The Challenges Of Game Dev In 2024

Read Time: 7 Minutes

Welcome back to the Building Better Games Newsletter!

Today, I’m continuing to breakdown the past few years of our industry. 

To get you caught up, in 2020 there was a pandemic. It was bad for the world, but actually had quite a positive impact on game dev - temporarily. 

As the pandemic faded in day-to-day impact, things started looking pretty bleak. \

Startups, Mobile, and AAA

Many Game startups had launched after the pandemic hit between 2020 and 2022. As we got towards the end of 2023 and into 2024, those startups went back to investors looking for their next round and discovered that there wasn’t much available, and the standards for receiving funding had become much more stringent. 

Many ended up with less runway than they’d anticipated, as investors and optimism had pushed them to too high a headcount and too far down their production phases. Investors wanted higher valuations, which often meant bigger teams or focusing on the work that wasn’t the most critical for solving the problem the game was having. To be a bit reductionist, there was a lot of great art without much behind it. They (startups and investors) went out of sync with the reality of their game/investment, but once you’d made the mistake, attempting to acknowledge that and fix the burn rate issue probably meant you’d never get funding again.

Insolvent startups began shutting down. The relative number of devs laid off in those startups vs established games companies was small, but it was a blow to the model we’d used to create innovation in our industry, and it contributed to the number of people looking for work in games.

It wasn’t all bad. Some few startups, plus the rise of solo devs and small teams working on games on the side, were finding success. While absent the big brand recognition, less renowned devs created games like Valheim, Manor Lords, Lethal Company, Palworld, Battlebit Remastered, Helldivers 2, and many more. There were plenty of compelling experiences players had easy access to and that made back far more than they cost.

On the plus side, mobile was reworking itself and had somewhat recovered from the wound of IDFA changes. It was finding its feet again, though the machine had needed to be reinvented. A lot of simple games came out that were nonetheless compelling, often word games and the like, and mobile players were happy to have something else to do on their phones. Mobile gaming was dead, long live mobile gaming.

On the PC/console side of things, “AAA” (as a way to describe the best games humans make) took a huge reputation hit. Failures popped up and garnered more attention than ever before, all while the small studios and teams mentioned above released successes that returned many times their development cost.

In a continuation of the quality and release problems that had struck a chunk of games during the pandemic, it felt like new launches just couldn’t find footing. The world had changed, or quality wasn’t there, or the idea had never been validated and ended up being a dud.

And due to an ever-growing cost of game development at the AA and AAA levels (while it REDUCED at the indie, solo dev levels), these failures were not easily written off. 

A game touted as “AAA” no longer cost $30m as it had 10-15 years ago. That was a startup now. “AAA” games cost 9 figures. Hundreds of millions in development budgets were normal, while marketing would be stacked on top of that to try to ensure success.

But success was no longer easy to ensure. The cost and risk of dev had wildly outstripped the relative size and success rate of the market. 

Large Game Companies

Large studios could no longer afford to have failures in their portfolio, but games are an inherently uncertain space. In the old world, if you hit one strong product, even if a couple more didn’t quite recover their budget you’d be ok. But now, big publishers and game companies were struggling with even a big hit not giving them the cushion they needed. Critically successful games that had limited commercial success now caused studios to shut down instead of proving that they could make a good product.

Loaded into all of this, and related to the dev costs, was the reality that games didn’t just cost more because teams were bigger, they also took far longer to make. You were running much larger teams for much longer periods of time. 

The longer development time had some knock on effects. A simple one: the world changed a lot more than it used to from starting to finishing the game. If it took two years to make something, you might be able to guess about where players and the industry would be. But if it took eight years to make something, your future projections were far more likely to be wrong. Other impacts were higher likelihood of burnout on teams, losing key people during development, and falling prey to the sunk cost fallacy after years of efforts still weren’t creating anything good.

Baldur’s Gate 3 finally launched in 2023 after almost 3 years in early access, perhaps one of the most successful early access stories in existence. It was a counterpoint to the problems other large studios were having. BG3 was a resounding success from a studio (Larian) that had made some solid games but that few would have called “AAA” before BG3 came out. 

Players AND devs all viewed BG3 as an insane accomplishment. Game devs almost saw it as an impossibility. It was simultaneously proof that you could still make an amazing game, and also that most companies did not know how any more without outspending BG3’s dev cost several times over.

