Key Takeaways
- Despite the gaming industry suffering massive layoffs over the past few years, the trend has continued into 2025.
- Many game developers view artificial intelligence as a positive force, even as its rise coincides with widespread job cuts.
- Gamers remain skeptical about the use of AI tools.
The Web3 and Web2 video game industry has faced a wave of shutdowns this year as more firms turn to AI to cut costs.
Mass layoffs have affected major companies such as Immutable, Microsoft Gaming, Electronic Arts, and Sony Interactive Entertainment.
A recent DappRadar report found that the Web3 arena had experienced a significant funding downturn, with total investment slumping by 71% in Q1 2025 from the year prior.
However, a new study suggests that most game developers still support implementing AI into game development.
Web3 Gaming Layoffs
Immutable
On Wednesday, May 21, it was reported that Australian blockchain gaming unicorn Immutable had axed a third of its employees over the past nine months, replacing some roles with AI.
Immutable, which was last valued at $3.5 billion in 2022, confirmed to the Australian Financial Review that it was using AI across its product, commercial, engineering and marketing teams.
The firm is now using AI for the bulk of its in-game art and content creation, which used to cost it over $1 million a year, according to the spokesperson.
“We are actively working to embed AI within our culture as well as empowering employees to work smarter and faster with the latest tools,” an Immutable spokesman said.
“Any technology company that is not considering how to best leverage AI will be left behind the curve,” they added.
Former employees who spoke to the publication anonymously said the firm had hired too many people after its Temasek-led capital raise in 2022, which pressured executives to cut costs.
Community Gaming
Community Gaming, a Web3 esports tournament platform, laid off 17 employees in April, according to Decrypt.
CEO Chris Gonsalves cited broader struggles within the competitive gaming industry.
“With the economic downturn in the esports industry, we’ve had to restructure our goals in order to have a stronger future, which came with some roles being eliminated,” Gonsalves told the publication.
“We appreciate the contributions of all our employees and will support them as they continue to be innovators in the space,” Gonsalves added.
Neon Machine
Neon Machine, a U.S.-based Web3 game studio, reportedly laid off an undisclosed number of staff in March, after making sweeping cuts throughout 2024.
According to Blockworks, citing sources familiar with the matter, the studio asked staff to be quiet about the layoffs to avoid attracting attention to the company.
Neon Machine, which is currently working on a game called Shrapnel, reportedly has very few employees left after the layoffs, according to the publication.
In response to a query about the layoffs, Neon Machine said: “Our team is intentionally lean and focused as we enter the most critical phase of bringing SHRAPNEL to market this year.”
Declining Web3 Funding
According to DappRadar, Web3 gaming projects raised just $91 million in Q1 2025, marking a 68% year-over-year decline.
User activity also reportedly fell, with daily unique active wallets seeing a 6% quarter-over-quarter fall, with 5.8 million registered.
However, the study found that the volume of deals being made in the space had actually increased, albeit at lower totals each.
Deals increased 35% in the first quarter of the year, signally investors actively participating in the sector.
Traditional Gaming Layoffs Are Rife
EA
On Tuesday, April 29, it was reported that Electronic Arts (EA) had laid off 300 staff members from its organization, including 100 from its Respawn division.
In an announcement, Respawn said it was cancelling two early-stage incubation projects and laid off a number of individuals from its Apex Legends and Star Wars teams.
“These decisions aren’t easy, and we are deeply grateful to every teammate affected — their creativity and contributions have helped build Respawn into what it is today,” the statement read.
Adding: “We’re offering meaningful support to those impacted, including exploring new opportunities within EA.”
Shortly after, IGN reported wider cuts to multiple EA teams, including customer support and marketing.
In a statement seen by the publication, an EA spokesperson said the layoffs were part of its “long-term strategic priorities” and to allocate resources “in service of driving future growth.”
Ubisoft
In early April, Ubisoft Leamington, the British arm of French video game giant Ubisoft, announced its official closure.
“After many incredible years, we want to share the news that Ubisoft Leamington has officially closed its doors,” the studio wrote on LinkedIn.
Reports of the closure first came in January, as the company planned to reorganize its workforce across Europe, affecting over 200 employees.
