I know it’s not Friday. I was sitting at my computer this morning thinking “hey! It’s Friday!” and it took me a while to realize it isn’t. I have a feeling today will be a long day.
Scott at Broken Toys keeps updating recent job cuts in the industry. Hearing about mass layoffs sucks – even when you aren’t the one getting laid off. It is easy to empathize since we can all imagine what would happen if our own jobs ended tomorrow. Scott takes it even more personally as he is firmly entrenched in the industry, and those are his friends and colleagues getting let go. If you are one of those people who have, or think you will be, tough times are ahead. Trust in yourself and your capabilites and try not to lose your confidence – although confidence is no doubt the first thing to go.
Layoffs are “fashionable” right now in publically traded companies. I know that is a terrible word to use but with the stock market plummet and wary investors steps need to be “shown” to make the company be a more “worthwhile” investment for potential buyers. I do contract work in the food industry, and our biggest challenge is trying not to raise prices although costs around us are increasing. When minimum wage increased we used it as a legitimate opportunity to bump prices accross the board to offset increasing labour costs. Consumers weren’t upset because they expected it – because everyone was doing it. The gaming job market is in a similar position. Since everyone is cutting operating costs (wages being one of the most easiest to do) everyone is else is doing it to stay competitive. When EA cuts 1100, THQ cuts 600. THQ needs to be “viewed” as staying competitive and hopefully can get some external investors.
It isn’t as easy as that sounds – although it is very easy to think that way. Credit markets in the USA have basically shut down – even for the big companies. So when you lost 600 million you could just go get it covered with cash reserves and future credit, since your billion dollar in revenue company would make it back. Without the access to that credit, and needing a much stronger cash position, this is the result.
Whether it’s A, or B, or parts of both, it is no consolation to people now out looking in the worst job market in our recent history.
I live in a Big 3 Union town and the last 10 years has seen over 10,000 jobs eliminated (from a community of 200,000). People tend to not empathise as much when Union members lose their jobs – they were partly responsible with strikes, and getting insane wages (by the “average” person, not comparable to company income). Of course Unions aren’t solely to blame, but try explaining that to someone who makes $8.50 an hour, when Joe on the line makes $32 and goes on strike for more money. It just isn’t common sense to the average person who is working 60 hours a week just to pay the bills that someone making almost 4x the amount is refusing to work. Unions have a combative nature about them making them even less popular to the typical person.
I am not sure of the average salary of the 600 being cut at THQ, but let’s just guess for a minute – $60,000 fair? (average between highs and lows). So that cut would save them only $36,000,000 – 18% of their ~200 million loss. Where are they going to make up the other $164,000,000? Of course, that 36 million is being saved over a period of 1 year, which means in the interim it is hardly savings at all, compared to how much they are out. I am trying to find the sense in it. Who is going to produce games in 2010 to drive revenues for the company when ~25% of their workforce is now gone?
I am just rambling, of course, (and my apologies if you were expecting something special today) I have no pointed direction to this article. I feel bad hearing about the job losses, and equally as fortunate for being self employed that I don’t have to face layoffs the same way. And of course, guilty for thinking the latter part while I know the former is going on.
This article at Gamasutra has an interesting take on how to reshape the Game Industry. Perhaps now is as good of time as ever. It is an interesting read.
It isn’t even Friday yet.