In a week marked by turbulence in the video game industry, Epic Games has announced the elimination of one thousand jobs, while PlayStation has closed Dark Outlaw Games, a studio acquired just a year ago.
These decisions reflect a worrying trend in the sector, where cuts and studio closures have become a common phenomenon.
6 million units sold to achieve profits
Despite the fact that video game revenues have increased since the pandemic, many companies face significant financial challenges. According to journalist Jason Schreier, the budgets for developing ‘AAA’ video games are around 300 million dollars or more.
With a selling price of 70 euros and assuming an income of 49 euros per copy after store discounts, at least six million units need to be sold to avoid losses, a figure that is not always reached, as shown by the recent release of Marathon, which has only sold 1.2 million copies.
The high production costs in countries like the United States and Canada contribute to the financial insecurity of these developments. In cities like Los Angeles, the employment cost of a developer can range between 15,000 and 20,000 dollars a month, which significantly raises the annual expenses of a studio.
This has led some developers to opt for more affordable locations, although they often face fierce competition for creative talent.
Poor management and lack of creative direction in some projects have been cited as causes of rising costs. Unnecessary changes in development and risky decisions can negatively affect the final outcome. This context suggests that, to ensure sustainability in the industry, companies should consider creating smaller projects and adopting more effective management.