TOPIC 7: TECHNOLOGY

Artificial intelligence: Hold on, troubles

are coming.
In an industry as profitable as the video game sector,
massive layoffs foreshadow greater turbulence.

Image of 'M arvel's Spid er-Man 2.

Baldur’s Gate 3, Zelda: Tears of the Kingdom, Resident Evil 4, Diablo IV, Super Mario
Bros. Wonder, Alan Wake 2, Spider-Man 2, Hogwarts Legacy… to say that 2023 has
been an extraordinary year for the video game industry is almost a bit repetitive. It has
been a year with extraordinary works that will greatly influence the future of the
industry and it has been an excellent year in economic terms. However, for all the good
that the year has been, the truth is that a deplorable and counterintuitive phenomenon
has occurred: the industry has suffered more than 6,000 layoffs in some of the most
powerful companies (Rockstar, Bungie, Ubisoft, Take-Two, CD Projekt, Epic,
Bethesda, Blizzard…).

It is not the first time that one of these companies has laid off many workers in a
prosperous year (one of the most famous cases was that of Activision-Blizzard and its
800 layoffs in the 2018-2019 financial year, when it broke a revenue record). But the
figures of the labor debacle of this recently completed 2023 exceed all catastrophic
perspectives. Paradoxes are always complicated to resolve, but we can point out three
factors that can explain this bad news.

The first has to do with the effects of Covid-19. 2020 was a year in which circumstances
pushed half the world to take refuge in digital leisure. This led to private investment in
video games during 2020, 2021 and 2022 multiplying due to the safe bet image that
emanated from the sector, but in 2023 that investment has lost two-thirds. That, without
a doubt, is a loss of financial muscle that is impossible not to notice in the labor
ecosystem.

The second reason is the exorbitant increase in the price of the largest projects.
Insomniac Games (Spyro the Dragon, Ratchet & Clank) recently suffered a data leak
that showed the world simply dizzying figures. Marvel’s Spider-Man 2, the company’s
most recent release, had a budget of $315 million (the forecast is that it will leave a
profit of $75 million). The future Marvel’s Spider-Man 3, according to the leak, will
have a budget of $385 million. And the even more future Marvel’s Wolverine would
have a budget of $305 million. That is, figures that are hardly found in Hollywood and
that imply the total closure of any project in the event of a disaster.

And lastly, of course, there is AI.

The toy company Hasbro has just announced 1,100 layoffs. And, last year, 800 people
were fired. While the company lost almost 10% in annual revenue, the video game
division’s profits rose by 40%. Still, there are layoffs. Why? Well, within Hasbro, one
of the divisions affected is Wizards of the Coast, the parent company of the Magic card
game and the Dungeons & Dragons role-playing game (the video game of the year,
Baldur’s Gate III, is based on D&D). Coincidentally, Wizards of the Coast has recently
been accused of using artificial intelligence to create some of the art for its upcoming
Dungeons & Dragons book. The company has defended itself with a less-than-
resounding statement: “We require artists, writers, and creatives contributing to the
Magic TCG to refrain from using AI generative tools to create final Magic products.”

Perhaps in that innocent word — “final” — lies the key to everything. Everything that’s
released will ultimately be supervised by people, obviously. But anyone who’s even a
little bit interested in generative applications based on AI know that it’s naive to think
that this new technology will not greatly affect illustrators, editors, creators of video
games, application designers and almost everyone who works with a computer. It’s not
unreasonable to bet that the highly-anticipated technological revolution will begin with
a labor revolution. A revolution with many layoffs, apparently.

Video games are the canary in the mine of a world in which the digital precedes the
analog. And it’s within the world of video games that many political wars and
discussions were born, which would only reach the newspapers years later. If AI
influences a technology sector that literally vomits gold, it’s not very gratifying to think
about what it will eventually do to digital companies that live in a precarious balance.

(From El País in English by Jorge Mola. 2nd January 2024.)