This week’s news that Microsoft is shutting down a number of studios, including Tango Gameworks and Arkane Austin, left a particularly bad taste in almost everyone’s mind. It’s the latest development in the takeover saga – which appears to be one of the hottest things happening in the video game industry right now. Post-acquisition cuts by Activision Blizzard, Embrace Group ruthlessly destroyed the studios it acquired. Which begs the question – why would CEOs want to sell their studios to one of these big companies now?
To find out, we reached out to a number of indie studio CEOs and founding members on condition of anonymity to express their thoughts.The answer we get may match your hypothesis; if it able can be avoided, the acquisition is Absolutely Things to avoid. This is especially true now, when the hurt from recent news is still painful, but recent reports have also heightened existing sentiments about the matter.
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One source painted a clear picture when asked if they would be willing to be acquired by Microsoft or Sony right now, even if it would bring an influx of cash.
“Fuck, no. It’s clear that being acquired is a stepping stone to closing your studio for no reason other than to hit a big company’s fiscal quarter goals,” an unnamed source told iGamesNews. “I thought, If my only option was to close, we might get acquired, delay it a little, and line our pockets. But that’s not the case now. ”
Another source provided some insight into the dangers of such acquisitions, and why companies like Tango Gameworks, even if they are successful, are cut out by larger companies after acquisitions.
“I think everyone involved in acquisitions knows what they’re doing, big companies operate at a massive scale and corporate strategies can change on a dime. For a while, it felt like streaming and subscriptions were the future, so the number of games was satisfactory, Then Game Pass slowed down, and company strategy seemed to shift back to “fewer, bigger brands,” a long-standing mantra of most big publishers, which meant smaller studios, ones that didn’t stay with them Consistent studios. Big brands as well as those that have recently failed are being singled out for alliances.”
The source continued: “The challenge is that these large companies are now often run by sales or marketing people who don’t understand how difficult it is to develop talent, find a team that can work together to deliver anything, and that the process can take years Time, so they can make short-term gains by cutting costs, but there will be fewer teams making games for them in the future. That said, when you sell the company, you’re selling your control or blocking capabilities. This story is at Activision. , Microsoft and others have repeated it a hundred times, if you don’t want to risk the whims of your corporate overlords, you shouldn’t sell your company.”
Recent news has put Microsoft and its particularly horrific missteps in the spotlight, but everyone I spoke to stressed that this is by no means a problem unique to any particular company. The perception of a large acquisition – no matter who the buyer is – carries serious risks.
“I think today’s news is further proof that you can’t trust anyone,” a source said. “By definition, any public company only cares about profits, growth, and appeasing shareholders. Huggers are the worst of them all because they’re run by a bunch of assholes, but even the richest company in the world, Microsoft, is not your friend, they It doesn’t matter how many podcasts Phil Spencer goes on to talk about the happy families of Xbox Studios, until it’s no longer convenient for them.”
Another CEO pointed out that when a company (any company) offers you a large amount of money, one has to consider complex pros and cons.
“You always make decisions based on very specific questions of ‘now’: how much cash flow do you have, how much security do you have, does your next game have a publisher, how much money do you have that not many indie studios have Big cash reserves, so you’re always doing what’s best for your team, your game, and your company, so I can totally imagine selling to a publisher or a first party, as that might be at the moment. “It makes the most sense, but it’s fraught with risk and it changes the way you need to operate.”
One source found their long-standing belief in a takeover reinforced, with recent news only closing in on the topic. “I’ve always held this position, so this does more than reassure me that mergers and acquisitions usually always end badly for game studios. The current situation is that this is terrible.”
So if getting acquired is difficult right now, what’s the best position for a development studio? Answer? Well, given the current situation, developers don’t have a completely safe haven. But self-ownership, not being overly bloated, and just using your own hands behind the wheel, feels like the way to go.
“The safest position is to not care about growth. The bigger you get, the more success you need to maintain the burn rate,” one source said. “Be happy with the size of your studio and make sustainable games. Great games come in all sizes. Let’s not pretend that being independent offers any kind of security, but at least you have control.”
Another expert highlighted the risks of game development in general, but also noted that it’s a useful working rule not to chase the temptation to overextend.
“Gaming is a hot industry, and its audiences and sentiments are changing rapidly, so it’s very risky no matter where you are. If you’re afraid of risk or long for eternal stability, this is not an industry to enter.” I moved twice in search of better projects, not to mention a studio, which is not for everyone. Our strategy is to stay small, stay a single game studio, focus all the team’s talent on one project, and then move. Next try to create a buffer at the bank.
“The more people you have, the bigger your monthly costs are, which means if you’re independent you might run out of money pretty quickly, but if you’re in-house with a publisher you might also look like A big funding gap keeps it small, keeps the game fresh, and tries again!”
2024 is going to be a disaster for the gaming industry. You can read reports on the numerous layoffs here , here , here , here , here , here , here , here , here . Multiple media outlets reported that this is not the end of the list of planned layoffs. This massive culling of talent and studio diversity will undoubtedly have a huge impact on the video game industry in the weeks, months, years, and even generations to come. It’s a sad moment for creatives in one of the world’s most lucrative entertainment industries, and perhaps we need to think long and hard about why this is happening.
