is that in two years it has fired 30% of its workers

On Friday, January 30, the shares of the main video game companies They collapsed on Wall Street hours after Google will launch Project Genie. The story was simple: investors believed that artificial intelligence would replace traditional developers. However, that same day a data was published that went practically unnoticed among the stock market noise: a third of American workers in the sector (33%) have been laid off in the last two years.

Genie appeared to be a threat, but the video game industry has been bleeding silently for two years, and artificial intelligence is not the cause of that hemorrhage, but rather the instrument that some executives see as the perfect scapegoat.

The data. The magnitude of the layoffs exceeds any recent precedent. Between 2022 and July 2025, approximately 45,000 jobs were lost. The aforementioned GDC report estimates that the percentage of workers who lost their jobs in the last two years is 28% globally and 33% in the United States. Half of the professionals consulted declared that their company had made cuts in the last year. The impact was especially devastating at AAA studios: two-thirds of developers working on big-budget productions confirmed layoffs at their companies, compared to just one-third in the independent sector.

Specific cases. Some examples illustrate the magnitude of the crisis. Microsoft eliminated more than 9,000 jobs despite boasting a “record year” in revenue and operating profits. Embracer Group reduced its workforce from 15,701 to 7,873 employees, a net loss of 8,000 workers that represented half of its workforce. Unity Technologies carried out six rounds of layoffs between June 2022 and February 2025. Sony closed Firewalk Studios and Neon Koi, eliminating 210 positions after the failure of ‘Concord’. And 2026 has not started better: Ubisoft announced in January the closure of its studios in Halifax and Stockholm, as well as restructurings in Abu Dhabi, RedLynx and Massive Entertainment.

When the crisis started. The origin dates back to the confinements of 2020. The world’s population confined to their homes sought entertainment in video games, generating growth figures that the industry interpreted as the beginning of a new era. Steam reached 23 million concurrent users in March 2020, surpassing all previous records. Microsoft reported that Xbox Game Pass had surpassed 10 million subscribers. Console and software sales skyrocketed.

The irresponsible expansion. Companies responded with aggressive workforce expansions. Electronic Arts increased its workforce by 12%, going from 9,800 to 11,000 employees between 2020 and 2021. Ubisoft added 2,000 new developers in the same period. But when health restrictions ended, revenue didn’t just stop growing: analyst Matthew Ball documents that video games became one of the few entertainment sectors whose consumption contracted (because, for example, streaming of movies and audio has not stopped growing). Ball notes that major consulting firms and investors had overestimated projected revenue for 2025 by 25% to 30%.

The market is ossified. Warnings to the entire entertainment industry about the risk of over-reliance on recycled products were especially pertinent in the video game. Development costs skyrocketed as studios focused resources on sequels and remasters rather than taking risks with new intellectual properties.

Furthermore, the omnipotent mobile market, traditionally considered resistant to recessions, was showing signs of ossification: according to Ball, the three main titles in each genre concentrate approximately 40% of the segment’s revenue, and 82% of the turnover corresponds to games that are more than two years old.

Ubisoft and AI as an excuse. On January 21, 2026, Ubisoft announced what it called an “organizational, operational and portfolio reset.” The company’s shares They plummeted 33%. The restructuring involved the cancellation of six projects in development. But while carrying out mass layoffs and closing studios, Ubisoft announced “accelerated investments” in player-oriented generative artificial intelligence, not limited to internal tools but integrated directly into games.

self-fulfilling prophecy. What Genie offers is an alibi. When a CEO contemplates “accelerated investments in player-oriented generative AI” while closing studios and canceling projects, the technology functions as a justification for financial decisions already made. The GDC survey reveals that 74% of video game development students are concerned about their future job prospects: the industry eliminates positions while its leaders invest in systems to automate work.

Header | Vitaly Gariev / Shuichi Aizawa

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