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Gaming Industry Layoffs Continue: Supermassive Games’ Cuts Highlight a Broader Turmoil

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In the constantly changing world of video game creation, maintaining stability is becoming more challenging. On July 22, 2025, Supermassive Games, a studio based in the UK that’s known for creating atmospheric horror games like “Until Dawn” and “The Quarry,” made an announcement about another round of job cuts. This could potentially affect as many as 36 employees.

A statement from Supermassive Games.

— Supermassive Games (@SuperMGames) July 22, 2025

This action takes place following a postponement for their upcoming sci-fi horror game, “Directive 8020”, originally scheduled for Halloween 2025 and part of the “Dark Pictures Anthology” series. The new release date is now set for the first half of 2026. The studio explained that they are adjusting their team setup to match the dynamic and continuously changing landscape in the industry.

In 2023, it’s not the first time Supermassive has faced reductions; they let go of approximately 90 team members last year, decreasing their workforce by nearly one-third from what was previously estimated to be around 350 employees.

As Supermassive Games moves forward with the scheduled release of “Little Nightmares III” in 2025, recent staff reductions and project delays have sparked concerns about the studio’s upcoming projects and the potential impact on its workforce.

Responses to X have been quick and compassionate, with individuals voicing sadness about the persistent downturn in the gaming industry and showing worry for the developers who are impacted.

Supermassive Games LAYOFFS: Video Game Industry CRASHING!
WATCH:

— Smash JT (@SmashJT) July 24, 2025

Previous discussions pointed out the paradoxical nature of using AI for quality control while it contributes to job reductions, emphasizing concerns that technological progress may be intensifying this pattern.

Previous posts showcased an ironic situation where AI is employed for quality checks yet leads to job losses, raising worries that rapid technology development could be worsening the trend.

A Wave of Layoffs Sweeping the Industry

The struggles faced by Supermassive are a reflection of a broader problem facing the video game industry. Over the past few years, it’s been reported that approximately 35,000 jobs have vanished from the sector, with around 3,563 to 4,000 layoffs occurring in 2025 alone, as of mid-July.

While the rate of cuts might be diminishing relative to the astonishing 14,600 cuts seen in 2024, the repercussions continue unabated, impacting both prominent companies and independent studios. In fact, this month alone, Microsoft announced potential layoffs of up to 9,000 employees across its Xbox divisions, resulting in studio closures like The Initiative and the shelving of projects such as Perfect Dark. Similarly, Electronic Arts (EA) made redundancies totaling over 300 people in April, affecting teams within Respawn Entertainment.

In 2025, some significant downsizings were also seen with Unity reducing its workforce by 1,800, PlayStation Studios trimming by 900, and companies such as People Can Fly and Jagex experiencing similar reductions.

The collection of data on layoffs from 2022 to 2025 on Wikipedia portrays a bleak scenario, explaining the increase as a result of over-extension following lockdowns, escalating production expenses, and economic strains such as inflation and high-interest rates. The annual report for the Game Developers Conference (GDC) 2025 on the state of the industry showed that around 11% of developers lost their jobs within the last year, with positions involving storytelling experiencing the most cuts.

Approximately four out of ten developers have experienced the effects of layoffs, either directly or due to cuts within their teams.

Underlying Causes and Industry Reactions

Complex factors contribute to the situation at hand. Rapidly increasing production costs for AAA games, frequently surpassing the range of 200-330 million dollars, combined with disappointing revenue from live services and a decrease in consumer spending have left companies with no choice but to scale back their operations.

The fusion of Artificial Intelligence (AI) and Machine Learning has ignited a heated discussion. On one hand, some developers express a favorable outlook towards generative AI in certain studies. However, the specter of job displacement casts a long shadow. A report by Kidscreen reveals that approximately 30% of developers believe AI tools are causing more harm than good, which might amplify layoffs.

LinkedIn analyst Amir Satvat proposed a hint of optimism, indicating that hiring rates might eventually match layoffs by 2025, possibly suggesting a leveling off following 34,000 job cuts over a period of 2.5 years. Nevertheless, with tech-related layoffs amounting to 80,000 in 2025 thus far, the future recovery of the gaming sector remains unclear.

Implications for the Future of Gaming

It’s not just about reducing numbers; these layoffs eat away at skill reserves, hinder creativity, and exacerbate stress in an already tense profession. For Supermassive, the reductions might affect the caliber of future horror productions, a genre that values narrative richness and immersive design. The consequences could extend to a possible trend towards independent developers, who seem to be thriving amidst the turmoil, paving ways for new talent to flourish.

At Supermassive Games, there’s another round of job cuts. Meanwhile, independent developers continue paving the way for future game creators.

Supermassive Games is undergoing more layoffs. Yet, it’s indie developers who are charting the course for aspiring game developers.

Out with the old and in with the new.

— Spatial Spandex (@SpatialSpandex) July 22, 2025

Across X, there are growing demands for union representation and stricter rules, as people advocate for a fundamental shift in the system to safeguard workers’ welfare.

It’s regrettable to learn that Supermassive Games has had to let go of 36 employees due to job cuts, which has led to a delay in the release of Directive 8020 until 2026. The rise of AI seems to be impacting employment negatively for many people nowadays. ⁦@kingdavidotw⁩

— ChildofGodGaming (@COG_34215) July 22, 2025

In simpler terms, as a recent post pointed out, “It’s unfair that so many people are losing their jobs due to the increase in AI, and it’s crucial for the industry to address these issues to ensure long-term growth.

To summarize, Supermassive’s layoffs symbolize an industry experiencing turbulence, where financial necessities collide with artistic aspirations. As we move forward into 2025, there’s a wish for reduced downsizing and more assistance for the developers who breathe life into our cherished virtual realms.

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2025-07-24 21:04

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