Larian publishing director slams game studios laying off employees: "None of these companies are at risk of going bankrupt"

[midian182]

A hot potato: There has been an unprecedented number of layoffs from within the video game industry recently, with CEOs often claiming the streamlining is necessary to survive in a competitive market. Larian director of publishing Michael Douse says the statements are bull, noting that "none of these companies are at risk of going bankrupt."

There have been around 9,000 layoffs across the video game industry in 2024 so far. From massive companies such as EA, which let go of 670 people, to smaller organizations like Deck Nine Games. It continues a trend that has been ongoing for about two years.

Speaking to Game File (via PC Gamer), Larian's Douse said the layoffs "are an avoidable f*ck-up."

"That's all they really are. That's why you see one after the other. Because companies are going: 'Well, finally. Now we can, too. We've wanted to do it for ages. Everyone else is. So why don't we?' That's really kind of sick," he added.

Gale approves

We often hear CEOs talk about job cuts being essential to help firms remain competitive or even to ensure their survival, but Douse noted that "none of these companies are at risk of going bankrupt."

"They're just at risk of pissing off the shareholders. And that's fine. That's how they work. The function of a public company is to create growth for its shareholders [...] It's not to make a happy climate for the employees."

Douse also talked about the prospect of Larian going public. It's something that's unlikely to happen even if it would add a lot of money to the company's coffers, given how the incredible success of Baldur's Gate 3 was partly due to Larian not having to answer to shareholders.

"Creating the games that we wanted to make, going public might give us more money, but it would be antithetical to the quality part of what we're trying to do," Douse said. "So it wouldn't make our games better. It would just make us rushed."

Douse said big publishers aren't nimble enough to react to new demands and changes in the market, stating that better planning and leadership could have prevented some of the worst job cuts. He also expressed his annoyance at something that has aggrieved many people: hosts of big game award shows failing to mention the huge number of job losses in the industry.

Douse isn't the only person from Larian to criticize the layoffs. CEO Swen Vincke recently blamed the firings on the greed of companies trying to continually double their quarterly profits. He also pointed a finger at the constant cycle of firing developers only to rehire them when studios realize they need more people to make their games.

For the avoidance of doubt - there are plenty of people in publishing I met who have their hearts in the right place. This message was for those who try to double their revenue year after year. You don't have to do that. Build more slowly and make your aim improving the state of… https://t.co/DTMmwst1qE

– Swen Vincke @where? (@LarAtLarian) March 21, 2024

It's not just Larian that's angry at the situation. Tarn Adams, creator of Dwarf Fortress, made his feelings clear at GDC last month when he said all the executives responsible for laying off workers, canceling games, and generally shrinking the industry could "eat shit." He added that they were horrible, bad people who are driven by greed.

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Larian publishing director slams game studios laying off employees: "None of these companies are at risk of going bankrupt"

 

[bviktor]

All these mass layoffs are nothing more but personnel rotation. It's clear as day.

 

[Dreadcthulhu]

During Covid, and the game boom while everyone was stuck at home, game companies hired a lot of extra employees. Now, 4 years later, it is plainly obvious that a lot of the people that were hired are not actually good at making games; games are taking longer and longer with larger budgets to make, and very little to show for it. For example, the most recent Spiderman game cost 3 times as much as the previous, and it is really hard to see where all that extra money went. While it is true that most of the larger companies could afford to keep these extra employees on their payroll, it is hard to blame them for wanting to shed employees who seem to be making the whole product development process worse. Larian, being a smaller company, has probably avoided the issue of hiring a bunch of people who just want a paycheck, and have no interest in actually getting games out.

 

[godrilla]

I've heard all these layoffs should lead to a independent developers boom.

 

[dangh]

We can clearly say looking at the amount and quality of new AAA games that there is surely a reduction in both effort and focus by gaming studios. Everyone is trying to get an imaginary cake of a services to appeal to investors as a 'innovative and full of buzz words company', forgetting what is the bread and butter of a gaming company. same comes from Nintendo and Sony, which is even more surprising. Those smaller studios actually take over the gamers minds just by focusing on what's important. But they will be preyed upon by large corpos like MS or EA just to squeeze whatever can be squeezed and the thrown away. Lets hope the integrity of those smaller studios will be same as Swen's so we all can benefit from that and have good games to play instead of slowly approaching corpo-woke stuff. I couldnt believe some *****s were bashing Stellar Blade because the mc is a good looking girl...

 

[RandomWAN]

"Larian director of publishing Michael Douse says the statements are bull, noting that "none of these companies are at risk of going bankrupt.""

