Video games are made by people (Picture: Embracer Group)

GameCentral speaks to publishing boss Mike Rose about the mass redundancies and other issues that have made 2023 a nightmare for game developers.

Over the next few weeks, the internet is going to be flooded by end of the year reviews, all touting 2023 as one of the best ever for video games – which in terms of the quality of titles is certainly true. But for those that work within the industry, even at studios that have had major successes, this has been one of the worst years ever.

All through the year, there has been a near constant stream of job cuts, starting with some of the biggest publishers and working its way down from there. Xbox and Bethesda were one of the first to be affected, but the situation soon snowballed to include 870 jobs at Fortnite creator Epic Games, 50 at indie publisher Team17, and a never-ending series of cuts at all the many studios Embracer Group has been buying up over the last few years.

By early October the games industry as a whole had cut over 6,000 jobs and the trend only continued, with even more Embracer studios seeing cuts and PlayStation reportedly undergoing a ‘money saving initiative’ involving at least 100 job losses at Bungie.

From game engine maker Unity cutting 270 jobs to Amazon Games laying of 180 staff, and from The Last Of Us maker Naughty Dog to Free Radical Design, there’s hardly a company that hasn’t been affected across the entire industry.

It is a part of a wider phenomenon, that has affected the whole technology sector, but the problems in gaming have compounded issues for indie developers and publishers, who have already struggled to get their games noticed this year, amidst the unusually large host of other big name games.

So we spoke to Mike Rose, boss of indie publisher No More Robots, who handles the likes of Descenders, Hypnospace Outlaw, and the recent Spirittea. He was able to give an insider’s view on what’s happening, why it was so predictable, and how the problem is almost certainly going to continue in 2024.

GC: OK, so I’m not exactly a layman when it comes to gaming, but I don’t have anything like your insider knowledge, but what I’ve assumed has been going on in is normal corporate stupidity. Demand for games increased over the pandemic and publishers convinced themselves that was the new norm, and so immediately staffed up. And then when demand, predictably, returned to normal they started getting rid of all those new employees again. Is that the core of what’s happening?

MR: That’s pretty much it. If you really whittle it down, yeah. There’s a little bit more nuance to it. There’s things like when all the numbers started to go up, people from outside of video games were like, ‘Hey, look at those numbers!’ And the problem is in that situation, when someone from outside all of a sudden comes in and starts flinging money everywhere, how do you say no?

These situations, some of these people are in, where they’re looking at numbers that are making them think, ‘This is going to set me for life and you’d be crazy to say no.’ But, of course, the problem with that is that those people are probably still quite happy even though everything’s falling down.

They’ve got bank accounts filled with gold and instead of them being like, ‘I should take this on as my responsibility now, I made these decisions and I should now take the brunt of it’ they lay a bunch of people off and that’s the way that you bring the numbers down and that’s it.

GC: Whenever this sort of thing happens, I always think of Nintendo’s darkest hour with the Wii U, when their investors were demanding they cut staff, just because that’s the sort of thing companies do when things are going badly – punish those that had nothing to do with it and let the decision makers off scot-free.

MR: Yeah!

GC: But at Nintendo, Iwata took a 50% pay cut and the rest of the board cut their pay as well. And he said something like, ‘If you want your staff to be making fun and creative games it’s probably not a good idea to have them constantly living in fear of losing their jobs.’ Then a few years later they put out the Switch and their current slate of games. But does anyone ever try to copy Nintendo’s attitude? No, they’d rather slit their own throats than admit any personal fault.

MR: It’s very easy to look at Nintendo and be like, ‘That’s a different culture. That’s not our culture. We’re an American company.’

GC: Treating your staff like human beings as literally a foreign concept.

MR: [laughs] You’re completely right. There’s ways, right? There’s absolutely ways to deal with these things and the hardest thing to deal with in your head is that there are people who made all these decisions. There’s people who decided, ‘I’m going to balloon the company, I’m going to sign all of these things. I’m going to take us public.’ And then when the shit hits the fan, those people are not the people who then take the brunt of it.

They just look at a spreadsheet and go, ‘Right, okay. So we need this number to now be this number because things haven’t been going so well, so we’ll cut all of this. I’m still going to get my bonus.’ And that’s business. That’s how it works.

GC: This is what worries me the most about the Activision Blizzard acquisition. You get all these people encouraging and celebrating it, but… you do know that hundreds of staff are going to be made redundant over the next few years? It’s always the same, no matter the company. There’s already signs the belt-tightening has started, I’m sure it won’t be long till the first studio is shut down.

MR: The biggest one right now is Embracer.

