The Actual Reason Behind Layoffs and Why Unionization Is Not Enough - Part 1

Layoffs are the hangover after 10 years of ZIRP $ and a smoke screen for the death of service games

Layoffs: The Musical

By now the game industry is close to 15000 layoffs covering 2023 and 2024 or possibly more. The usual suspects are capitalism itself (right but wrong unless you also want to blame it for the jobs existing in the first place) to corporate greed (less wrong but still pretty wrong) to a correction for the pandemic game industry boom (getting warmer but warmly wrong).

Mass layoffs have been built into the fabric of the modern game industry since it had any “mass” to speak of. Meaning the current incarnation crystallized in the early 90s when team and studio sizes have started to grow from at most double digits to the hundreds, sometimes thousands we know today. The scale of the current wave is indeed shocking but only by degree, not mere existence. The pandemic boom is only the tip of the iceberg and doesn’t explain the scale of these layoffs. Camouflaged in here is the bill due after 10 years of:

• industry boom fed off easy Zero Interest Rate Policy money once VCs entered the game space in a big way with mobile F2P taking off

• ultracheap user acquisition subsidized by Apple and Google through easy API access to a flood of user data

• a core audience kept captive through a potent cocktail of tech, nostalgia, power fantasies and tribal affinities, whose willingness to spend on their hobby seemingly without limit fuels the next point

• a tech arms race that has constantly increased game budgets, team sizes and decreased chances of recouping investment on all but the best known games

• a huge separate market of disengaged consumers of games as disposable distraction, retained through psychological gambling-adjacent hacks leveraging cognitive biases but with enough overlap between these markets to confuse participants they’re the same

How Unions Should Work

From a purely mechanistic standpoint without getting into political theory or ideology the basic idea is pretty straightforward. Workers band together to counteract the intrinsic power imbalance between huge employers and small fry individuals. Through collective bargaining employees gain enough bargaining power to can negotiate for better pay, conditions, etc which any big employer has no real incentive to pay for out of the kindness of their hearts and the wallets of their shareholders.

Library of Congress, Washington, D.C. (LC-DIG-nclc-01581) Non-union workers without significant bargaining power

Of course what’s missing from this is the context of how workers in an industry gain and maintain bargaining power. Much of the understanding of this comes from the Industrial Era when worker leverage was a lot more literal. As in the number of people doing manual labor.

Although our understanding of bargaining power has since evolved quite a bit most of the game industry still thinks in those terms, which is the direction most of the recent influx of unionization discourse comes from. Getting as many game devs as possible into a union = maximum leverage. As an emotional kneejerk reaction, it makes sense. As a strategic move to gain bargaining power it’s on par with gig drivers boycotting Uber.

Knowledge worker unions gain leverage not mainly on numbers needed to stop production because their labor is not in a 1:1 relationship to industrial output. To understand how it’s also worth rereading the impact of marginal cost on game production and how it differs from physical goods.

Knowledge worker unions gain leverage but on their power to affect markets or votes and in the current market game developers have little to none because of one thing: monopoly.