The wave of layoffs that has already shaken tech, media, and major global businesses is now hitting one of the world’s most dynamic entertainment sectors: video games. In recent weeks, the gaming industry layoffs have accelerated, with multiple studios announcing job cuts almost back-to-back, turning what once seemed like isolated restructurings into a clear industry-wide shift.
Major companies in the gaming industry have all made headlines after reducing teams or restructuring projects, signaling that even successful and well-known studios are under pressure. Developers, live-service teams, and support staff across the sector are being affected as companies adjust budgets, cancel projects, and rethink long-term strategies.
The message is becoming clear: no industry is fully protected from the global correction affecting entertainment and tech businesses.
I. The New Wave of Layoffs in the Gaming Industry
Unlike prior layoff cycles that affected individual companies or isolated teams, the current round of workforce reductions is spanning a range of studios, from independent developers to major publishers. This shift reflects wider economic pressure across entertainment and technology, as well as changing dynamics in player engagement and project performance.
1. Wildlight Entertainment and the Highguard Layoffs
One of the most talked-about layoffs in the current cycle involves Wildlight Entertainment, the developer behind the multiplayer shooter Highguard. Just 16 days after Highguard’s launch on January 26, 2026, the company announced significant staff reductions that reportedly affected most of the project’s development team.
Scale and Timing of Cuts
Although Wildlight has not published exact numbers, multiple reports from former employees indicate that “most” developers working on Highguard were let go in early February 2026. This followed a launch period where Highguard initially saw high interest but quickly declined in active player counts and engagement. Official communication from the company stated that a smaller “core group of developers” would remain to continue supporting the game’s development and live-service operations.
Context Behind the Decision
Highguard was a high-profile project for an independent studio, created by industry veterans with experience on major titles. However, mixed reviews and declining player engagement appear to have contributed to internal decisions to cut down workforce costs rapidly. Player numbers reportedly dropped significantly from their initial peak, which compounded financial pressures and likely influenced Wildlight’s choice to reduce staff.
Criticism and online debate around the project’s performance quickly followed the layoffs, with former staff and community members discussing their disappointment and concern for the game’s future.
2. Riot Games Reduces 2XKO Team
Another major layoff announcement came from Riot Games, which confirmed a significant reduction in the development team behind 2XKO, the free-to-play tag fighting game connected to the League of Legends franchise.
Job Cuts and Team Size
Riot revealed that it had laid off approximately 80 employees from the 2XKO project, representing around half of the game’s global development team. This announcement came just weeks after the game’s full release on January 20, 2026, marking a rapid turnaround from launch to workforce reduction.
Reasoning and Company Statements
According to Riot’s internal communication, overall momentum and player engagement — especially following expansion to console platforms — did not reach the level necessary to sustain the team at its previous size. While the company noted that the game resonated with a committed player base, long-term trends in engagement and financial metrics were cited as factors in the decision to scale back.
Riot also indicated that some impacted employees would be given opportunities to transition into other roles within the wider company, where possible, although the layoff announcement remains a notable event given Riot’s history of gradual workforce changes rather than abrupt cuts.
3. 10 Chambers: Restructuring and Leadership Departures
The studio known for the cooperative shooter GTFO, 10 Chambers, also confirmed major staffing changes tied to a broader restructuring effort focused on its upcoming title Den of Wolves.
Nature of the Reductions
In early 2026, the studio publicly acknowledged that a significant number of employees were impacted by restructuring changes. Reports and company statements indicate that layoffs have taken place and that several co-founders are departing the company as part of this shift. While exact numbers have not been disclosed, the move is described as extensive and consequential for the project’s development team.
Strategic Reasons Behind Restructuring
10 Chambers stated that the restructuring is intended to refocus efforts on Den of Wolves, but the layoffs and leadership changes suggest internal reevaluation of project priorities and team structure. This is significant because it involves not only rank-and-file staff but also some executive leadership, hinting at deep organizational changes designed to optimize development workflows and resource allocation.