GC: Oh god, they’re even worse. Who couldn’t see that train crash coming? Who’s their CEO, Homer Simpson?

MR: [laughs] In 2020/2021 when it felt like every week Embracer announced a new list of 20 studios that they bought. That was horrific. That time was horrific for me. And, actually, I have a friend who wanted to build their own game studio. Then they wanted to get investment, basically. And they got a thing with Embracer and at the time I was, don’t get me wrong, I was so happy for them. The thing I didn’t want to say was like, ‘Oh god, I really hope this goes well because I’m so worried for you and what’s going to happen in the future.’ And exactly the future I feared has happened.

And it’s human lives, these are real people being affected. Some of these people have made a game. Some of these people are now in a situation where a game is like 90% complete and they will never get that game completed, because they needed Embracer to fund it and now it won’t.

So there’s now just going to be dozens of dead games and studios. There’s going to be, I don’t even know how many hundreds of people there’s going to be who are going to have been heavily affected by this. And I say Embracer, but you could swap Embracer for so many names.

Mike Rose [top left] and his executive team (Picture: No More Robots)

GC: They’re the most extreme example, it seems to me, but yeah. With them it’s not just the scale of what they’ve done but the complete lack of any kind of understandable plan. They spent billions and the biggest franchises they got out of it was Tomb Raider and Saints Row. And they’ve already ruined one of those.

MR: During the pandemic, there was a bunch of publishers who were No More Robots size or slightly bigger who all went public for unbelievable amounts… billions! And at the time when that happened, all I thought to myself was, ‘You are not worth that much. Everybody knows you’re not worth that much. It’s unbelievable that you’ve done this. This can only go badly.’

And now you search the stock price of any of the publishers who went public in 2020/2021. They are all… most of them, their share prices are now about 5% of what they floated for. And again, that situation is going to be that the people at the top who did it in the first place, they’re going to have their bank accounts filled with money.

Local to Manchester… I’ve always felt funny about Team17. That article came out a couple of years ago on Eurogamer that exposed a bunch of stuff. And I was at the time quite happy that had come out because I was, like, ‘Finally someone’s talking about this.’

And that year we won the Publisher of the Year award at the Develop Awards. I was very happy. The reason I bring it up is because then literally the year after Team17 won it and their CEO went up on stage and was like, ‘Oh, it’s so nice of you to have given us this award. We know we’ve had some troubles, but it’s so nice that you’re seeing that we’re trying and all this kind of stuff.’

GC: Yeah, It’s the disingenuousness of these execs that gets me.

MR: And three months later, they laid off a bunch of their staff and got rid of the CEO. That night I went to the pub and someone from Team17 was there, who had been laid off, and they just sat at a table, had a drink, and cried. You can be angry at them, but everybody else is facilitating it. No one here is in the right. Why are they winning a Publisher of the Year award when this is happening? It’s unbelievable to me.”

GC: It’s just accepted as the capitalist norm, and nobody seems to care. But what also disturbs me is the attitude of percentage of gamers, where they not only don’t care, they seem to get actively angry at even bringing up the idea that developers might have a tough job. I’ve noticed a distinct lack of empathy about this year’s problems from a significant sub-set of readers.

MR: It’s interesting that something that I am hearing more and more be blamed for it, which I actually don’t agree with, is the subscription service stuff, with PlayStation doing their own and Microsoft obviously pushing Game Pass pretty much as their main thing.

I’ve been sat in rooms with a bunch of CEOs and the feeling is ‘Our sales are heavily down and it’s because of Game Pass.’ They’re saying, ‘Oh, players aren’t buying games anymore. They’re all just downloading our games on Game Pass and so we’re not making money.’ And I know it’s a feeling that a lot of developers are having right now and it’s something that I just unbelievably disagree with.

And the reason I disagree with it is because I think it’s a case of not seeing the forest for the trees. Sales are down because sales were up. The pandemic happened, your sales rocketed. They’ve gone back down again, but they’ve gone down lower because, also now, the world has no money. No one has income to throw at buying video games all the time anymore. And, also, the number of video games coming out has gone up.

We’ve got a game out next week and it’s the most wish-listed we’ve ever had for a game. We’ve got nearly 150,000 wishlists on Steam for this game. The most we’ve had before is like 80,000 for a game.

GC: Is that Spirittea?

MR: Yes! It’s like a Spirited Away kind of thing. So, games we’ve had before when we’ve had 80,000 wishlists or whatever have been gigantic for us. A game we had when it had 80,000 wishlists, it shot to the top of the top sellers on Steam. It stayed there for three days. We sold, I think, we made a million over a weekend or something like that. It was a massive thing for us.

