Developers are sitting in front of design documents for games that will never be produced somewhere—in a Santa Monica office park, a Stockholm studio campus, or a converted warehouse in Austin that was once referred to as a creative hub. Before they were made public, the projects were canceled. After eight years of employment, some of them were cancelled. A few were canceled after the studio that created them closed.
This wasn’t because the game wasn’t good; rather, it was because the financial model for it had quietly stopped making sense, and no one in the executive suite wanted to be the first to publicly state this. The AAA video game industry came to this realization gradually at first, then all at once, and the damage it caused is still growing.
| Category | Details |
|---|---|
| Topic | Collapse of AAA and live-service gaming model; industry restructuring |
| Jobs Lost (2022–2024) | 23,000+ video game industry jobs |
| Jobs Lost (January 2024 alone) | ~6,000 |
| Studios Closed (recent years) | 30+ including Arkane Austin, Volition, Firewalk Studios |
| AAA Budget (5 years ago) | $50–$150 million average |
| AAA Budget (current minimum) | $200 million+ average |
| Call of Duty Annual Budget | ~$300 million per title |
| Highest Known Dev+Marketing Budget | $1.2 billion (anonymous publisher, per CMA report) |
| Concord (Firewalk Studios) | 8-year development; reported $200 million+ investment; shut down weeks after launch |
| Hyenas (Creative Assembly/Sega) | 7-year development; cancelled before full release |
| Minecraft Total Revenue (12 years) | ~$3 billion (launched 2011) |
| Notable 2024 Indie Successes | Balatro, Animal Well, UFO 50, The Crimson Diamond |
| Balatro Developer | Solo developer (LocalThunk) |
| Animal Well Developer | Solo developer (Billy Basso) |
| Reference Website | The LA Times |
The figures are not nuanced. In the two years preceding 2025, the video game industry lost over 23,000 jobs, with about 6,000 of those jobs vanishing in January 2024 alone. For those in the industry, that month felt like a controlled demolition of something that had been structurally compromised for years.
More than thirty studios, including Arkane Austin, Volition, and Firewalk Studios—names that held significance for both the employees and the fans of their games—closed. The explanations continue to sound the same while the list grows longer. overstretching. erroneous market calculations. the expense of operating a live-service game that failed to attract players quickly enough. Over the previous ten years, budgets had increased so sharply that there was virtually no margin for error.
A major AAA game could cost anywhere from $50 million to $150 million just five years ago. That range was regarded as challenging but doable. These days, that range begins at $200 million and rises sharply from there. Activision acknowledged in a Competition & Markets Authority report that it takes the equivalent of one and a half studios to ship a single entry in the franchise each year, indicating that Call of Duty’s development benchmark is currently around $300 million per annual release.
The most extreme instance described in that same report, which came from an unidentified publisher, involved $660 million in development costs plus an additional $550 million in marketing. A game worth $1.2 billion. In contrast, it took twelve years for the best-selling video game in human history, Minecraft, to reach $3 billion in total revenue. It’s difficult to comprehend how the anonymous publisher’s wager was approved at all because the math on it was never going to work.
Because it captures a particular aspect of how this era ends, the Concord story is worthwhile. The game took eight years to develop at Firewalk Studios. Sony reportedly spent more than $200 million to acquire the studio. According to some reports, PlayStation’s executives thought they had the groundwork for a Star Wars-caliber franchise. The game debuted, struggled during beta testing and the first few weeks of release, and was shut down by Sony in a matter of days.
This was the fastest collapse of a major live-service game that anyone in the industry could recall. Soon after, Firewalk was shut down. In the course of a news cycle, eight years of labor, hundreds of people’s careers, and a sum of money that could have supported numerous smaller projects were all lost.
Here, it’s difficult to avoid thinking about the Blizzard analogy: After a disastrous 2012 launch, Diablo 3 was ridiculed and abandoned by disgruntled players. However, it was later rebuilt, patched, and completely redesigned with the Reaper of Souls expansion before becoming a beloved game. Concord was never given that opportunity. Patience was not possible due to the financial strain.
Nearly everything in Fortnite revolves around chasing. After releasing Fortnite’s Battle Royale mode in 2017, Epic saw it grow to become one of the most popular games ever produced and unintentionally persuaded a whole industry that the model could be replicated on a large scale. For the majority of studios that tried it, it wasn’t. Instead of creating a rising tide, Fortnite’s dominance created a congested harbor that continued to fill with ships, the majority of which eventually sank.
Even with 12 million players, games like Knockout City were unable to endure. One of the most well-known IP collections in entertainment, Marvel’s Avengers, debuted as a live-service game before being shut down. Sega decided it couldn’t recover its investment, so the sci-fi shooter Hyenas, which had been developed at Creative Assembly for seven years and was just getting ready for public play, was canceled in advance. It had taken the studio seven years to construct. Before the majority of players saw it, it was cancelled.
Observing all of this gives the impression that the industry is gradually shifting toward something different, albeit more out of necessity than choice. The $200 million productions were not the games that players genuinely discussed in 2024, the ones that frequently appeared on year-end lists and in discussions among media enthusiasts.
They were Balatro, a poker-based card game created by LocalThunk, a lone developer. Billy Basso created Animal Well, a Metroidvania, over a number of years. A six-person team spent a long time developing UFO 50, a collection of fifty arcade-style games. These games are focused, lean, and designed to be entertaining rather than massive. They didn’t require battle pass monetization, season pass infrastructure, or open worlds the size of entire countries. All they had to do was be proficient in their field.
A larger slate of smaller projects, less concentrated risk, and more space for things to be strange or experimental without a $400 million liability are all possible outcomes for the big studios. The publishers who are most devoted to the blockbuster model might also continue to pursue it until the economics decide for them. The current indie renaissance occurring on the periphery of the industry is not an attempt to save the AAA sector.
It’s a different thing, created by people who, even if they had wanted to, couldn’t afford to pursue the blockbuster dream. However, it does serve as a helpful reminder that it wasn’t the production budget that initially made people fall in love with video games. You couldn’t stop thinking about a mechanic, a moment, or a world that seemed to have been created by someone who actually cared about how it felt to play for fifteen minutes. $1.2 billion is not necessary for that quality. It didn’t.