Publicly traded companies have a legal gun to their head in terms of making profit. They cannot simply keep operating costs up because they aren't in fear of going bankrupt.

"Douse also talked about the prospect of Larian going public. It's something that's unlikely to happen even if it would add a lot of money to the company's coffers, given how the incredible success of Baldur's Gate 3 was partly due to Larian not having to answer to shareholders."

If you do, you'll get to see the same layoffs as soon as you start leaving profitability based on sales alone.

"CEO Swen Vincke recently blamed the firings on the greed of companies trying to continually double their quarterly profits. He also pointed a finger at the constant cycle of firing developers only to rehire them when studios realize they need more people to make their games."

Again, they have a legal requirement to make profit as a publicly traded company. In regards to the developers, if you keep going back after they let you go, that's on you. As a developer, focus on growing your skillset so you can take on more important roles. If you're going to be working for a publicly traded company, staying higher up the ladder reduces the chances you get laid off.

"It's not just Larian that's angry at the situation. Tarn Adams, creator of Dwarf Fortress, made his feelings clear at GDC last month when he said all the executives responsible for laying off workers, canceling games, and generally shrinking the industry could "eat ****." He added that they were horrible, bad people who are driven by greed."

Another person trying to conflate a private company with a publicly traded company in terms of what they can eat in terms of monetary loss.

These people are either stupid or willfully obtuse.

 

[rhavenn]

"Larian director of publishing Michael Douse says the statements are bull, noting that "none of these companies are at risk of going bankrupt.""

Publicly traded companies have a legal gun to their head in terms of making profit. They cannot simply keep operating costs up because they aren't in fear of going bankrupt.

"Douse also talked about the prospect of Larian going public. It's something that's unlikely to happen even if it would add a lot of money to the company's coffers, given how the incredible success of Baldur's Gate 3 was partly due to Larian not having to answer to shareholders."

If you do, you'll get to see the same layoffs as soon as you start leaving profitability based on sales alone.

"CEO Swen Vincke recently blamed the firings on the greed of companies trying to continually double their quarterly profits. He also pointed a finger at the constant cycle of firing developers only to rehire them when studios realize they need more people to make their games."

Again, they have a legal requirement to make profit as a publicly traded company. In regards to the developers, if you keep going back after they let you go, that's on you. As a developer, focus on growing your skillset so you can take on more important roles. If you're going to be working for a publicly traded company, staying higher up the ladder reduces the chances you get laid off.

"It's not just Larian that's angry at the situation. Tarn Adams, creator of Dwarf Fortress, made his feelings clear at GDC last month when he said all the executives responsible for laying off workers, canceling games, and generally shrinking the industry could "eat ****." He added that they were horrible, bad people who are driven by greed."

Another person trying to conflate a private company with a publicly traded company in terms of what they can eat in terms of monetary loss.

These people are either stupid or willfully obtuse.

They don't have a legal mandate, in the sense of the "law", to put profits over everything. This is just false. CEOs / board members may find themselves looking elsewhere if they don't and some corporate charters might spell things out more clearly as to which way a company should lean, but to pretend that publically traded companies are required, by law, to put profits over everything else is just stupid. They just like to because they themselves get richer off of it and who really cares about the little guy when "I" can make an extra $1mil in stock incentives and make all my golf buddies richer at the same time by slashing my payroll by a couple "people"?

That's not to say that some of these layoffs weren't trimming the fat, but I'd argue that most of these big budget games spend more on marketing and fluff than the actual tech stack or developers. If they actually focused on making good games vs. recycling an engine and turning everything into micro-transaction hell the "gamers" might like them more. The problem is marketing and micro-transaction make them a **** ton of money, so why bother making a good game? It just has to be good enough.

older article, but says it better than I can re: shareholder maximization of profit and whether it's required by law:

https://www.washingtonpost.com/news/wonk/wp/2013/09/09/how-the-cult-of-shareholder-value-wrecked-american-business/?wprss=rss_ezra-klein&clsrd=&utm_source=dlvr.it&utm_medium=twitter

 

[RandomWAN]

They don't have a legal mandate, in the sense of the "law", to put profits over everything. This is just false. CEOs / board members may find themselves looking elsewhere if they don't and some corporate charters might spell things out more clearly as to which way a company should lean, but to pretend that publically traded companies are required, by law, to put profits over everything else is just stupid. They just like to because they themselves get richer off of it and who really cares about the little guy when "I" can make an extra $1mil in stock incentives and make all my golf buddies richer at the same time by slashing my payroll by a couple "people"?

