For Modern Gaming the Only Constant is Change

PlayStation described the move as a natural direction to adapt to consumer trends, saying “the general preference for digital media significantly outpaces physical discs”.

Despite the confident tone of the message, the social media silence that ensued for several days following the post suggested anything but certainty, especially given the company’s habit of posting multiple times a day beforehand.

The post was viewed more than 180 million times, attracting approximately 108,000 angry replies and 70,000 reposts, compared with 66,000 likes. Many of those reposts drew further angry comments from social media users.

For PlayStation’s social media accounts, it has been all downhill from there. Many posts have since received Community Notes featuring purchase warnings about video games. The notes caution users about the dangers of an all-digital future in which true ownership of paid-for products is lost and replaced with revocable licenses.

It was a development savvy observers had anticipated. Just days before PlayStation's controversial disclosure, publisher Rockstar Games had declined to announce a physical edition of its highly anticipated blockbuster, Grand Theft Auto VI.

Rockstar attempted an unusual compromise by offering a physical box for the game among the purchasing options. However, rather than containing a physical disc, it includes a single-use digital download code allowing players to install the game on their console.

It indicated what was to come, and many commentators in hindsight judged that Rockstar had likely been informed by PlayStation in advance of its plans for an immaterial future.

Perhaps to PlayStation’s surprise, that digital-only future is already being furiously resisted. Since the announcement, players have been canceling their PlayStation Plus subscriptions – the service that enables PlayStation owners to play their games online – with some receiving discounts of up to 50% when attempting to cancel. The offers have prompted speculation over whether they are routine retention incentives or an effort to stem the boycott.

Layoffs and New Tech Make Their Mark

The shift from physical media, the traditional format for selling games, to exclusively digital distribution has been viewed with apprehension for years. It also comes at a time when another longstanding anxiety is wracking the industry – this time among publishers, platforms and developers.

Gaming industry layoffs have accelerated since the Covid-19 pandemic, during which widespread lockdown policies saw more people gaming than ever before. However, the dark side of that boom, from the industry perspective, was the subsequent discovery that many organizations were overstaffed, kicking off a wave of job cuts that has hardly lost pace in the post-pandemic years.

It is a process that has been shaken up by the proliferation and adoption of artificial intelligence (AI). While the technology is not yet typically engaged in heavy development work, it has been used to streamline production processes and automate basic tasks that previously required human input.

The latest entry in this ongoing saga came earlier this month when Microsoft announced plans to axe almost 5,000 jobs. Its gaming division Xbox, one of PlayStation’s major rivals, is bearing the brunt of the cuts.

Executive Vice President Amy Coleman said in a blog post revealing the shake-up that a changing technological landscape and business environment necessitated the changes. Despite Coleman's denial, many concluded that AI had been a factor.

“I also want to be direct that the roles eliminated today are not being replaced by AI,” Coleman said before adding that at the same time, “what is true is that AI is changing how work gets done”. 

“Some of the tasks we do every day can now be automated, and that means we all need to keep learning, keep building new skills, and keep adapting as the work evolves.”

For her part, Xbox CEO Asha Sharma said that the team would be reduced by 3,200 employees during the 2027 financial year, comprising 1,600 immediate layoffs followed by a further 1,600 later.

https://twitter.com/asha_shar/status/2074124008795369482

Microsoft AI CEO Mustafa Suleyman previously predicted that the vast majority of white-collar jobs, from marketing to accounting, legal to project management, would be replaced by AI in the short- to medium-term. It is a vision that appears to be underway as far as the gaming industry is concerned.

The waves washing over the video games industry should not be underestimated because gaming still carries the image of a youthful hobby. Yet regardless of how the sector is defined, every analysis shows it now dwarfs both the global box office and the music industry.

Approximately $200bn in revenue was generated by the global gaming market last year, compared with about $34bn for the global box office and $32bn for recorded music.

While the future of gaming is uncertain, the market trajectory does not appear to be.