Intercept Games, known for “Kerbal Space Program 2” at Take-Two Interactive label Private Division, is the latest gaming studio that will be shuttered, per a LinkedIn post from a senior designer on Tuesday.
This comes after Take-Two in April announced another round of layoffs that amounted to 5% of the publishing group’s workforce, or 600 roles. Another Private Division studio, Roll7, is reportedly being shuttered as a result.
Globally, the video games industry has seen more than 10,000 job cuts in 2024, nearly as much as last year in just five months.
Even more jarring is how big some of these companies still are, despite vast differences in their business models.
Despite its April layoffs being the third such round since February 2023, Take-Two’s remaining headcount matches that of Sony Interactive Entertainment, the top console brand that presides over many development teams at PlayStation Studios.
It’s a striking indication of just how large Take-Two grew after its acquisition of mobile giant Zynga in 2022. While the publishing group includes “Grand Theft Auto” and “Red Dead Redemption” steward Rockstar, among other popular franchises at sister label 2K, having a workforce that matches the size of PlayStation underscores how complicated the AAA games space has become. Electronic Arts’ workforce is even bigger.
While “Grand Theft Auto 5” and its live service have made Take-Two a ton of money, follow-up “GTA 6” has been in development for over a decade and is still slated as far out as fall 2025, forcing Take-Two to make cuts wherever it can as developers’ faith and trust in such AAA giants erodes. Budgeted at a rumored $2 billion, the resources needed for “GTA 6” are still immense, emphasizing the risk of topline games in the current generation of consoles.
By comparison, live-service juggernauts such as Epic Games (known for Fortnite) and Roblox sport headcounts of just over 4,000 and under 2,500, respectively. Take-Two is still adding to its headcount with the new acquisition of “Borderlands” developer Gearbox Software, likely to close by the end of June, even as the cost of its prior Zynga deal caught up to take-Two in its recent earnings.
PlayStation hasn’t evaded the wave of layoffs, parting ways with 900 roles across SIE in February, including the closure of its London Studio. Before then, the company reportedly cut around 100 jobs at acquired subsidiary Bungie and closed Pixelopus, one of its smaller studios.
The cuts at Microsoft Gaming, which presides over PlayStation competitor Xbox, are far more staggering.
Despite the flashy May announcement of Elsewhere Entertainment, a new narrative studio working on a brand-new, “genre-defining” AAA franchise at Activision Blizzard, Microsoft closed several studios at Bethesda Softworks earlier in the month, including Japanese developer Tango Gameworks, which delivered a modest hit in “Hi-Fi Rush” last year.
Microsoft acquired Bethesda parent ZeniMax in 2021 for $7.5 billion, only to upstage that deal with its massive $69 billion purchase of “Call of Duty” parent Activision Blizzard last fall. Before the studio closures at Bethesda, Microsoft Gaming shed 1,900 jobs, mainly at Activision Blizzard.
After all these cuts, Microsoft still commands the largest Western gaming workforce, at just under 20,000 strong. But gaming remains a much smaller business at the tech giant, putting immense pressure on the division to deliver on strategy shifts that have seen Xbox exclusives come to PlayStation for the first time. It will see the next “Call of Duty” title debut on the Xbox Game Pass subscription service at the same time as its multiplatform release, the first time the No. 1 console franchise has done so. Game Pass growth has stalled, while PlayStation 5 consoles continue to outsell Xbox Series systems.
Most bizarre is that after Microsoft Gaming, French publisher Ubisoft appears to have the second largest Western gaming workforce, around 19,000 altogether. Like other companies, Ubisoft is in cost-cutting mode and indicated it would streamline its games to primarily focus on live-service and open-world titles.
Ubisoft certainly has the resources to deliver big games and has carved out a space for itself with open-world franchises including “Assassin’s Creed” and “Far Cry,” but its oversize headcount has more to do with strict labor laws in France that prohibit the company from cutting roles at the scale that U.S.-based companies can.
Likewise, Swedish publishing group Embracer Group still commands a hefty workforce of more than 12,000 spread across as many as 150 studios. Its restructuring period has cut more than 1,400 staff, but Embracer still has around $1.5 billion in debt to contend with after years of aggressive M&A and an attempted $2 billion deal with Saudi Arabia’s Savvy Games Group that collapsed a year ago.
There’s a clear correlation between companies that have stacked up on studios en masse and subsequent layoffs, making it questionable if Sony Interactive Entertainment will ever strike a deal at the scale of Microsoft and Activision Blizzard, given PlayStation’s existing lead in the console space and less dramatic bouts of layoffs and closures.
Otherwise, the mounting costs and development timelines of AAA games will continue to hold a ticking time bomb of cuts over companies unable to downsize fast enough.