Large companies no longer had wiggle room. The stability that they had brought to game dev was suddenly shaky, and layoffs started in earnest in 2023 and have only accelerated into 2024. Here’s my take on the biggest factors for those layoffs:

1. Overhiring during COVID - this certainly played a role, but I think it’s overemphasized

2. Lower risk profile - companies losing money retreated into what they knew, dropping people who weren’t directly related to safe bets (happened in tech as well as games)

3. Being in the red financially - salary is usually the highest expense in game dev, so when things go south, reducing the number of employees is one way to try to get back to profitability

Initially these led to experienced devs being snapped up by other companies that hadn’t been hit yet, but as more and more studios and publishers realized they were in trouble and reacted with layoffs, suddenly you weren’t hiring even amazingly talented devs. Instead, the growing pool of available talent meant companies could get really selective. Many who were “the best in the business” would spend months or longer unemployed and getting more and more desperate. 

Just a year or so before during COVID, the established devs seemed to hold the power. Once the layoff cycle began, that pendulum swung back to the companies.

With the unprecedented amount of talent available, those companies started targeting specific profiles and requiring lots of experience across the board. Companies had lost some knowledge by now of how to train junior talent, and with an obscene quantity of senior talent available, they still didn’t need to solve that problem - especially since you could now pay a senior less with the changes in supply and demand across the industry.

Making matters worse, the last few years were the first years where significant numbers of students were graduating college with degrees in game development. Whether engineering, design, or art (the most common majors), an already massive talent pool was even larger. I don’t know what the future will be like. There is a subtle but increasing number of graduates focused on game dev while the industry is still relatively small and the audience isn’t growing fast enough to support us all.

Large companies were also wondering if the advent of LLMs meant they could get away with smaller workforces. As they looked at what seemed like unsustainable budgets - especially because some major titles that are perennial successes had fallen flat - they wondered if ChatGPT or Midjourney or whatever could fill the gap, reducing the cost of development while speeding up parts of the process, potentially solving both problems.

In the midst of all of this developer pain, mistrust from failed releases plus the lowered reach and trust in games media was hurting the relationship between the games industry and players. Their suspicions had grown while their interests had continued to evolve. The increasing time to ship meant some titles felt outdated at launch, while others were just not working. The disconnect between development and players grew.

Players, Live Service, and Indie Dev

Even as new AAA titles and the community of game devs were struggling, players had tons of great options to spend their time on. The biggest draw for players? Those very few but still insanely successful live service products. A massive amount of player attention would end up going towards games that had launched years or even decades before across PC, console, and even mobile. 

The live service market was - if anything - overcrowded. Many of the newer startups had been funded based on the idea of becoming a successful live service game that would print money for years into the future. An amazing investment … assuming you could pull it off.

That turned out to be much harder than it had seemed. Well-funded startups who targeted this space started fizzling out, and much of the web3 stuff seemed to go along with it. 

Live service wasn’t easy to get started from any angle, especially not when the incumbents already had deep commitment and engagement from the players new live service games were trying to attract. Players might drift into the game, but they would likely drift away just as rapidly, and since a live service product was often free or cheap and based on long-term sustained engagement with a massive audience, these startups were not recovering even a portion of their expenses. It was all cost, no gain. The reality was they were often trying to lure players away from not just their favorite game, but also their friends.

Not all games are live service of course, and if players wanted something new, the lowered cost of entry to game dev meant you could find tons of engaging products of all lengths to sink your teeth into. Plenty of gems were popping up to satisfy every player’s desire for new great experiences, even as many contending (and probably quality) games were undoubtedly being buried in the tens of thousands of launches that were happening every year on Steam, Roblox, UEFN, app stores, and more. 

While the odds of success still favored large companies, the cost of making a game on the side in college or with a few friends meant that it wasn’t that big of a deal if your game didn’t take off. You didn’t have much to lose, while a failed AAA product would easily destroy tens or even hundreds of millions of dollars in financial investment.

Still, the absence of investment wasn’t making life easy for anyone. Indie’s are not and never were the “safe” bet, instead being driven by a passion and love of games. Some hit it out of the park, sure, but many more slowly faded away amidst the glut of competitors.

Differences in Devs and Leadership - The Problem of Brand-based Hiring

Hiring was another problem area, and not just because of the changes to supply and demand in the games industry. 

Throughout this whole period I’ve been describing, leaders and devs were being brought into companies for poor reasons. The aura of success of wherever you used to work carried an outsized weight, as the logic of, “If they could pass an interview screen and get hired at Blizzard/Bungie/Riot/Supercell/Naughty Dog/Rock Star/Amazon/Meta/Netflix/etc. and then survive for a year or so, they MUST be good!” seemed to reign supreme.

While there is a nugget of truth in there, the grim reality was that many studios and investors took people away from their expertise, and asked them to work where they had no experience. 

