It looks to be time to bring out the elephant in the room: BURN RATE.
The traditional game financing model is broken: returns no longer outweigh costs.
Gaming is not alone there but unlike books and video, there is no surefire way forward.
The nature of the content business (movie, TV, books, software--especially games) makes the bulk of their day to day expenses, aka overhead but more accurately described by the startup business term: Burn rate. Because the upfront investment required by those products is speculative and in many cases (for the investors) little different from piling up the currency and lighting it up on fire.
In the startup world, Venture capitalists understand they are speculating and, much like a roulette player at a casino, spread their bets around. The goal isn't to win every bet and get rich quick, but to win some and lose some with the hope that the wins outweigh the losses, that when they win, they WIN BIG.
In Hollywood, the big studios typically share the expenses with outside investors so they can get more product out the door faster. Same principle, with the added caveat that they understand that what might be new and successful today might be a dated loser tomorrow. (BATGIRL, for one.) Hollywood accounting is famous for their "skill" at money management.
Gaming's version of this is third party exclusives, especially the timed exclusives, and more recently, the upfront subsidies MS pays to get Day one rights on Game Pass. (Some are exclusive or timed, some are neither. Different cases, different deals. Some games only exist because of those subsidies.)
For most of the past 45+ years, video games operated much lie book publishing: the creators prepared a presentation, shopped it around, and a publisher would buy it. Sometimes only the game, sometimes the game and it's IP. That model has been dying for the last decades and we are now seeing its last gasp.
Publishers have been buying up studios for quite a while. The big publishers have all rising by buying up their "partner" studios but it has accelerated over the last decade because development has gotten more and more expensive (and not just because for pixel pimping, but that is a big part of it) and life as a mid-sized developer has gotten almost unworkable. Indies and mobile studios are hanging around because they avoid the blockbuster model like the plague. They may yet reach the end of the line but for now they are hanging on.
How it will shake out remains unclear but one thing is certain: the drama is not even close to being over. Ubisoft and moof EMBRACER are in play. EA, lie MS, has been proactive but there may still be pain in their future.
Nintendo got dinged this week (100 out of a 400 member studio) and now Sony bit the bullet and gave up on CONCORD. (And Bungie is shedding entire teams.)
Square practically gave away valuable IPs just to shed the studios' operating cost.
There *will* be winners but there will be more losers.
The why for all this comes down to business 101: ROI.
Investments have gotten too high, output too slow. investment times development time equals burn rate. And the returns no longer outweigh the investment, even for well reviewed product.
Every time another closure is announced the pundits nod and admit costs need to come down but nobody wants to be the first to say how.
Try this: coding costs must come down.
Graphics costs must come down.
Staff sizes must come down.
Less releases? Maybe, but less releases likely means less revenue.
Live service was the last great hope and it is no longer a magic bullet.
There is one road that might help but anybody who brings it up is going to be tarrred and feathered. Generative software. Nobody will admit using it but odds are, many already are. eventually some will admit it.
The old ways are untenable; too expensive.
Something needs to change.
What? TBD.
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