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Necrosoft Games was running out of money. At the rate things were going, the video game studio’s director, Brandon Sheffield, surmised that the company would be broke before its current project, a Persona-like RPG called Demonschool, shipped in September.
This was in March, and prospects were looking glum. The funding climate for video games was dangerously bad, especially for small projects, and layoffs seemed to happen at studios across the industry almost weekly. Then, a Hail Mary: Sheffield, an industry veteran with over a decade of experience, was able to secure a contract for Necrosoft to do some work on another game. It wasn’t an ideal situation—the studio would have to do the work while also finishing Demonschool—but a necessary one. “It was the only way to survive, because nobody was funding anything,” he says. “It's also better than what's happening to a lot of people, where they just have to fold.”
The studio’s troubles are hardly unique. After a harsh year of layoffs in 2023, GamesIndustry.biz reported in January that company heads were already eyeing 2024 as “the year of closures.” After a boom in hiring during the Covid-19 pandemic, things cooled off, and now many game developers say mismanagement is making things worse. Avenues smaller developers could once rely on for cash, like offering their games as exclusives on the Epic Games Store or Microsoft Game Pass, are no longer open. In March, Chris Bourassa, creative director of Darkest Dungeon developer Red Hook Studios, put it bluntly in an interview with PC Gamer: “The gold rush is over.”
Necrosoft bought itself time to get its game across the finish line, but now—like so many other small developers—it remains in a precarious position. “All of our hopes depend on this game being a success,” Sheffield says. “That's obviously a bad situation.”
As the industry shrinks, independent developers are vanishing left and right. While some are holding on to the hopeful refrain “survive till ’25”—making it through this brutal year in hopes prospects improve in the next—others are less optimistic.
“‘Survive till ’25’ assumes that we are encountering a long winter rather than having burned our own crops for three years previous,” says Xalavier Nelson, studio head of El Paso, Elsewhere developer Strange Scaffold. “Unless we start planting differently, unless we start changing the way we work and think about making games, then we're going to continue to see the highest highs and the lowest lows that games has ever seen. And it might, in fact, just get worse.”
The video games industry seems to be in free fall. How any particular company lands, though, depends on their size. When large companies like Microsoft, Unity, Electronic Arts, or Ubisoft want to tighten their belts, they do layoffs, but the company itself still exists. For independent gamemakers, the fallout is more existential. Since they’re often run by small teams of fewer than a couple dozen people, belt-tightening can often mean simply shutting down.
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Deliver Us Mars developer Keoken Interactive laid off its entire team after its founders were unable to find funding or work at this year’s Game Developers Conference; Eggnut, Galvanic, and Paladin Studios also cited lack of work and funding as they closed their doors. Others, like League of Geeks, are currently on “hiatus” with no word on when they might return, or are relying on “skeleton crews” like Lightforge Games.
Countless more are currently in panic states, scrambling to make games while the clock ticks and funds run low. Some may find themselves forced to release a game before it’s truly ready. Sheffield says it’s hard not to feel guilty when other studios go under, even as his own struggles. “We're all kind of fighting for a tiny slice of the same pie,” he says. “I do look forward to a day when I'm not always scrambling looking for money, because I came into this to theoretically be a creative person. I want to give things space to breathe. I want to come up with interesting game systems.”
A handful of public announcements does not—and will not—account for the number of indie developers that have vanished or will vanish. Nor can they capture video games’ brain drain. “When an indie doesn't get funding for its game, you just quietly never see their work again,” says Nelson. “The horrifying nature of indies is that death occurs in the dark. We're very much seeing this happen now.”
Nelson would know; he has worked on dozens of indies and AAA titles over the past eight years. The problems facing the indie space now, he says, are systemic—products of decisions that have been made over the past five to 10 years. That's why he's skeptical the industry could recover in just one. The entire system, he says, “must be altered in order for the industry to be in a recoverable state where we are consistently making projects and taking care of people who serve players in the first place.”
When indies disappear, players are losing more than they know. With fewer smaller, creative teams to make experimental games, players will have fewer choices—or chances—to find games that speak to them or surprise them.
Among Us developer Innersloth recently launched its own funding efforts to help a handful of small developers get their projects out the door. Like Nelson, Innersloth community director Victoria Tran isn’t optimistic about the “survive till ’25” outlook. Aside from the sheer loss of talent the industry is facing, she says, developers learn from making games. “I think most of the time, an indie's first game is a complete flop,” Tran says. “That's not an insult.” There are exceptions to that rule, she adds, but realistically developers need time to explore ideas and iterate, even learn how to manage relationships or marketing or QA.
“There’s a lot you learn from making indie games, and losing that knowledge is pretty big,” Tran says. “The games industry itself already has an issue where we don't have a lot of people who you would describe as veterans. They burn out, or they leave the industry for whatever reason.”
Disappearing talent doesn’t stop with layoffs, either. It’s also a morale issue. It’s “potentially scaring new talent away, because indie development seems so scary and difficult,” Tran says. “You lose out on all the ideas that they had. It makes the industry less colorful and vibrant as a whole.”
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After news that embattled conglomerate Embracer had shut down yet another studio, Pieces Interactive, following a rough game launch, developers on X lamented losing the ability to learn. “The irony here is the only way to make better games is [to] make mistakes making them,” wrote longtime dev and The Outsiders founder David Goldfarb. Another, senior Remedy Games writer Eric Stirpe, noted when he was working on episodic games at Telltale he had the benefit of “getting to put out content every few months and learn in nearly real time what worked and what didn't.”
Look at it this way, says Nelson: You can’t get the game a developer makes in its 20th year in its first year. Studios release games that bomb sometimes. It’s inevitable. They can still go on to make “the work that defines the next 10, 20 years” of video games.
A beloved indie studio like Supergiant, for example, could not have made its critically acclaimed game Hades without first creating Pyre, Transistor, or Bastion—the same way its highly anticipated Hades sequel doesn’t exist without the first.
“You're losing the game they would have been making 10 years from now that would change the world,” Nelson says. “I bemoan the loss of potential constantly, if only because we literally cannot see what we have lost. We just know more people are looking for jobs.”
Updated: 7/11/2024, 11:15 am EDT: Corrects Chris Bourassa's title.