Mobile product managers with incredibly developed talents creating ROI in the pre-”IDFA change” era were being snapped up by AAA studios because revenue was important, despite actually having low awareness of how that type of game development, player relationship, and monetization work. 

Live service leaders from the most reputable brands in gaming were handed boatloads of money to go … create a scrappy new studio and new game with a bunch of peers who were similarly unskilled at anything but the sustaining of an already successful product. 

Established AAA leaders good at shipping “boxed product” style games were pulled over to scaling live service efforts in an effort to “mature” their orgs and create stability, while having very little awareness of what it actually means to run an organization responsive to continual player feedback.

I want to be clear: there is nothing inherently wrong with this if everyone has the humility to realize that what you were doing is not what you will be doing and accept that you’ll need to spend some time learning. BUT in many cases that humility and recognition of current inadequacy was not present. 

The industry ended up with startups acting as if you needed dozens or hundreds of millions of dollars to get a game off the ground because that is what it would have cost when they were at Amazon or wherever else, or monetization experts destroying player trust in established IPs by misunderstanding their audience.

The irony was that while we were being insanely specific about any dev or lower level leader role in games, at the senior leadership level where it mattered most we were overvaluing 1) past results and 2) companies operating in completely different domains as our predictors of how someone would perform.

All of this was, in my mind, a backfiring shortcut based on not really knowing what the company actually wanted or needed in the people it was hiring, and just hoping that someone smart enough to work at Google or Apple must surely be able to help us succeed here. We didn’t know how to hire, so we outsourced that to their last hiring manager and hoped it would work out.

Some new hires did adapt and learn, but many caused a lot of problems when they landed in their new roles. If they were discovered causing harm, they could be removed, but the damage had already been done … and many went undiscovered.

Summary

So that is where we’re at today. Hiring is a mess, talent is oversaturated, mobile is recovering nicely (way to go!), “AAA” game dev needs to change but is instead retreating into old (and now non-functional) patterns, and startups are experiencing reality checks at an alarming rate. The verdict is still out on AI, but Web3 and NFTs have mostly died, and I think for most game devs it’s not being missed because no one ever told us how it realistically made the experience better for the player anyway.

We’re continuing to experience dysfunctional relationships between publishers and devs, and publishers and players, but now we’ve added dysfunctional relationships between devs and players to complete the triangle.

I said last week not to bank on 2025 turning this around. There’s a lot left to improve before we’re out of the woods. It’s not that ways to improve don’t exist, they just are rarely amenable to the people who would need to be bought in. 

I want to zoom in now. In the midst of all of this, you have an opportunity to adjust your approach and do better as an individual and leader than you or others did in the past 5 years. I don’t know exactly what you should do - I’m not in your shoes - but here’s some advice.

What To Do

Here’s what I’d recommend.

1. Don’t oversimplify the industry. 

Recognize the complexity of everything that is happening. The number of variables involved are high, and to reduce everything down to one or two variables like “greed” or “macroeconomics” and then attempt solutions will more likely miss than hit

2. Contact reality as fast as you can. 

Whether you’re a startup or a AAA studio, you can’t afford to rely on hope for the assumptions you made. Focus on learning, recognize you probably got some things wrong, and then be willing to pivot if you realize you’re on the wrong track. A lot of current pain is far worse because people stubbornly pursued poor paths.

3. Establish (or re-establish) relationships with your players.
   If you go out and do a bunch of stuff players love because you took the time to understand them, we’re in a unique moment where that gives you a competitive edge over others that are frankly doing a terrible job of listening to their audience. Take advantage of that.
   

4. Don’t wait forever for a game dev job if you’re out of work.

I get it, we want to be in this industry. But there are some brutal underlying realities baked into games. There are only so many players out there. The number of games those players can sustain is going up slowly, but not enough to support dozens or hundreds of additional companies long term. Don’t put your life and career on hold. Go get experience elsewhere that you can bring back to games someday in the future. The industry will adjust, but I am not optimistic that it will be soon.

Alright, I’ve written enough and still have more that could be said on all of this, like what I think about the future.

Thanks to all the people who have shared their insight into the state of games with me over the past years. It’s been something crazy to watch and be a part of.

So, what did I miss? What are the big things you think are driving where the games industry is today? What did I get wrong? Let me know!

Whenever you’re ready, there are 3 ways we can help you…

—>Courses built by game devs for game devs - check out “Succeeding in Game Production” HERE.

—>Regular deep dives on critical game development topics on the BBG podcast

—>We’ve helped many high-profile game studios save a ton of money & time through building clear vision and leveling up leadership. If you’d like to work with us, please reach out at [email protected].