Layoffs, Dried-Up Funding and AI Reshape the Games Industry

For Aftermath's Inside Baseball Week, Luke Plunkett spoke with three games workers, mostly in AAA, who were told by ownership to lay off colleagues. One, "Sandy," left the company alongside the team they cut. "James," a leader with over 20 years in games, says layoffs have been done in person and over video call, and that being pushed to cut people he thought should stay was worse still.

James describes the support as thin: a short chat with HR and a script not to deviate from. Taking the rest of the day off is, in his experience, a token gesture that can mark you as weak. Plunkett's argument is that the decade's layoffs also damage the people who carry them out and the teams left behind, and that executives are insulated from this because they delegate the task downward.

CounterpointExecutives and owners who order cuts would say they are a painful response to financial pressure and are needed to keep a studio or publisher solvent. The piece quotes no one from ownership, and its sources are anonymous.

Nathan Grayson used Aftermath's You Are Error podcast to ask Mike Futter, who runs the Virtual Economy podcast and works at Causeway Studio and Strange Scaffold, why funding has dried up. Futter says the industry expected a correction after the 2020-21 pandemic boom but not one this severe, and he points to the war in Ukraine, covid supply-chain effects and now an AI investment bubble. He dates the turn to 2022 and says consolidation, including Microsoft's purchase of Activision Blizzard, did not deliver the hoped-for gains for labor.

The shared argument is that venture and private-equity money chases buzzwords and gets bored fast, as it did with esports. Futter says 2026 is as much an anomaly as 2020 was, for different reasons.

CounterpointInvestors and publishers would argue the money simply followed returns, and that a glut of expensive, similar games, not capital flight alone, made the economics hard. Futter's remarks here are an excerpt of a longer conversation.

Eurogamer's Jay Castello found that the top Google result for "Nighthawks Wiki" was not a wiki. It accepted corrections only by email, listed companions and skills that don't exist, and cited a 1981 film and a Hopper painting as sources. She traced the domain to a service that offers an AI website builder, and found many similar sites aimed at smaller indie games. Hooded Horse CEO Tim Bender says his company has been playing "whack-a-mole" with them, including a collection covering more than 20 games whose operator admitted using generative AI.

Volunteer wikis are hurt twice. Players are misled and bounce off wikis entirely, and AI crawlers add load: the Dune: Awakening community wiki logged 7m crawler requests in 30 days, 5m of them from Meta. Castello's argument is that low-cost AI spam has made it easy to crowd out good information in a corner of games culture that was already squeezed by hosts like Fandom. In one case a site pointed users to a download that her malware software flagged as potentially unsafe.

CounterpointOperators of such sites, and AI vendors, would say automated tools fill gaps where no fan community exists. None of the site operators Castello contacted responded, so that case isn't made in the piece.

EFF's Corynne McSherry cites criticism, including from Meta's Oversight Board, of Meta suspending a major political Instagram account for hours during an October 17 early-voting push, and of allegedly boosting a candidate in Brazil's presidential election. Meta denies deliberate interference and blames mistakes in its automated moderation. EFF argues that automation reproduces bias and handles context and low-resource languages poorly, citing leaked 2020 figures that Meta wrongly deleted 77 percent of nonviolent Arabic content.

Its prescription is the Santa Clara Principles 2.0: automation that assists rather than replaces human moderators, especially around elections, plus transparency, bias audits, human-decided appeals and human-rights impact assessments. EFF also urges lawmakers not to mandate automated moderation or dictate platform design. It adds that too few companies hold too much power over political communication.

CounterpointPlatforms such as Meta say automated systems are unavoidable at their scale, and some policymakers want faster, more automated removal of harmful content, which is the kind of mandate EFF opposes. EFF is an advocacy group and the piece is a policy argument, not a neutral review.

PC Gamer's Robert Jones interviewed Peter Molyneux, who says developers are "pretending" not to use AI when coding without it is almost impossible, and that Steam's AI checkbox lets them avoid the label. He cites a survey figure of 12 percent of players who would never buy a game involving AI. He blames early image-generator failures for equating AI with slop, says AI cuts weeks of concept work to minutes and prototype code from months to a day, and expects it to be bound into Unity and Unreal within a year.

Molyneux says AI isn't yet good enough for final-quality assets, but will be. Jones calls the shift inevitable, for better and worse.

CounterpointDefenders of Steam's disclosure rule, such as PC Gamer's Shaun Prescott earlier this week, would say players are entitled to know how a game was made, whatever tools are now common. Developers who avoid AI would dispute that it is nearly unavoidable.

Previously: Tim Sweeney attacked Steam's AI disclosures as partisan while PC Gamer's Shaun Prescott defended Valve's rationale. — Monday October 26 edition.

Game Developer's Bryant Francis reports on the Nightdive Studios CEO's argument that large publishers which buy a studio and then change its core identity consistently see it fail. The thrust is that acquirers would do better to let studios keep doing what they do best. The summary provided does not include the CEO's specific examples.

CounterpointAcquirers would argue they must integrate studios into portfolio strategy to justify the purchase price. Nightdive is a specialist in revivals and remasters, which colors its view of what a studio's identity is.