Most developers still aren’t sold on the apparent benefits of consolidation and conglomeration, and with a wave of layoffs sweeping across the industry it’s not hard to imagine why.
Out of those who took part in GDC’s 2024 State of the Industry report, 43 percent of developers felt studio mergers and acquisitions would have a negative impact on the current status quo.
Another 42 percent suggested ongoing M&A activity might have a “mixed impact.” 8 percent said they simply “don’t know” what impact it might have, while a minuscule two percent of respondents said it would have “no impact.”
Notably, just 5 percent of developers suggested M&As would have a positive impact, down by 17 percent from 2023 (though it’s worth noting this was the first year ‘mixed impact’ was added as an option).
The data indicates that very few developers are fully convinced conglomeration will be a force for good in 2024 and when asked for their thoughts on the subject shared some very choice words.
“There’s a reason why antitrust laws were put in place. Consolidation of wealth and power inevitably breeds complacency and contempt for workers and consumers alike by executives and shareholders,” opined one developer.
Embracer Group’s involvement
“I think the recent Embracer fumbles sums it up. Once a huge publicly traded company buys up large swaths of an industry, it will inevitably end up creating redundancies and placing innovative, more ‘exploratory’ studios in a position where they’ll never be seen as profitable enough for shareholders,” added another, referring to the huge layoffs at Swedish conglomerate Embracer Group, which last year cut over 900 jobs in three months.
In 2023, we saw major companies like Unity, Meta, Epic Games, PlayStation, EA, Embracer, and more axe thousands of workers. It’s a trend that has continued into 2024, with Thunderful Group (another big-spending company) recently culling 20 percent of its workforce. Unity has also announced around 1,800 layoffs since the turn of the year.
There are some, however, who feel M&A activity could still bring benefits, even if there are undoubted risks. “It can be positive in the short term—payouts to smaller teams, stability—but increases risk and stifles creativity long term,” added one developer who took part in the survey.
“Acquisitions are a vital part of the business ecosystem, and whilst there are inevitable casualties and losses with beloved studios and brands disappearing entirely, overall it has a positive impact on the business behind the IPs,” added another respondent. “[M&A often leads] to new directions and innovations that were simply not possible before, even if that comes in the form of a new studio being formed by the execs who sold off the last studio.”
For more data and opinions on topics ranging from conglomeration, unionization, game engines, and AI usage, you can download the 2024 State of the Industry report today.
Game Developer and GDC are sibling companies under Informa Tech. The 2024 State of the Industry report was produced in a collaboration between Game Developer and Game Developers Conference.