Gaming layoffs hint at more scary times for industry – but there is hope

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The gaming industry has faced a series of unsettling developments recently. This roundup covers three major stories that have left significant impacts on different segments of the gaming world. From gaming layoffs at Midnight Society to the shutdown of a beloved mobile game and continued cuts at Activision Blizzard, these events mark a rough patch for the industry.

Dead Drop drama: Layoffs Hit Midnight Society studio

Midnight Society, the studio behind Dead Drop, an NFT-based extraction shooter – which was co-founded in part by popular streamer Guy Beahm, better known as Dr. Disrespect – has announced significant layoffs. While still commitment to launching Dead Drop in 2025, the team has faced numerous “unexpected changes” – prompting a major restructuring.

This comes at a challenging time for Dead Drop, which has received lukewarm feedback from gamers, particularly as the audience for extraction shooters and crypto-based gaming is increasingly limited. This is likely not helped by the studio distancing itself from the essential face of the company, Dr. Disrespect – a step the studio took after serious accusations were levied against the popular streamer.

Amid lackluster enthusiasm and without a recognizable face behind it, the game’s future is uncertain. Midnight Society is struggling to find its footing in a crowded and highly competitive market.

Kabam shuts down Disney Mirrorverse despite popularity

In another unfortunate turn, Kabam announced the shutdown of Disney Mirrorverse, a mobile game that has enjoyed strong success. Despite reaching the top of iOS and Android charts during its first year and generating over $20 million in revenue with 10 million players, the game will officially close on December 16, 2024.

Kabam has not given a reason for the closure, but there are at least a few major challenges Disney Mirrorverse contended with – including the cost of live-service operations and using Disney’s IP. While Mirrorverse was well-received, live-service games are costly to maintain, and large IPs come with hefty licensing fees that can significantly erode profitability.

Additionally, Kabam has undergone several internal struggles, including leadership changes following its acquisition by Netmarble, which may have further complicated the game’s sustainability. Ultimately, it’s likely Mirrorverse fell victim to the high operational costs of AAA IPs – despite its popularity.

Activision Blizzard layoffs: Microsoft consolidation continues

The largest blow to the industry recently came from Activision Blizzard, which announced another round of layoffs following its $69 billion acquisition by Microsoft in 2023. Around 650 employees, representing 3% of the workforce, were let go, primarily from corporate and support roles. Notably, teams working on Call of Duty, Warzone Mobile, and Warcraft Rumble were among those affected.

While no specific games were canceled, these layoffs signal continued consolidation following the merger, as Microsoft aligns resources for long-term growth. This marks the third round of cuts since January 2023, with Activision Blizzard downsizing by 1,900 employees earlier this year.

Despite these layoffs, Microsoft’s gaming CEO, Phil Spencer, emphasized that the changes were necessary to better support their studios and position the business for future success. Unfortunately, this restructuring has taken its toll on many talented individuals in the industry.

A silver lining: Opportunities for new ventures?

While these layoffs and closures are undoubtedly difficult for those affected, there may be a silver lining. The downsizing of teams at large companies often leads to the creation of new game development studios and startups, as talented developers look for new opportunities. As the gaming industry continues to evolve and adapt, these free agents may spark the next wave of innovative companies.

That may be extra good news, considering the recent Fed Reserve rate cut – which could potentially pump investment money into new, innovative studios. Although the current news may be grim, the gaming ecosystem has a history of resilience, and these challenges could pave the way for new beginnings in the future.