This game, that’s got 150,000 wishlists, I think we will be lucky to sell 15,000 copies in the opening week, something like that. Two or three years ago, we would’ve sold over 100,000 copies easily, no question. But I think we’ll do 15,000 copies next week. Now that sounds like a disaster. That sounds horrible. And if I was any other studio, it would be. Any other studio now would be screwed. This would be bad for them.

However, we got a massive Game Pass deal for the game. And that deal is literally going to make the developer who made this game a huge amount of money, the moment the game launches. The moment that game launches he’s basically going to make enough money to… he’s Canadian and he’s married to a Korean lady and they’ve got a kid together. They want to move to Korea. That’s what they want to do.

He’s going to be able to just do all of that, no questions asked. And if the game was selling 15,000 copies, and that’s all that was happening, we’d have a problem.

[Rose, happily, turned out to be wrong about this and Spirittea became one of No More Robots’ biggest launches ever, so after the launch we asked him to explain himself over email. You can read his response at the end of this interview – GC]

Some companies seem to have a love/hate relationship with Game Pass (Picture: Microsoft)

GC: So is he now making more money than if it had been back in the old pre-pandemic, pre-Game Pass era? Or does it work out the same?

MR: Good question. Well, obviously it’s hard to tell. I think it probably would be about the same. I think it would be about the same. Yeah, because I guess it would sell about a hundred thousand copies then you’d make about… yeah, it would basically be the same. So it’s like we’ve offset the huge drop in sales with a nice Game Pass deal.

The problem is that what other studios are doing, who are in a similar situation to us, they’re seeing sales drop. And so what they’re doing, they’re going, ‘Right, we need to get the sales that we used to be getting three years ago. So here’s how we do it. We put millions into marketing. We put so much money into marketing that we guarantee ourselves that we get that many sales.’ The problem is the game comes out, it sells that many copies…

GC: But they’ve spent all that extra money on marketing.

MR: Exactly! Now they owe millions of dollars back to the publisher because they’ve got to pay for the advertising. And so it looks like the game did huge numbers, but it didn’t because the developer didn’t see any of it. And this is what’s happening over and over, and this is why people are angry about Game Pass because they’re getting Game Pass deals, which are good – the Game Pass deals are good. But they’re then completely demolishing it by putting three times as much into advertising and hoping that something happens. And it’s crazy.

GC: Are the big publishers affected in a proportionately similar way, when big name third party games go on Game Pass? Because sometimes you get stories of traditional publishers saying they hate Game Pass but there’s no consensus.

MR: When you see a story like that, where someone goes, ‘Oh, Game Pass wasn’t good for us.’ It’s because the money that they got from Game Pass, compared to the money that they spent on trying to make the game sell, are entirely disproportionate. For us, here’s the Game Pass money and here’s how much the game costs. So we immediately recoup all of that.

This [Spirittea] is the most, actually, we’ve advertised a game before. The previous stuff we’ve done, we’ve not really done paid ads and stuff, but for this game, I felt so strongly about this game that I’ve tried to push it as much as I can. So, we’ve actually done a decent amount of paid advertising for a change. And even with that, the moment the game launches we’re easily going to pay for all of that advertising, pay for the entire dev cost, pay for all the marketing, pay for all the porting we’ve done, pay for all the localisation we’ve done. And the developer will see a six figure profit immediately, the moment we hit the launch button.

And that for me, you could say that I’m simplifying the situation, but I don’t think that’s what it is at all. I think that we’re just doing the business right. For me, I don’t really care if it looks like our games sold millions and all this kind of stuff. For me, the important thing is did the developer come out of it and make a bunch of money and can they go on to make another game? And if the answer’s yes, I’ve done it, that’s it. We’ve done the right job.

GC: I’m sure that’s the primary concern of all major publishers.

MR: I don’t think it is…

GC: I was being sarcastic; they couldn’t give a f***.

MR: [laughs] It’s a numbers game as well, it’s like throw s*** at the wall and seeing what sticks. If it is a publisher, you put 20 games out and one of them is a hit. All you need is one of them to be a hit that sells millions. The 19 other developers can get in a bin. That’s just how it works.

PS Plus subscriptions have plateaued as much as Game Pass (Picture: Sony)

GC: So that answers a few things about Game Pass but the thing that always surprises me is that it doesn’t seem to be doing that well in terms of consumers. The fact that Microsoft won’t reveal the numbers says it all, but the only time we find out how it’s doing is when we discover that Phil Spencer hasn’t been getting his company bonus for meeting growth targets.

MR: It’s very interesting.

GC: And I find that peculiar, because if I was just an ordinary consumer, I’d be all over it. it seems a great deal to me. And PS Plus similar, but to a lesser a degree.