4. Ubisoft’s Ongoing Workforce Changes
Large publisher Ubisoft continues to manage a multi-stage restructuring plan that has included layoffs in multiple locations and studios.
Known Layoff Events
Recent layoff announcements at Ubisoft include:
- 55 job cuts at its Swedish studios, including Massive Entertainment and Ubisoft Stockholm, affecting roles across Malmö and Stockholm.
- 29 positions eliminated at the Ubisoft Abu Dhabi mobile studio, tied to strategic changes and project cancellations.
These layoffs are part of a broader effort by Ubisoft to adjust its cost structure and align resources with core franchise development and long-term strategic priorities.
Larger Restructuring Processes
In January 2026, the company also entered a voluntary mutual termination agreement (RCC) negotiation at its Paris headquarters that could involve up to 200 positions, pending confirmation from unions and regulatory bodies. This signals continued evaluation of organizational efficiency and portfolio focus.
5. Meta (Reality Labs): Closure of Three VR Game Studios
One of the most high-profile layoffs affecting the gaming ecosystem in early 2026 comes from Meta Platforms’ Reality Labs division. In January 2026, Meta announced broad workforce cuts affecting roughly 10 % of the Reality Labs staff, prompting the closure of several internal VR game development studios.
Studio Closures and Workforce Impact
The cuts resulted in the shutdown of three studios focused on virtual reality gaming titles:
- Twisted Pixel Games — known for VR titles such as Deadpool VR.
- Sanzaru Games — the studio behind the Asgard’s Wrath series.
- Armature Studio — developer of Resident Evil 4 VR and other VR ports.
These closures were part of a larger shift in corporate investment strategy at Meta, which has seen its Reality Labs division incur significant cumulative losses and has reportedly lost billions since its inception. As a result, the company decided to shelve in-house game development projects tied to VR gaming and reallocate resources toward artificial intelligence, wearable technology, and broader mobile applications.
Broader Organizational Changes
Alongside the studio closures, Meta also scaled back content updates and new feature development for some VR software offerings, including apps previously supported by these teams. The strategic shift reflects a rebalancing of priorities that directly affects game developers and related creative staff who had been employed to support virtual reality content.
6. NetherRealm Studios: Layoffs in Mobile Gaming Division
Another noteworthy layoff affecting a well-known developer in the gaming industry is tied to NetherRealm Studios, the studio best known for titles such as Mortal Kombat and Injustice.
Closure of Mobile Games Team
In mid-2024, NetherRealm reportedly shut down its entire mobile gaming division, laying off teams that had been creating mobile adaptations and related free-to-play titles. These positions included development and quality assurance staff working on assignments such as Mortal Kombat Mobile, Injustice 2 Mobile, and other smartphone initiatives.
Reports from industry sources and statements shared on social platforms indicated that this decision resulted in the loss of dozens of positions, as the company eliminated the division entirely rather than transitioning staff to other roles.
Consequences for Ongoing Titles
The closure of NetherRealm’s mobile division also corresponded with the shutdown of mobile projects that had been in operation, including Mortal Kombat: Onslaught, which was discontinued less than a year after its release in late 2023. This highlighted both internal reprioritization and the volatility of mobile game operations amid broader restructuring decisions.
This move underscores a broader trend across the industry where studios are scaling back or eliminating mobile units after assessing long-term sustainability and revenue performance from free-to-play mobile games linked to established franchises.
7. Warner Bros. Games San Francisco: Staff Reductions
Although not always covered with the same visibility as cancellations at larger multinational gaming companies, staff reductions at studio arms of media conglomerates also contribute to the ongoing wave of layoffs in game development.
Reported Workforce Cuts at San Francisco Team
Recent industry reporting revealed that a studio associated with Warner Bros. Games’ operations in San Francisco, known for working on mobile titles and digital publishing, reduced its workforce, with multiple employees impacted across development and support roles.
