The console industry has been stagnating for years. The Switch is proof of that. Nintendo consolidated its console and handheld business into one to combine the user bases, not seeing a big future supporting both a console and a handheld. Sony ditched handhelds, MS started putting all their games on PC.
The pandemic caused a temporary boost in entertainment, and subsequent hiring spree, as everyone was bored sitting at home. The market has now corrected itself to the track it was on before the pandemic which is why we're seeing so many layoffs currently.
Yet also because the economy is shrinking, record inflation and people aren't spending as much on new games anymore. Gaming is cheaper than ever, yes so are closing going out of business sales.
The extra profit from digital sales is no longer increasing, DLC, Season Passes, MTX fatigue has set in, all those crutches have reached / passed their max potential to prop up game revenue. Either game prices need to go up, a lot more people need to pay full price, or budgets need to be heavily adjusted down. We're seeing the last happen now, which leads to lay offs.
