game "Elden Ring" developed by FromSoftware and Bandai Namco

Some players believe that the reason for the decline of the gaming industry may come from excessive involvement of political issues and the recurring charging problem brought by the free gaming model. In this case, games should return to the pure nature of entertainment.

In fact, the case of 'Xingming Special Attack' being badly hit by Waterloo also attracted the attention of the Japanese game media '4Gamer' columnist for analysis, mentioning the wave of 'anti-DEI' among players.

The chain gaming world has also praised 3A masterpieces and faces greater challenges.

After Axie Infinity sparked the Bull Market for blockchain games, the industry once touted 'AAA masterpieces,' but many of them turned out to be bubbles from the previous Bull Market. Compared to Web2 games that only need to focus on game quality, blockchain games with Non-fungible Token and Token economic elements face greater challenges.

The CEO of the pixel-style non-fungible token game 'Pixels' once stated that the blockchain gaming industry is still not mature enough, facing challenges in identifying real users, preventing bots, and improving user quality.

These issues are the key factors hindering the development of the blockchain gaming industry. Without solving them, it cannot be called a real blockchain game. It is more like a tool for robots and studios to make money by gold farming.

In addition, as a niche area of blockchain games, when entering the huge and mature Web2 gaming market, it will also face significant challenges.

For example, "Off The Grid" has gained early exposure in the Web2 market, but faces the challenge of whether players can retain it for a long time; NEXON has boldly tried to use the "New Maple Valley" IP to create the "Maple Valley N" chain game, but whether it can operate for a long time and attract ordinary players is still unknown.

The studio closed down and laid off employees! IGN: The 3A game bubble has burst, leaving only 2 options. This article was first published in 'encryption city'