Take-Two Layoffs Highlight the Gaming Industry’s Biggest Problem
A downward spiral.
Take-Two, the parent company behind Grand Theft Auto developer Rockstar Games and NBA 2K maker 2K, has announced it’s cutting roughly 579 jobs and canceling “several” in development games. The company is one of the biggest publishers in the industry, and these cuts make up roughly five percent of its global workforce. This is the latest in a long line of layoffs and closures that have ravaged the video games for over a year, but Take-Two hits a little harder, partially because it's on the cusp of what could easily become the best-selling video game of all time — Grand Theft Auto 6. It feels like the encapsulation of the downward spiral that the blockbuster video game industry is on and a grim reminder that its current state simply isn’t sustainable.
The announcement of layoffs and cancellations was made through an SEC filing, and through the filing Take-Two says the plan is an effort at “rationalizing its pipeline.” The company, so far, hasn’t announced which employees or projects will be impacted by the cuts.
Take-Two wrote in a filing that it estimates its new plan will cost about $160 to $200 million, including $120 to $140 million in canceling upcoming games.
GTA 6’s trailer has been viewed over 186 million times to this date.
During an earnings call with investors last February, Take-Two CEO Strauss Zelnick said the company was working on a significant cost reduction program. These newly announced cuts are likely what he was referring to, however, at that time Zelnick said in a statement to IGN that there were “no current plans” for layoffs.
These cost-cutting measures are also likely tied to some key developments, namely Take-Two’s latest financials and the purchase of Borderlands developer Gearbox for $460 million. In February, Take-Two announced net bookings of $1.34 billion, which was down from $1.44 billion in the previous fiscal period. However, it’s important to note that still an increase from net bookings in Q1 2024 (January 1- March 31 2023) where total sales was $1.21 billion. At the same time, a report from Axios revealed that Take-Two executive’s pay nearly doubled in 2023, with Zelnick himself raking in over $40 million.
A dip in sales and a massive acquisition certainly put pressure on the company, but while Take-Two’s pay rises for executives, it also has some of the biggest games in history on the horizon.
The elephant in the room, of course, is Grand Theft Auto 6. It’ll likely be some time before we find out how much GTA 6 actually costs to make, but it could end up being one of the most expensive games ever. Red Dead Redemption 2 is already in the top five most expensive games with a budget of $540 million, and GTA 6’s scale and new technology likely put it above that. However, it’s also expected to smash any and all revenue records, like this article from the BBC points out. When the GTA 6 trailer debuted in December 2023, it set a new record for the most-viewed nonmusic video in a 24-hour period on YouTube.
It’s fair to say GTA 6 is going to not just be a massive sales moment, but perhaps even a seismic cultural moment when it releases. Alongside that, an August 2023 report from The Wall Street Journal points out that GTA Online alone made nearly $500 million in 2022, proving it's still a sales juggernaut.
Bonuses for executives like Zelnick have been tied to an increase in player’s spending on microtransactions.
GTA isn’t the only thing on the horizon, however, as BioShock creator Ken Levine is working on Judas with his studio Ghost Story Games, and 2K is reportedly gearing up for a new Mafia reveal. There are some big things on the horizon for the company, but it’s clear that employees are the ones bearing the brunt of the cuts, rather than the executives at the top.
It begs the question of how sustainable AAA game development is moving forward, let alone at this moment in time. When the games you make become so expensive that you can’t keep paying the people who make them, what’s the end goal? Is it just to endlessly pursue ever-growing profits?
There were over 10,000 layoffs across the industry in 2023, and 2024 is about to eclipse that number not even halfway through the year. It feels like the industry is facing bleak headwinds, with the job market being flooded by more talented developers and creators who face a constantly shrinking pool of jobs. If the company behind the most successful video game franchise of all time can’t avoid layoffs, who can?