That's not to say that some of these layoffs weren't trimming the fat, but I'd argue that most of these big budget games spend more on marketing and fluff than the actual tech stack or developers. If they actually focused on making good games vs. recycling an engine and turning everything into micro-transaction hell the "gamers" might like them more. The problem is marketing and micro-transaction make them a **** ton of money, so why bother making a good game? It just has to be good enough.

Legal precedent would disagree: https://www.litigationandtrial.com/...ons-are-legally-required-to-maximize-profits/

While they're not required by concrete law to do so, all law is not decided on what is passed as legislature. So not maximizing profits can cause a dip or stagnation in the stock price and invite potential legal action from larger share holders. The specifics can boil down to the articles of incorporation for the specific coporation, but most of them incorporate with some sort of profit motive language.

In regards to executives, I agree many of them are wildly overcompensated, but divide $1M by just 100 employees and tell me how much of a dent that puts in the costs of their annual salaries. The shareholders aren't concerned with how much the executives are getting paid, at least not the ones with significant voting power in the corporation. As long as it stays profitable, they're happy to stay hands off as they just want the passive increase in their net worth.

Large corporation always lean more into flash than substance. That's what you get once an organization gets overly large. There becomes a glut of middle management/HR type people who do nothing and provide nothing of substance, so they hire people of similar mindsets (if not directly, they make suggestions) and the root of the company becomes populated with more business minded types instead of people who believe in what the company produces. It's this way in all forms of entertainment at this point. They've all become big business and are run by people who only care about profits and/or pushing their political beliefs (Hollywood having fallen hard into the latter category).

 

[toooooot]

If they were hired for DEI purposes, let them all go. Not only they receive money for nothing, they help make our games worse, sucking joy and fun out of them. They are like those mythical things that suck life out of living things when they are near them.

 

[RudyBob]

If companies don't constantly monitor and adjust their financial output that's how they go bust. It is more about securing for the employees they keep and themselves. I am so tired of whining..

 

[preich]

"Larian director of publishing Michael Douse says the statements are bull, noting that "none of these companies are at risk of going bankrupt.""

Publicly traded companies have a legal gun to their head in terms of making profit. They cannot simply keep operating costs up because they aren't in fear of going bankrupt.

"Douse also talked about the prospect of Larian going public. It's something that's unlikely to happen even if it would add a lot of money to the company's coffers, given how the incredible success of Baldur's Gate 3 was partly due to Larian not having to answer to shareholders."

If you do, you'll get to see the same layoffs as soon as you start leaving profitability based on sales alone.

"CEO Swen Vincke recently blamed the firings on the greed of companies trying to continually double their quarterly profits. He also pointed a finger at the constant cycle of firing developers only to rehire them when studios realize they need more people to make their games."

Again, they have a legal requirement to make profit as a publicly traded company. In regards to the developers, if you keep going back after they let you go, that's on you. As a developer, focus on growing your skillset so you can take on more important roles. If you're going to be working for a publicly traded company, staying higher up the ladder reduces the chances you get laid off.

"It's not just Larian that's angry at the situation. Tarn Adams, creator of Dwarf Fortress, made his feelings clear at GDC last month when he said all the executives responsible for laying off workers, canceling games, and generally shrinking the industry could "eat ****." He added that they were horrible, bad people who are driven by greed."

Another person trying to conflate a private company with a publicly traded company in terms of what they can eat in terms of monetary loss.

These people are either stupid or willfully obtuse.

Public companies' boards do not have a legal obligation to generate profit. They have a fiduciary duty to look after shareholder interests. There have been many situations where loss-causing restructuring or changes of strategy were supported by shareholders due to the potential to create greater value long term.

It's the job of the appointed CEO and board of directors to devise a company strategy. They report to the chairman who reports to shareholders. Meaningful strategy decisions are put to shareholder votes and if approved are carried out regardless of whether they are intended to generate profits or not.

These layoffs are elective. None of the companies laying off workers have to do so.

 

[NumberNine]

Behold the disruptive power of actual skilled labor.

 

[WhiteLeaff]

All these mass layoffs are nothing more but personnel rotation. It's clear as day.

The guys in suits need to raise the stock price in order to increase their own salaries. The QA team is the first target, consumers have already proven themselves willing to pay up front for terribly optimized games.

"One of the studios responsible for Call of Duty’s success is laying off QA testers that are reportedly earning $17 an hour for their work on the franchise Activision Blizzard said brought in $3 billion dollars in 2020."