While the company has not released official population counts or broad layoff figures, several long-tenured developers publicly confirmed they were affected, contributing to wider discussions about staffing instability in mobile and mid-tier game divisions under large publishers.
Broader Implications
These reductions at Warner Bros. Games’ San Francisco team appear connected to ongoing strategic recalibration within the wider Warner Bros. interactive and media portfolio, particularly following high-level leadership changes and restructuring in the broader entertainment parent company. The layoffs demonstrate how fluctuations in game team staffing can sometimes align with corporate media shifts, not just typical game industry performance factors.
II. What’s Driving These Layoffs?
The wave of layoffs across the gaming industry in 2026 did not occur in isolation. Multiple underlying factors, both internal to the industry and tied to broader global economic trends, have influenced decisions by studios and publishers to reduce staff, restructure teams, or discontinue projects.
1. Underperformance of Key Projects
A central driver of recent layoffs has been underperformance of new or planned titles relative to expectations. When projects fail to generate sufficient player engagement, revenue, or retention, companies often scale back development resources. Live-service games are particularly sensitive to early performance signals, as they require sustained investment in content, support, and community engagement over time.
In cases where player metrics do not reach targeted benchmarks, publishers may reduce team sizes responsible for ongoing updates. This process reflects a shift toward allocating resources where they are most likely to achieve commercial success. In turn, this affects jobs tied directly to specific titles underperforming in highly competitive markets.
2. Changing Player Behavior and Market Demand
Player behavior and preferences have shifted in recent years, influencing which games succeed commercially. A concentrated number of major franchises continue to dominate global engagement, while many new releases struggle to maintain substantial active audiences. Titles with strong initial interest can still fail to maintain momentum, leading to lowered projections for future revenue streams.
The popularity of established franchises and platforms has raised the bar for new entrants, particularly in genres with substantial development costs such as live-service shooters and free-to-play competitive games. When projected audience growth does not materialize, studios adjust headcount accordingly. This dynamic is affecting studios with high-profile releases that have not met engagement expectations.
3. Economic Pressures and Cost Management
Economic conditions worldwide have tightened in recent years, prompting companies to scrutinize operating costs more closely. While the gaming industry experienced significant growth during earlier years of increased consumer entertainment spending, recent financial performance across multiple sectors has moderated. Investors and corporate leadership teams are pressing for stronger profitability and shorter timelines to return on investment.
In this climate, studios are reassessing how much financial risk they are willing to accept. Large development teams, especially those working on long-term or live-service projects, represent ongoing financial commitments. When projected revenue from a game does not align with internal targets, companies are choosing to reduce staff to contain costs and preserve capital for core operations. This trend is visible in workforce cuts at several major publishers and independent developers.
4. Cost of Live-Service and Multiplayer Development
Live-service and multiplayer game development requires sustained investment beyond initial development. Support for ongoing content releases, server infrastructure, community management, and technical maintenance places long-term financial demands on studios. When a live-service title does not achieve consistent monetization and engagement levels, companies reassess whether long-term investment is justified.
Maintaining large teams for content updates and technical support becomes difficult when businesses face revenue pressure or when projects fail to deliver anticipated returns. In such situations, workforce reductions are often implemented to align staffing levels with revised forecasts for future investment and profitability.
5. Broader Tech Industry Trends
Digital entertainment and interactive media companies are competing with other digital services for consumer attention and discretionary spending. As consumer spending growth slows or shifts to other sectors, gaming companies face heightened competition and more rigorous financial performance expectations. This macroeconomic pressure contributes to workforce
reductions that prioritize financial stability over expansion.
As studios adjust priorities and companies tighten spending, the direction of game development is entering a period of reassessment. The coming months will show whether the industry stabilizes around fewer, safer investments or finds new ways to support creativity and sustainable growth.
The key question now is simple: will this reset lead to a stronger, more resilient gaming industry, or mark the start of a longer period of uncertainty for developers and studios worldwide?
