The discussion around industry layoffs is a bit weird to me. People are mad at Sony for cutting spending because it cost people their livelihoods. I fully understand that. At the same time, the criticism of Xbox was always that they didn't have the same big AAA quality that Sony had. The majority of praise for Sony for the past 10 years has been regarding Naughty Dog, Sony Santa Monica, Guerrilla, the studios that have been driving the huge narrative AAA games that's pushing the industry standards for production quality. It's what drives a forum like this and a channel like Digital Foundry (I know DF doesn't only praise big AAA titles). We all knew pre-PS5/SeriesX gen that game development costs were sky rocketing and development cycles were lengthening. We all knew game prices were going up in response. Yet the main talking point this gen has been, "Where are the next-gen exclusives?" and "Cross generation games need to end." I'm pretty sure even DF has brought up these points while waiting for the true next-gen experiences. Well, it turns out they cost A LOT of money and take a long time to make, and if the market is not growing, and the price of games can only go so high, that means a big company like Sony ends up operating at a 3% margin, or whatever it was, which puts the whole business at risk. Not sure what else could have happened here besides ignoring gamers (maybe the best thing you can do 99% of the time.) They invested mostly in giving people what they wanted and it didn't work. And this isn't a games as a service problem. Spider-Man 2 cost two or three times as much to make as Spider-Man 1, but the price of games only went up $10 USD. The math doesn't work out unless the market is growing, which it apparently is not.
Companies like Sony have to figure out how to manage layoffs. If you refrain from "punishing" Insomniac, that just hits another studio harder. Maybe that would be more fair, but they're likely trying to protect other studios from being shut down entirely. In situations like this companies will kind of spread the pain around and hope that none of their business units will fall below a threshold where they can't be productive anymore. Like you might have some idea that a studio could survive a 30% workforce reduction, so you shutter the whole thing and protect another business unit from layoffs. Or you predict another studio could handle 20%, but not 30%, so you cut the 10% headcount from somewhere else (Insomniac). None of it is fair, but it's better than the whole business crumbling. Slim margins are difficult. You make a few mistakes and your entire business goes under.
I work in an industry that's been through this cycle many times in the past 25 years. It's never nice. We're going through it again right now.
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