MR: Yeah, it’s interesting the way that Game Pass has slowed.

GC: It doesn’t seem to have changed the industry in the way that I assumed it probably would. In the way that I imagine Phil Spencer thought it would.

MR: It’s funny because the way that Game Pass has slowed is actually what we’re seeing in TV and movies now, right? Because the same story has been happening with Netflix to a degree.

GC: But you can see where people got sick of Netflix and realised the quality wasn’t there. But I don’t feel that’s true about gaming subscriptions.

MR: I think that gamers love owning things. I’ve thought this for a long time. I think there’s something about gamers where they love seeing a game in their library. There’s a lot of players who… it’s a big thing to them that they’ve got a huge Steam library and stuff like that, and they want to own the things. And I think there’s a lot of people who, it’s just not interesting to them that they get all these games for free.

The other element to it as well, is that it’s very easy with a subscription service to just… when you buy a game, you as a player in your head, then you’re investing in it. You’re going, ‘Right, I’ve spent 60 quid on this. I got to get my 60 quid’s worth out of this.’ If you get a game for free, you don’t do that.

We saw it when Epic give away games every day, or whatever, it’s like… of all the people who claimed the game 20% or something ridiculous actually boot it and an even smaller percent actually play it. When you get a game for free you just are more likely to drop off it. And it starts to build this feeling for yourself, where you’re not playing the games.

GC: There’s no incentive. I think that’s just basic psychology, really, because the opposite extreme of that is when you’re a kid, and particularly in the 8 and 16-bit era, I dunno how old you are exactly…

MR: Yeah, I was around then.

GC: When game costs like 60 quid, for something that technically only lasted a couple of hours, you squeezed every penny out of that thing.

MR: You beat Sonic The Hedgehog like a hundred million times.

GC: Exactly.

When there’s a lack of options you tend to get your money’s worth (Picture: Sega)

MR: I think that’s why we’re still seeing huge successes. There’s games which are cutting through all of this horrible stuff that’s happening on now because they are events. Spider-Man 2 coming out was an event, because Spider-Man 1 was so big, they launched the PS5 with Miles Morales and then they’ve been marketing the s*** out of it. It’s Sony going: ‘This is why you bought a PS5.’

Because, actually, there’s not that many games coming out. There’s not that many big PS5 games. So it’s an event, it’s like a momentous moment, and then it gets reviewed well, so then it sells.

But if someone’s buying Spider-Man for $70, they’re not going to buy any of my games. They’re just not. They’re going to play Spider-Man for a few months at least. And anything I put out in those next few months, they don’t have the money and they’re playing Spider-Man. So they’re going to skip my game. Hence why instead of selling a hundred thousand copies next week, my game’s going to sell 15,000 and instead everyone’s going to wait until it’s 60% off on Steam in the Christmas sales next year or something.

And that’s fine, that’s fine. I have to think of a long-term plan. I have to think, this game is going to sell instead of going boom and then slowing down, it’s going to do a smaller boom and then I’ll make sure that it peters more slowly and we have to try and think long-term about it. But it would be nice if it wasn’t like that. It would be nice if the last four years of my life, painstakingly helping this dev I could be seeing more coming back from it, but that’s the reality of it now.

GC: It seems to me that’s not really anyone’s fault though, that’s not something we can pin on publishers.

MR: No, I can’t blame anybody.

GC: So what’s the answer to that? Game Pass?

MR: For us it is at the moment, yeah. And that might change. It might be that I go to Microsoft and I’m like, ‘Hey, I’ve got games that I’m fairly confident they’re going to be excited by.’ But they could say no. And at that point, then my situation is, ‘Right, I have to try and make this game break even as much as I can, so that then we can think of the future of it and we can work out with a dev what their future is.’ But, yeah, it’s not an easy time. And I don’t know if it’s going to get any better. I think next year’s going to be bad. I’ve talked to people who think this is going to go on for the next five years.

GC: But why? Because there’s going to be so many good quality AAAs coming out?

MR: Just because the pandemic changed the video game landscape in an irreparable way or in a long-term way. There is now different thinking. There’s now different ways that people are doing things. Simple things like…

You know I was describing smaller studios inflating their numbers. Loads of studios are doing that now, like ridiculous numbers. The problem is that when lots of people are doing that, they are now taking up space that originally was fair game. So, for example, on Steam it used to be that when we had a game on sale or we just launched a game or something, it was actually fairly easy for us to get into the top sellers charts.

