Publisher's honestly are not lying. It's easy to villify them, but lets look at the reality of the situation.

Everyone will acknowledge, even players, that game development costs are way higher as the years have gone on.

This is not like Frito Lay trying to justify doubling the cost of potato chips post COVID, bullshit that those cost double to make.

So you have way higher development cost, which no one will really deny ... do you have sales that are way higher? Not really, it's the same number of people buying the same number of consoles every generation, that number is not increasing.

The other thing most gamers are clueless about is they don't even understand how games are financed. Understand that a lot of publishers were borrowing money for dirt cheap interest rates (free money) basically in the past. Now that interest rates are much higher it means if you take out a $100 million dollars to pay for development of a 5+ year project ... it's way more expensive with interest rates being much higher. No more "free money" for anyone.

In all honestly, the Capcom president said this and it's true, and I know people are going to not want to hear it, but game prices need to go up. They should be about $80+, and even that honestly is pretty low. That really only covers some of the inflation cost it doesn't really get into development costs being way higher. You can't increase the production cost of anything, whether it's a McDonalds cheeseburger or Nike shoes by multiple times or whatever and sit there and say "well I expect to never pay more than the standardized price I was paying 10+ years ago". That's just not realistic. When you go to see a movie at a theater are you paying the same ticket price you were in the year 2002? I don't think so. 

Something has to give here. Layoffs are just a sign of a bigger problem the industry has. 

Hm, I don't know about that...signal to noise ratio has probably never been as low (only maybe rivaled by Atari 2600 pre-crash), and honestly, with AI tools, in next few years it will get progressively worse.

Digital sales make up the bulk of the industry, no shipping or retail costs. I know games are expensive regardless, but digital is a huge advantage for profit and revenue. 

I'm only down with more AAA games at $80 USD if some of the $60 and $70 games go down. There are some games past, present, and future that make sense to charge $80 for. They are some that don't even make sense to charge $60 or $70 for. 

Yeah digital has helped but it's not a be all end all. 

Lets just do some basic math. 

In 1997, the average Playstation game cost $50. That would be with inflation like $96 today. 

Lets remove the cost of retail and assume all games are digital (they're not, but lets just assume that) bring that down by $20 removing the retail cost, that's still $76 for a game just on inflation costs alone. 

Now factor in massively increased development cost, according to the Tekken producer, games cost 10x+ more today ... in all honesty even $80-$90 per game would be low for what publisher's are putting into for a lot of these games. 

$80/game barely would cover the cost of inflation alone. 

And the insane thing on that on top of all that, is you have a vocal group of people saying they want "more, more, more!", so how is the industry supposed to go from where it is today to a place where development budgets are even 2x, 3x, 4x  more what they are today say by the time the PS5 is winding down and the PS6 is launching (that's only about 4 years away). 

Does anyone think that is feasible? It's easy to paint publishers as the bad people here, but if there was no argument for example that the cost of beef had risen even 5x ... I'm pretty sure most people would agree "well hamburger prices have to go up". 

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.

The only thing I see that's stagnant is originality. I came of age during the golden era. I experienced the industry from the NES to present. The games and consoles released during the NES to PS2 era were breathtaking. Every year, something was blowing your mind. Consoles dropped about every five years, and every time they did, they blew the last one away so thoroughly, that you literally would toss the old console in the closet and let it collect dust, or sell it off immediately for a credit toward the next one. Remakes were almost nonexistent. Everything was new. Everything was groundbreaking. It was insanely creative, and you were never hard up for something amazing to play.

This is something I no longer see, and why I rarely get excited for anything. I own a PS5, and I'm eager to see what Nintendo does. I still have an Xbox One and will occasionally subscribe to Game Pass when I want to try something out. But compared to the days of SNES, or PS1, or Dreamcast... there is no excitement. It's all pretty much meh. And that's what I think is the industry's biggest problem.

Of course, if you didn't experience the golden era, you might not know what you're missing, and if that's the case, I suppose it's not a problem.

I've been more than happy.  Big budget games have been great via spider 2, ratchet, GoW and forbidden west. Nintendo has been amazing with metroid, Zelda and Mario.  And indie games have been superb with hades, cocoon, bomb rush and tunic.  Gaming is superb.  Quality has never been higher.

At worst they decided to do some mobile gaming to keep the shareholders off their back, they did...and that's that. 

Course gamers will still lament the graphics...

When OP talks about lay offs. Those are the norm. Companies hire you to make a game and after the game is released you get fired. But seeing as how so many gaming companies are laying off around the same time, it does seems fishy. My original thought is the economy. The economy has been rather rough for a couple of years. Companies put in so much effort and time into a game that needs to have the best of the best of the best, which is time consuming, energy exhausting, and money dumping. I want to point to the Big 3, as they are called, Sony, Microsoft, and Nintendo.

Sony spent $315M as their budget for Spider-Man 2 and was developed in 3 years. Selling over 10M units.

Microsoft spent $400M as their budget for Starfield and was developed in 8 years. Selling over 12M units.
Halo Infinite had $500M budget over 4 years, selling over 20M units

Nintendo doesnt spill the beans often but they did say that they had "ample budget", with "no deadline" for Super Mario Bros Wonder and was developed in 4 years. Selling over 11.96M units.
Tears of the Kingdom had $120M budget over 6 years, selling 20.28M units.

The problems are:

• Too high of a budget
  • Quality of Graphics
  • Rendering
  • Developer Costs
  • Advertising
  • Technology
  • Higher wages
• Not selling product
  • wrong demographic
  • poor quality (bugs, glitches, etc)
  • no franchise to back it up
  • No innovation
  • Not fun

Companies like Sony and Microsoft have an extra hurdle to climb compared to Nintendo. They went with the next-cutting edge technology route. They've decided that all their games must look real, and must be the most technologically advanced game of all time. That requires so much of them. They have to make sure the game has 120 fps 4k-8k, looks like a cinema, and plays fluidly. Nintendo on the other hand has decided to opt for the innovation route. Create consoles thats have aspects that aren't explored and make it fun. Graphics will naturally come with time. Hence why their AAA 1st party game budgets are 3x smaller than most of the AAA 1st party budgets. 

Sony and Microsoft are way bigger than their gaming identities.

Sony has TV, Speakers, Photography, Cinema, Music, Finance, Gaming, etc.

Microsoft has Computers, Websites, gaming, and entering cinema.

Nintendo has Gaming, Toys, Cinema.

Nintendo is once again leading and carrying the gaming industry.