It’s pretty obvious to anyone that’s been paying attention that the games industry is in a pretty rough place at the moment. No matter where you look, there are mass layoffs: Sony, Microsoft, EA, Ubisoft, Take-Two, Epic Games… the list goes on. The reasons are myriad, but generally companies place the reason for ‘restructuring’ at the door of the contraction of the market as a result of the pandemic boom in gaming, rising development costs, longer production cycles (and higher wages), shifts in consumers spending patterns, and the hardware shortages fuelled by the rising demand for AI data centers around the world.
In a new interview with Edge Magazine, via GI.biz, Epic Games CEO Tim Sweeney has weighed in on the current state of the industry, suggesting that we’re seeing the biggest crash since the infamous 1983 collapse sparked by the ‘Atari shock’. He speaks about the component shortage, specifically, and how it threatens to completely upend the industry if businesses do not act to get in front of the problem, soon.
“It’s an unexpected, severe disruption,” Sweeney explains. “There’s an unprecedented wave of investment in building AI systems and data centres, based on the belief that they’re going to have a really transformational role in the economy, and the scale of the economic opportunity there means they can outbid the entire entertainment industry for all the components.
“So we’re getting the short end of the stick, and the prices of RAM and storage are quadrupling, and not necessarily stopping there. We should expect there’s just going to be a continual supply crisis for all gaming-relevant hardware for the next three years. The only solution, I think, is going to be building massive new factories to meet the world’s capacity demands – and that will happen.” It’s an interesting take for sure – does this mean Sweeney himself is keen to invest some of Epic’s huge yearly profit into the manufacturing industry, in order to support gaming as a whole? It remains to be seen.
Sweeney has been in the news elsewhere fairly recently for suggesting Fortnite‘s rival gaming platform, Roblox, is a force that will “grow and eat gaming”. These comments came just weeks before Fortnite revealed a massive new collaboration with various gaming mascots, from Crash Bandicoot to Lara Croft, Street Fighter to Kingdom Hearts.
Epic itself laid off 1,000 developers in March. Prior to the layoffs, Epic had expanded to support the explosive growth of Fortnite, but a drop in Fortnite player engagement led to reorganisation and the elimination of roles. At the time, Sweeney also called out issues affecting the rest of the industry as well as Epic itself, such as declining console hardware sales.
