Phil Spencer has discussed the devastating wave of layoffs that has impacted the video games industry, and said he was “most concerned” about the overall “lack of growth.”
The Xbox boss presided over the departure of 1900 people across Xbox and Activision Blizzard in January of this year, a decision he described at the time as being one aimed at achieving “a sustainable cost structure that will support the whole of our growing business.”
Across the video games industry as a whole, more than 15,000 people are thought to have been let go over the past 18 months.
Newscast: Why are there so many games industry layoffs?
“I'll say the thing that has me most concerned for the industry is the lack of growth,” Spencer said in an interview with Polygon. “And when you have an industry that is projected to be smaller next year in terms of players and dollars, and you get a lot of publicly traded companies that are in the industry that have to show their investors growth – because why else does someone own a share of someone's stock if it's not going to grow? – the side of the business that then gets scrutinized is the cost side. Because if you're not going to grow the revenue side, then the cost side becomes challenged.”
Xbox is not immune to that, Spencer continued.
“We're a business. I've said over and over,” he said. “I don't get any luxury of not having to run a profitable growing business inside of Microsoft. And we are that today. But… I reflect on friends of mine in the industry that have been displaced and lost their jobs and how just, I don't want this industry to be a place where people can't, with confidence, build a career. So that's why I keep pivoting back to: How does this industry get back to growth?”
The reasons for that lack of growth are relatively well understood: the overall pool of people buying consoles is staying similar across recent hardware generations, games are taking longer to make and are more expensive, while companies are tightening their belts after a splurge of Covid lockdown -was spending.
The solutions to solving these problems are more complex, however. And in the short-term: layoffs.
“It can grow and it will grow again,” Spencer concluded. “But you see this time right now and the implications have human impact. And we should all reflect on that and think about it.”
For a more detailed look at the business reasons for video game layoffs, Eurogamer recently published a detailed explainer of what exactly is going on.
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