The wave of restructuring and layoffs that has disrupted work in development studios in recent years continues to be a difficult issue for the electronic entertainment industry to avoid. In an interview with the channel WhatCulture GamingShuhei Yoshida, veteran former director of Sony Interactive Entertainmentpresents an analysis of the economic and business factors that are driving the cuts and, far from justifying this stage as a sign of decline, the executive interprets them as a natural correction after a period of excessive optimism during the years of confinements which ended up leading to growth that was difficult to sustain.
The COVID-19 hangover
According to Yoshida’s analysis, the root of the problem lies in the market behavior between 2020 and 2022when millions of people remained confined to their homes and video games became one of the most accessible forms of leisure, something that translated into a exceptional increase in incomewhich in turn led many companies to invest and hire above their real needs. This atypical growth motivated managers and investors to overestimate demand in the medium term, which led to more investment volume, hiring and projects that many companies have had to do without when consumption has returned to a less exceptional situation.
With the end of restrictions and the return to normality, companies were forced to Reevaluate your catalogs and cut operating costs to maintain the profitability demanded by shareholders, but Yoshida does not minimize the human cost of these measures and addresses the situation as a painful stage, especially among professionals who have suffered the consequences of market volatility.
Shared diagnosis
The diagnosis of the former head of SIE Worldwide Studios coincides with several analyzes published in recent years. For example, GDC already stated in its report ‘State of the Gaming Industry 2024‘ that many developers attributed the cuts to the post-pandemic correction, business concentration and the economic situation, while its 2025 report kept layoffs as one of the great concerns of the sector. In turn, firms like Newzoo have observed a stabilization of the market after the peak recorded during confinements, a context that helps interpret the thesis of a industry that grew too fast and then had to readjust its plans.
Structural growth
Despite the period of cuts, Yoshida maintains good long-term growth prospects for the industry and maintains that when talking about a crisis, the number of workers that the studios incorporated during that boom period is usually left in the background, to the point that some companies, even after facing profound restructuring, maintain larger teams than those of the last decade. Therefore, it seems that the priority of publishers in the coming years is not only about managing the crisis, it also requires plans that avoid overcontracting and allow for sustainable growth.