"In 2019, the company laid off around 8 percent of its employees after CEO Bobby Kotick announced that its 2018 financial results were the best in the company’s history. In June, Kotick reportedly received $155 million dollars after a shareholder vote — a few months before that, the company laid off around 50 employees that managed events, giving them three month’s severance and $200 Battle.net gift cards.

Gamesindustry.biz reports that Call of Duty: Vanguard" https://www.theverge.com/2021/12/3/...actor-layoff-activision-blizzard-call-of-duty

 

[rhavenn]

Legal precedent would disagree: https://www.litigationandtrial.com/...ons-are-legally-required-to-maximize-profits/

While they're not required by concrete law to do so, all law is not decided on what is passed as legislature. So not maximizing profits can cause a dip or stagnation in the stock price and invite potential legal action from larger share holders. The specifics can boil down to the articles of incorporation for the specific coporation, but most of them incorporate with some sort of profit motive language.

In regards to executives, I agree many of them are wildly overcompensated, but divide $1M by just 100 employees and tell me how much of a dent that puts in the costs of their annual salaries. The shareholders aren't concerned with how much the executives are getting paid, at least not the ones with significant voting power in the corporation. As long as it stays profitable, they're happy to stay hands off as they just want the passive increase in their net worth.

Large corporation always lean more into flash than substance. That's what you get once an organization gets overly large. There becomes a glut of middle management/HR type people who do nothing and provide nothing of substance, so they hire people of similar mindsets (if not directly, they make suggestions) and the root of the company becomes populated with more business minded types instead of people who believe in what the company produces. It's this way in all forms of entertainment at this point. They've all become big business and are run by people who only care about profits and/or pushing their political beliefs (Hollywood having fallen hard into the latter category).

So, I agree with you..but in this case I think splitting hairs is needed. Not maximizing profit does invite potential lawsuits from a larger investor and you may lose, but this still isn't a "law" like what most people think a "law" is. I also don't think that's a slam dunk in "case law" either, but I will admit I'm not a lawyer.

There was the case recently where some crypto investors sued because they didn't make a certain percentage of profit. I'd argue that shareholders aren't "owed" and certainly not guaranteed a profit. However, as you state, most upper management types are a-ok with that pump and dump mindset.

 

[Thanthan]

During Covid, and the game boom while everyone was stuck at home, game companies hired a lot of extra employees. Now, 4 years later, it is plainly obvious that a lot of the people that were hired are not actually good at making games; games are taking longer and longer with larger budgets to make, and very little to show for it. For example, the most recent Spiderman game cost 3 times as much as the previous, and it is really hard to see where all that extra money went. While it is true that most of the larger companies could afford to keep these extra employees on their payroll, it is hard to blame them for wanting to shed employees who seem to be making the whole product development process worse. Larian, being a smaller company, has probably avoided the issue of hiring a bunch of people who just want a paycheck, and have no interest in actually getting games out.

This is so not the problem. There are an abundance of people whose sole desire is to create games. The issue is that the companies are not actually designed to create games. That’s not what they do in their hearts of hearts any more. They create ‘shareholder value’, whatever that is. And in moving their focus away from creating awesome games, they create shitty work environments, that produce unproductive employees.

 

[kiwigraeme]

What you see it highly cylindrical businesses, is they are all restructuring to be immune to these cycles

I see Builders who are mimicking painting companies . ie a smaller core staff , then subcontractors or temp hires for specific times.

Look at movies, nearly whole crew disbanded once shooting, production is done.

But I like Larians take, support talently people in a long term partnership. with stability to pay mortgages etc

 

[Endymio]

They don't have a legal mandate, in the sense of the "law", to put profits over everything. This is just false .. to pretend that publically traded companies are required, by law, to put profits over everything else is just stupid.

Um, yes they do. It's called "fiduciary duty". A company board that intentionally acts in a manner to reduce profits -- or fail to maximize them -- is breaking that duty, and subject to shareholder lawsuit.

Public companies' boards do not have a legal obligation to generate profit. .... There have been many situations where loss-causing restructuring or changes of strategy were supported by shareholders due to the potential to create greater value long term.

Yes, and in each of those cases, their justification was that the short-term losses were more than outweighed by the long-term gain. The profit motive didn't change: only the timeline by which it was measured.

All of you arguing the contrary are missing the point. Rational companies do not lay off employees who make them money. And if a worker is losing a firm money, it's not only hurting that company's bottom line, but the entire economy as a whole. A few employees here and there may not be noticeable, but if you wish to see the results of this policy being widespread, I suggest you check out the USSR, circa 1985 -- millions of workers making shoddy products that no one wants, while store shelves remain barren of essential goods.

