Money saving developer layoffs may cost more in the long run

Many major videogame companies go through a common development process: 

Developers staff up to make a huge game, then shed members once it ships because they no longer have anything for them to do. It happens again and again, whether the game is successful or not: Take-Two had a huge hit with Red Dead Redemption in 2010, then immediately canned 40 workers from its Rockstar San Diego studio, calling the layoffs “typical.”

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On the surface it seems to make mathematical sense and an unfortunate reality of game development, but it may not, in fact, be the best approach.

Game creator Tim Schafer says that’s not how a creative team should be run.

“One of the most frustrating things about the games industry is that teams of people come together to make a game, and maybe they struggle and make mistakes along the way, but by the end of the game they’ve learned a lot — and this is usually when they are disbanded,” says Schafer, president of San Francisco developer Double Fine Productions.

“Instead of being allowed to apply all those lessons to a better, more efficiently produced second game, they are scattered to the winds and all that wisdom is lost,” he said in an e-mail to Wired.

Without a game release in the near future, developers see the red in their ledgers and they shed workers. But can close a staff of long-time employees outweigh the cost of keeping a few extra bodies during a company’s off-season? Epic Games (Gears of War) is an example of a studio that has performed exceedingly well by mainting a consistent team. In Tom Bissell’s Extra Lives he talks about how Epic has a “band dynamic”, and that “staff turnover is low, and many of Epic’s most senior employees have been friends for more than a decade.” A Penny Arcade editorial elaborates on this style of management:

[Epic] is also incredibly savvy when it comes to dealing with talent, and [Kevin] Dent was able to provide several examples of Epic’s smart moves in this area. “Bulletstorm as an example did alright, nothing amazing. Did Epic shutter the studio People Can Fly? Hell no, they just put them to work on Gears of War: Judgment,” Dent said. “This was completely logical for a number of reasons, the biggest one being that Bulletstorm was not a failure, it was certainly not a home run, let’s call it a double, but the studio delivered a solid game.”

Dent also pointed to the mass hiring of the talent from 38 Studios and Big Huge Games to create Epic Baltimore. “Big Huge was a world class studio, their Kingdom of Amalur title has sold around 1.5M units to date and the studio itself is considered stellar,” he explained. “Epic did not have an RPG studio in the Console/PC space, I consider Chair to be a mobile RPG studio, and they basically picked the guys up for free. I like their GM Sean Dunn a lot and I know that his team are now very, very happy.” A team that has already created a solid game that sold well has been kept intact, Epic now has talent in the RPG space, and a mass lay-off was turned into a long term work opportunity for the developers. This is the rare move that’s a home run from every perspective.

Epic Games and Double Fine may be anomalies, but if more companies focus increasingly on a cohesive creative team and less on their short-term bottom line, they may end up making more money in the long run.