Comment by mrandish
2 hours ago
The current commercial game studio apocalypse is tragic for the disruption to jobs and lives but it was inevitable and, although painful, I think a necessary correction in terms of improving the health of gaming in the long run.
Around 2020 the industry quickly added around 35% more jobs based on three big things. 1) A COVID-shutdown driven demand bubble, 2) PE capital chasing inflated Live Service gaming profit projections and, 3) Speculative land-grab industry roll-ups by Embracer and Microsoft. These triggers were all either temporary, illusory or chasing trends which are net negative for the gaming. Those inflated jobs weren't justified by organic growth and shouldn't have been created in the first place.
What I don’t get is how do so many companies make the exact same mistake?
It’s like corporations all get the same memo and do the exact same things in lockstep
That's the funny point: it's not a mistake from their point of view. The managers deciding this get MASSIVE bonuses because they saved a lot of money, which means more money for the shareholders
EA has its money cows, and neither Mass Effect nor Dragon Age are one of them, as it seems. The IP stays with EA anyway, so from their point nothing is really lost.
There are multiple causes. Two big ones are:
- Increasingly rapid proliferation of business strategy, competitive analysis and spreadsheet-driven financial optimization means more MBAs in a given industry trying to run similar playbooks at the same time. This increasing homogenization occurs at both the company level and the investor level.
- Corporate executives and managers can have divergent incentives due to differing scopes, time frames and reward structures. A crass example is "Even an obvious Ponzi scheme can be good as long as you personally get out before the inevitable crash", although the way it actually happens in practice is usually much more indirect.
For instance, even the difference between a manager optimizing for their division's end-of-year bonus can diverge from the CEO's incentive to optimize next year's profit margin increase. And those can both differ from an institutional investor's incentives tied to 5 yr stock price appreciation.