The video game giant said its goal was “to prioritize projects and reduce costs that ensure long-term stability at Ubisoft.”
Meanwhile, Canadian video game developer Eidos-Montréal plans to lay off “up to 75 valuable members.”
The developer, which is currently supporting work on the highly anticipated Fable reboot, said it does not “have the capacity to entirely reallocate them to our other ongoing projects and services.”
It added that the layoffs were not a “reflection of their dedication or skills.”
Signs of Recovery?
Despite several layoffs throughout the year already, gaming hiring champion Amir Satvat said that layoffs have slowed down in the first few months of 2025.
Satvat has created a pool of resources to help people gain employment in the games industry, aiding over 3,000 people find jobs.
The gaming expert predicted in January that hiring would exceed firing for the first time in around 30 months, which came true.
In a post on LinkedIn, Satvat wrote:
“I can tell you this: based on the best available actuals, known likely scenarios, all our community data (millions of lifetime observations across many categories), and time series forecasting, 2025 games layoffs (actuals + forecast) are currently trending at 6,145 versus the initial forecast of 9,769 — in terms of the expected layoffs for 2025 in gaming.”
Satvat said that while there will likely be ups and downs, this was the most “encouraging gap between trend and projection” he had seen since sharing the exercise in the second half of 2024.
2024: A Tough Year for Gaming
2024 was one of the worst years for the gaming industry, with an estimated 14,600 job losses, which surpassed the 10,500 layoffs reported in 2023.
Major companies, including Electronic Arts, Ubisoft and Bungie, implemented significant workforce reductions.
According to a survey by the Game Developers Conference, one in ten developers was laid off in 2024.
Throughout the year, 41% of developers were directly impacted by layoffs, compared to 35% in 2023, the report stated.
In March, hundreds of video game workers joined the newly formed United Videogame Workers Union in response to widespread job losses across the industry, Bloomberg reported.
The union aims to advocate for standardized workplace rights, including healthcare and fair hiring practices. It follows U.S. President Donald Trump signing a far-reaching executive order that aimed to reduce the power of union contracts.
AI’s Impact on Gaming
When ChatGPT and other generative AI tools first entered the spotlight, many game developers and gamers expressed concern that creativity in the industry could be compromised.
As with other creative fields, fears centered on AI-generated content replacing the unique imagination and innovation of human creators.
However, as AI has become more ubiquitous across society, perspectives have shifted.
According to Unity’s 2025 Gaming Report, 79% of game developers now feel positively about using AI in gaming, while only 5% remain skeptical.
The survey highlighted a surprising shift in attitudes towards AI, especially as the technology threatens to limit the size of workforces.
However, while developers may be shifting their outlook, gamers remain highly skeptical of AI’s use in game development.
In February, Activision received backlash after acknowledging the use of generative AI tools to develop certain in-game assets for Call of Duty: Black Ops 6.
The acknowledgment came after months of player speculation, with one particularly telling asset featuring a zombie with six fingers on one hand.
Last year, Wired reported that Activision sold an “AI-generated cosmetic” for Call of Duty: Modern Warfare 3 without disclosing its origins—angering players who had spent $15 on the item.
Kurt Robson is a London-based reporter at CCN, specialising in the fast-moving worlds of crypto and emerging technology. He began his career covering local news in Cornwall after graduating from Falmouth University with First Class Honours in Journalism. There, he cut his teeth on everything from council meetings to missing swans.
He quickly rose through the ranks to become a frontline journalist at several of the UK’s leading national newspapers. Over the years, he has interviewed musicians and celebrities, reported from courtrooms and crime scenes, and secured multiple front-page exclusives.
Following the upheaval of the COVID-19 pandemic, Kurt shifted his focus to technology journalism—just ahead of the AI boom. With a natural curiosity and a trained eye for emerging trends, he has found a new rhythm in reporting on innovation.
At CCN, Kurt's work focuses on the cutting edge of crypto, blockchain, AI, and the evolving digital world. Drawing on his background in people-first reporting and his deep interest in disruptive tech, Kurt delivers stories that are insightful, entertaining, and human-centric.
