Shuhei Yoshida, former president of Sony Interactive Entertainment Worldwide Studios, has pointed out the main cause of the mass layoffs shaking the industry. According to the veteran executive, during the COVID-19 pandemic, the sector's explosive growth generated excessive optimism. Investors and publishers over-hired and over-invested, believing the boom would last forever. Now, the bill comes in the form of cutbacks.
The pandemic boom and the hiring bubble 📈
The logic behind the mistake is simple: during lockdown, game and hardware sales skyrocketed as people had more free time. Companies, seeing sustained growth charts, assumed this trend would continue. They hired development teams, opened new studios, and approved inflated budgets. When life returned to normal, demand stabilized, leaving unsustainable cost structures. There was no malice, just a calculation based on anomalous data.
The investor who mistook a sprint for a marathon 🤡
Come on, the usual story: an investor sees console sales rising and thinks humanity will never leave home again. They hire half the world, buy studios at a premium, and when people go back to the beach, they realize they're not selling as many cooking games. Now it's time to fire those they hired by mistake. Good thing the shareholders' money is safe, even if developers have to fend for themselves.