 

[James Ryan]

I've heard all these layoffs should lead to a independent developers boom.

That would actually be great.
Free from corpo control and the lack of any creativity.

 

[Kam7r]

Or maybe stop trying to shove the woke political agenda down our throats and insulting the vast majority of your customers and just make good games we will buy ? (ie: what's going on on twitter )

 

[Puiu]

While I agree that greed is out of control, we also have to acknowledge that many of these big name studios have extremely bloated teams which in turn raises the cost of games to astronomical numbers.

 

[Theinsanegamer]

Um, yes they do. It's called "fiduciary duty". A company board that intentionally acts in a manner to reduce profits -- or fail to maximize them -- is breaking that duty, and subject to shareholder lawsuit.

Yes, and in each of those cases, their justification was that the short-term losses were more than outweighed by the long-term gain. The profit motive didn't change: only the timeline by which it was measured.

All of you arguing the contrary are missing the point. Rational companies do not lay off employees who make them money. And if a worker is losing a firm money, it's not only hurting that company's bottom line, but the entire economy as a whole. A few employees here and there may not be noticeable, but if you wish to see the results of this policy being widespread, I suggest you check out the USSR, circa 1985 -- millions of workers making shoddy products that no one wants, while store shelves remain barren of essential goods.

Please explain why the board at Disney has not been sued into oblivion. If what you said was true, then none of these companies would adopt DEI infused investors, because it demonstrably destroys value and reduces sales. Yet that happens all the time.

Of course, people will read "a fiduciary duty to look after shareholder interests." and immediately think this means "max profit" because the average person coming out of the education system is illiterate past a 3rd grade level.

This is so not the problem. There are an abundance of people whose sole desire is to create games. The issue is that the companies are not actually designed to create games. That’s not what they do in their hearts of hearts any more. They create ‘shareholder value’, whatever that is. And in moving their focus away from creating awesome games, they create shitty work environments, that produce unproductive employees.

Most of these people who want to "create games" are demonstrably HORRIBLE at it. People can blame publishers all they want, but EA doesnt have a mandate that all gameplay, writing, and set pieces have to suck massive dong. That is due to low quality developers who have no idea what they are doing. It is no coincidence that after the hiring frenzy in 2020 the output from the industry has taken a nosedive from an already low bar to deep underground.

 

[gdavid65]

**** the sharemarket.. no sharing going on

 

[Endymio]

Please explain why the board at Disney has not been sued into oblivion. If what you said was true, then none of these companies would adopt DEI infused investors, because it demonstrably destroys value and reduces sales. Yet that happens all the time.

It's a fair question, and one I'm glad you asked. Originally, DEI considerations were lumped as inducing profit under the nebulous "goodwill" category. However, public perceptions of DEI have shifted in recent years. Over 20 states have already outlawed DEI initiatives, and in July of last year, the Attorneys General of 13 different states put the entire Fortune 100 on notice for their DEI programs. There are currently a number of shareholder suits underway against corporate boards for pursuing (and conversely for failing to sufficiently pursue) DEI programs. Hopefully, SCOTUS will soon provide more clarity on the issue.

 

[kiwigraeme]

Lots of interesting posts here.
One of the problems is CEO , Fund managers etc get bonuses on short term gains.
So they do the best for themselves and not the long-term heath.

Nothing new - do local politicians promise mo rate/tax increases and your water infrasturre sucks big time.

Is galling with bank managers , CEO caring solely about their bonuses with no claw back at risk on long term health and at expense costumer's and employees ,and the environment.

Some that listed Publicly , go private again as annoyed what happens.
Some know it will be F.U so sell for good money and buy back dirt cheap

Happens to us - you sell house with lots of land to new family , help us out , they turn around and sell for huge profit to developers who you could of sold to from day one.

c'est la vie

 

[RandomWAN]

Please explain why the board at Disney has not been sued into oblivion. If what you said was true, then none of these companies would adopt DEI infused investors, because it demonstrably destroys value and reduces sales. Yet that happens all the time.

Because Disney's biggest shareholders are corporations who have historically been fully onboard with the ESG/DIE train and would willing accept losses to push "the message." That's why so many of the entertainment sphere companies have embraced that nonesense, because Blackrock and Vanguard were giving out low interest loans to anyone with ESG/DIE intitiatives. Even they are starting to back off of it as the losses are becoming too great. That's part of why you see these development companies lamenting that none of the investment money is there anymore.