“Talent, Not Tech,” is Gaming’s Most Important Resource, and More Mass Layoffs Will Leave Xbox and Others Behind, “Both Short-Staffed and Short-Sighted,” Says Analyst

Once again, the video game industry is caught in a limbo state, waiting for the hammer of more mass layoffs to fall, and once again, it's Xbox and Microsoft bringing its gavel down. While Asha Sharma and the rest of Team Green's leadership position these cuts as a "reset" for the company, the CWA and its members point out that the company has tried mass layoffs, multiple times in recent years. Clearly, attempting to 'reset' the business like this hasn't been working, and now, Microsoft is poised to lose what veteran analyst Joost van Dreunen rightfully calls the gaming industry's most important resource: "talent, not tech."

In Dreunen's latest SuperJoost Playlist newsletter, the veteran analyst digs into how the tech industry's mass investment into AI is also the cause of so many of tech's biggest issues, with consumers having to bear the brunt of everything getting more expensive. We've seen it with the Xbox Series, PS5, Nintendo Switch 2, and the Steam Machine on the gaming side of things, but the rising price of memory as a result of AI data centers swallowing up component supply has impacted every piece of tech that needs memory to run.

We've also seen major memory makers get sued over claims that they've manufactured this current industry state, but that lawsuit and its potential results won't save the employees who will likely lose their jobs this week. It won't help Xbox with the institutional knowledge it is about to lose, and it won't help them regain that in the future, as developers continue to be pushed away from the video game industry due to its instability.

Earlier this month, Dreunen called out Sharma's 'reset' statement and made it clear what the truth of the next stage of her tenure is about: making Xbox smaller. Xbox will almost certainly be smaller by the end of this week, but if Sharma wants to talk about things that 'cannot continue,' these kinds of cuts would be at the top of the list.

"Eventually, such cuts hit the bone," as Dreunen puts it. "Rather than providing the infrastructure and organizational stability necessary for long-term creative work, a fealty to financial cycles and increasing powerful tech overlords marginalizes talent...Making games is hard, costly, and time-consuming. If you're not investing in talent and cultivating their ability to develop great experiences, are you even a games company?"

These layoffs will catch up with Xbox, PlayStation, and every other major firm that has made a habit of cutting hundreds and thousands of developers at a time. Dreunen makes it clear that these kinds of shifts and the consequences of the tech industry's push into AI "is catalyzing the current push into distribution innovation."

The industry will change, old business models won't work, and when the biggest firms have done nothing but constantly push talent away, they're likely to find themselves on the back-foot by the time they realize where the tide has turned.

"Free-to-play, the app store, the creator platform: none of these were tech-first innovations. They arrived when creatives, under financial pressure, reinvented their business models. It suggests that firms cutting talent today will soon fall behind, both short-staffed and short-sighted."

Currently, Microsoft will reportedly shutter "at least five" studios, all of whom are stacked to the brim with talented, award-winning developers, some of whom are behind some of the video game industry's most iconic games in the last few decades. The current list of those suggested to be on the chopping block includes Compulsion Games, Double Fine, Undead Labs, Ninja Theory, and Arkane Lyon.

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