The takeaway: Game studio layoffs and closures have increased sharply in recent years, largely due to the aftereffects of pandemic-era overinvestment. As Microsoft continues its layoffs and closures and Arkane Lyon fights for its survival, a new analysis suggests that most studios are doing worse after the acquisition. However, the game studios that have been successful under certain publishers show a consistent pattern.
Games industry veteran Sebastian Cardoso recently examined the fate of more than 300 studios purchased by major companies over the last quarter century and found that about 61% sold fewer games, had worse ratings, or faced closure following the acquisition.
Arkane Lyon risks becoming the latest example if it doesn’t find a buyer by mid-December, but Ubisoft and at least two other companies have made offers for the Dishonored and Deathloop developer.
Cardoso’s detailed breakdown shows changes in performance and staffing for hundreds of developers since 2000, as well as lifespan after the acquisition. Although closures and layoffs have surged since 2023, the identity of the acquiring company is by far the biggest indicator of a studio’s well-being.
The consequences are final, as the statistics show: a third of the acquired studios were closed, half of these closures occurred within five years of the deal. Closings were also a rarity until recently: Only one acquired studio in Cardoso’s data set closed between 2019 and 2022, compared to 33 from 2023 through October.
Studios that managed to buy back from their owners fared far better, with none of the 18 such cases ending in decline or closure, although Cardoso warns that these studios were probably healthy enough to finance an acquisition in the first place.
Activision Blizzard is the worst offender, as every single studio it acquired has either closed or been gutted. Developers under Disney and Midway have a 0% survival rate, while Square Enix and EA, which recently closed BioWare, aren’t doing much better.
Cardoso noted that these publishers tend to buy studios to bolster existing intellectual property, and that debt-financed buying sprees like Embracer’s also end badly.
At the other end of the spectrum, Nintendo, Sumo Group, Krafton and Kadokawa have each acquired only a handful of studios since 2000 and have not closed any of them.
These publishers tend to only buy developers after working with them, leaving the responsibility to the original studio heads. Kadokawa in particular has hit the jackpot with FromSoftware, which has now published Bloodborne, Sekiro and Elden Ring.
Microsoft, Ubisoft, Take-Two, Epic Games, Sony and Sega are now in the middle. However, Microsoft recently initiated one of its worst rounds of layoffs, affecting 3,200 employees and resulting in the sale or closure of several studios. Luckily, Double Fine and Compulsion were able to escape without closing their doors, but Ninja Theory wasn’t so lucky.
It remains unclear which camp Arkane Lyon will fall into. Sources recently told Bloomberg that Microsoft may sell it back to management and that closure is still on the table if a deal doesn’t happen.
The French game development union STJV, which represents Arkane, recently accused Microsoft of sabotaging Blade to justify its closure. The union claims development on Marvel’s Blade is going well, but a forced 19-month hiring freeze has extended it. STJV claimed Arkane was profitable but not profitable enough for Microsoft.
