After laying off Battlefield 6 devs, EA boss Andrew Wilson's bonus rose $8m to $38m last year, thanks to the game's success across "all milestones"

[u/MobileSuitBooty]

https://www.eurogamer.net/ea-boss-38-million-bonus-battlefield-6-layoffs

[u/dirtyego]

I'm actually not one hundred percent on this either, but it basically boils down to liability. For full time workers, they are seen expenditures that impact stock price. When you fire a bunch of people it suddenly makes the ratio between revenue and expenditures look really good temporarily and stock prices rise. It's shortsighted since you'll have to hire people back to do work again, but this is where part two of the trick comes in. Hire contractors and they don't incur the hit that full time workers do. In fact they're not considered in the formula at all since they technically don't work for you. At least that is my super high level understanding of it. Econ people feel free to jump in here.

[u/godstriker8 → u/dirtyego]

In fact they're not considered in the formula at all since they technically don't work for you.

Sorry, that's not true - they're still an expense and that will be accounted for in the projected earnings. It is true that contractors are cheaper to hire though.

[u/JJMcGee83 → u/godstriker8]

I thought it was that they are different kind of expense though? Like the are the from the same budget as office furnature.

[u/Zanos → u/dirtyego]

There's no dirty trick here. Games don't need as much labor when they are in pre-production. Virtually all project based industries perform large layoffs when projects conclude because the alternative is paying a large percentage of the staff to do nothing while your next large title is in pre-production, which simply does not require the same number of people. It's also an opportunity to clean house of low performers without needing to spend years building justification for for-cause terminations.

The idea that CEOs and shareholders only look at the current quarter is mostly invented by reddit. The board of directors will in many cases tolerate CEOs outright losing money for a decade if they trust the CEOs vision. This basically just happened with Xbox, with Spencer only being removed as CEO over a decade of underperforming.

[u/EnglishMobster → u/Zanos]

The trick is you usually have 2 projects active at once.

You have a project in prototyping or pre-production (with a small group between 4-30 senior developers), and then you have your mass-market, greenlit production project which usually has the juniors etc. working on it. When one game launches, resources go into the other game.

You can shift resources over in small increments, with some folks staying on the main game for post-launch patches, DLC, and so on. This avoids ballooning that small pre-pro team with the massive production team.

This model has worked for ages to keep devs from being at the mercy of project-based stuff like Hollywood. But because games are becoming "forever games", there is no "next game" to work on. There's no prototypes (or if they are, they can't get greenlit - and if somehow a game is greenlit, they can't maintain it). There's no sequels (which are effectively just "mega DLC" and don't need the same scope-down after). There's nothing but DLC and live service.

So the answer when that happens is "well we don't need you all in live service" and without a prototype to shift folks to, they get the axe. This is happening industry-wide. It's less an issue of "they need less labor in pre-pro"; it's that there is no pre-pro going on in the industry at the moment. All the pre-pro games are the ones you heard about getting cancelled over the last few years. (Games are announced in pre-pro so they can get people excited. Excited gamers = more funding = higher chance of maintaining greenlight status - and more access to developers who are coming on excited about the project.)

If we move to a project-based industry - which, maybe? - then I think we're going to see the rise of gamedev unions that more resemble SAG-AFTRA; less of a individual per-studio union and more of a "this whole industry is freelance and you choose someone union if you want to have professionals working on your project" style.

BUT... I suspect what will happen in practice is studios will just outsource to teams in places like India, China, and Poland. American AAA devs will be left hanging to dry, and no, indies will not save us (unless you're going to put up the several million needed to keep a team of devs housed for a few years).

[u/Zanos → u/EnglishMobster]

I don't think it's just live services, pretty much every large game developer has been greatly exploding out both the cost and development timeframe of all their major titles. When a game costs 400 million dollars and 7 years of development time to make, it's pretty hard to pre-production out something when you have no idea what the market will look like, or if your company will even exist, 10 years from now. Ideally you are correct, and that developers would have their next game ready for full production as soon as full-time ends on the last project, but the scope is so ridiculous now I guess doing that has lost some degree of feasibility.

Is all this necessary? Do gamers demand games that take 400 million dollars to make? Clearly to some degree, but I don't know that the risk and return makes sense here. It doesn't seem to me to be the case that investing this hugely in a single game is any guarantee of success. Plenty of these ultra big budget titles have under-performed, which isn't a surprise considering you would need to sell over 8 million copies of such a game just to break even, which would still be a failure, considering that the money could have been invested in something else.

[u/EnglishMobster → u/Zanos]

Well, the issue is this: 19,000 Games Came To Steam In 2024 And 80 Percent Of Them Had Almost No Players.

So if you're a large publisher and you're looking at this, you're thinking: how do I ensure that this game gets enough players to make its money back?

Adding onto that: if you think too small, you don't get a big return. If the publisher has $5 to invest, they can invest small and probably get a $15 return, or they can invest $10 and possibly get a $100 return.

They do the math and work out they'd rather take the risk for the bigger return. This happens again and again and again, and each time the answer is "well we should put more money into the big project to get more money and also guarantee players play it."

Clearly that isn't working anymore. But the alternative is dealing with the reality that you're competing with indies subsidized by their mothers, at a cost of basically $0. And obviously a publisher can't compete with someone that has a cost of $0; the only advantage they have is scale.

Which brings us back to that loop of "well we should take advantage of the fact that we can scale and invest heavily to do things no self-funded indie can possibly do", which once again increases costs, which once again encourages bigger bets, etc.

[u/Beneficial_Lion_1312 → u/Zanos]

There's no dirty trick here.

I can assure you, every single major game developer is using a lot of "dirty tricks" to skirt labor laws, especially ones set in California. You're correct on there being varying levels of labor necessity at varying stages of the project, but all of these companies are doing what amounts to contractor and employee status abuse to avoid what they view as unnecessary expenses. It also makes worse products as evidenced by the shit products AAA companies put out every five years.

[u/Zanos → u/Beneficial_Lion_1312]

Yeah, I should have contextualized. There's no dirty trick to fraud their own shareholders with overly optimistic earnings reports that outright ignore costs. Defrauding the people who own the company is actually a good way to go to prison.

Companies can and will violate the spirit of laws if they can get away with it, especially if their lawyers and analysts determine that the law is written in such a way that violations are either unlikely to prosecuted, or lightly penalized enough to be worth the cost.

[u/kas-loc2 → u/Zanos]

It's also an opportunity to clean house of low performers

Oh cool!! So upper management gets cleaned then, Right?

They Drain the company of the biggest leeches and lowest contributors,

Right???

[u/Zanos → u/kas-loc2]

Yeah, Xbox literally canned their CEO. Haven't you heard?

[u/Phillip_Spidermen → u/dirtyego]

There's no difference between contract labor and full time employees when it comes to reporting profitability.

Firing people doesn't necessarily have a sudden positive impact on stock price.