Today Midway announced that they are laying off 25% of their workforce, and this news has finally led me to make this thread. Western publishers are struggling, generally speaking, and I'm wondering what others think we should do about it.

First, let's remember that almost all Western publishers are losing money. Ubisoft and Activision aren't: that's good. But Midway, Atari/Infogrames, SCi/Eidos, THQ, Take 2, Electronic Arts and likely LucasArts are. That's bad, and the list of losers is significantly longer than the couple of winners.

Second, let's look at how the workforce has changed in the last year.

December 2008: Midway closes Austin studio, reduces total workforce by 25%.
November 2008: THQ closes 5 studios, reduces workforce in 2 others.
October 2007: Atari ousts board of directors, lays of 20% of workforce.
February 2008: Eidos cuts workforce by 25%, cans 14 projects.
September 2008: As losses widen, EA cuts workforce by 6%
November 2008: Electronic Arts warns of further losses, likely more job cuts
September 2008: Lucasarts lays off 100 workers

Of the major Western Publishers, the only ones not to announce layoffs in the last year are Activision, Ubisoft and Take 2. Take 2 has been losing money for quite some time, however, and is likely to either begin bleeding soon or be acquired by a larger fish.

By contrast, there has been virtually no turmoil in Japanese publishers. What's particularly interesting about Western Publishers is that revenue is quite good: even in this recessive economy, video games are reaching record breaking profits, with the US market likely to spend 15-20% more money on video games this year than last, and last year was a record breaking year, too. Overall industry revenue is very healthy. So I ask again: why are most Western Publishers struggling so mightily?

I've noticed this a lot lately. And this is certainly a bad thing for those being fired.

I think maybe some of the Western publishers are struggling, in the face of massive revenues, as you say, because these revenues are below expectations. Consider the case of wallstreet: if a company profiting or losing and announcing that is almost irrelevant to their stock price. What is mostly relevant is how they do relative to expectations.

Also consider that big games are doing well but the smaller games may very well be doing much worse than in a better economy.

I'm not sure if Ubisoft is really a western publisher/developer. And the reason western developers are struggling is because they refuse to focus the majority of their development on the two most popular platforms with the cheapest development costs (Wii and DS). Of course, the PSP is also big and is cheap to develop for, but it's software releases are few and far between and it's obvious developers have given up on it.

And while Japanese publishers may not be struggling, they have lost virtually any influence they had in the market. Except for Nintendo, Sony, and Sega, how often do you see a Japanese publisher even being in the top 10?

The only issue is: In the US Most companies are losing money right now or feeling the economic pressure.


I should know, i work for a bank.

The thing is most of them have only themselves to blame.

It isn't like people spend less money on games now then 5 years ago, it's quite the contrary.

No suprise for me 90% of titles i want next year are sony, square, sega, SE

 Absolutely, this is critical to my point. It would be more understandable if these companies were in a dying market. Say, they were CD manufacturers. Obviously, CDs (as in the hardware itself, the literal disc) are slowly dying, as music moves in to digital distribution and most business related tasks have moved to DVD or online. If you are a manufacturer of Compact Discs, I can understand why your business may be declining.

However, that is not the situation these companies are in. The industry is booming, and we're breaking revenue records year after year. The fact that these companies still manage to struggle in such an environment does seem to suggest the blame falls on the companies' heads.

I think quality of games may have something to do with it. I am surprised they haven't been many deveolpers/publishers going bankrupt or lots or mergers/acquisitions.

Massive revenue maybe, but they are offset by even more massive costs. With the increases in development costs, any development is higher risk, and even small percentage variations against expected revenue can have a killing effect of the business model.

This is not altogether a bad thing though. Trouble is, some of the larger developers at least are stuck in the past when it comes to business plans, and like any big set-up it can take them an age to change their minds.

On the other hand, the staff being laid off - and I'm sure there are many talented people among them - now have the opportunity to go their own way. There should be some new, vibrant and profitable studios coming out of this ...

Is it going to be 1983 all over again?

http://en.wikipedia.org/wiki/North_American_video_game_crash_of_1983