Most of our games got into the top sellers charts and that was nice. Now, none of our games get into the top seller charts. And they don’t get in there because you can pay to get into them. If you throw loads of money at advertising and inflate your numbers to make sure your numbers are larger, the Steam charts don’t care that you paid loads of money to ensure that you got higher numbers so that you got into those charts. You just get into them.

So when you look in those charts now, someone like with City: Skylines 2 or something like that, the amount of money that they will have put into selling that game, I cannot even fathom. It’s probably more money than we make in three years or something like that. And so when you have a hundred of those games on that scale coming out every month, those charts are not available to everyone anymore. They’re only available to the people with inordinate amounts of money.

And so, because we just don’t appear in those charts anymore or anything, those charts were important to us, to people our size they’re important. Because you go into those charts and all of a sudden you can see the view numbers shoot up. You are getting loads more views, loads more sales.

I’m not saying, ‘I deserve to get in those charts. How dare you take them from me?’ It’s more that that is now functionality that I cannot rely on anymore. I can’t be like, ‘Oh, and when we launch, we’ll get in those charts and that will get us in a little spike and that’ll be great.’ I have to now assume we will not get there. So therefore, those spikes that we used to see, where our sales went up, we won’t get that second one anymore.

We’re now relying on that first spike and that will not reverse now. People are going to continue to throw money into it, like they are. They’re not going to reverse what they’re doing. If anything, it will get worse. And so studios my size, which is actually the majority of game studios, are all now going to get worse sales because there aren’t spaces available to us that there were.

GC: Unless you spend ridiculous amounts of money on marketing.

MR: Yes. So the only way that I could do this now is get bought out by somebody and they put s***loads of money in and then I become part of the problem and that’s it. If it becomes more and more tempting every day, because I’m slaving away trying to do well by our developers but I can’t promise ’em now. When I talk to ’em, I have to say: ‘Realistically, this is how much we’re going to make unless I put a mill into it and that won’t make you more money if I do that. It’ll just make us look better.’ It’s just a losing battle.

More: Trending

GC: Okay, so just to finish, can you give a pithy answer to the question of how the games industry is currently doing? What’s its current level of health?

MR: I… feel embarrassed to be in this industry.

GC: That’s pretty pithy.

MR: That’s the truth. I see all these stories coming out and I feel like this was completely avoidable. And we’ve all created this situation. I’ve always seen myself as being in the video game industry for a long time and all this kind of stuff, and I just don’t see that anymore.

I’m not saying I’m going to leave sometime soon or anything, but I dream of futures where I’m not working in video games anymore. So that’s for me, the health of the game industry. That I don’t see a future where I want to be part of this anymore, because it’s so gross. So that was maybe a more horrible answer than you were looking for.

GC: No, well. It clearly is a horrible situation for many people and companies.

MR: This game that we’ve got out next week… Obviously, I’m going to say, it’s great and all this kind of stuff but actually, on a personal level, I am so excited for it because this has been my life. Me and this guy, this Dan Beckerton who’s been making it. We have talked about it every week for years now. We’ve been so invested in it. We love it so much. And those moments are why I am here. Those moments are amazing for me.

GC: Well, I hope it goes well for all involved. Thanks very much for your time.

MR: Right, cheers for the chat. Bye.

There was a happier ending to our discussion than at first seemed likely. Not necessarily for the industry as a whole, but at least for Spirittea.

The game turned out to be one of No More Robots’ biggest launches ever, with $1 million worth of sales in just one week and 150,000 players across Switch, PC, and Game Pass. That means it was profitable from day one and made three times its development costs within a week.

However, that doesn’t necessarily mean Rose was being overly pessimistic, as Steam sales went just about as he expected. Instead, the game was saved by console sales, with Xbox and Switch (It’s not on PlayStation) accounting for 80% of revenues.

So we asked him, via email, to comment on the game’s success and whether it suggested a general pattern for future indie releases.

‘Spirittea has done roughly twice as well as I was expecting. I think it was more successful on console, because quite frankly, it looks like a console game – so I think when people were trying to decide whether to play on PC or console, they were more often choosing console. Bit of a boring answer, but that’s kinda it really,’ he said.

‘In terms of why did it do better than I expected – my expected was really worst case scenario, I tend to be a bit more subdued on how our games will do these days. But even though the game has done very well, it’s still done way worse than it would have done if this was a previous year. So really, I would have hope to do $2+ million in a better year.

‘Still, can’t complain, obviously! It’s done well enough that the dev is going to be a very happy man for years to come now. But it’s more the difference between, he’s very happy now but in a previous year he would have been completely set for life.’

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GameCentral speaks to publishing boss Mike Rose about the mass redundancies and other issues that have made 2023 a nightmare for game developers.